EXHIBIT 10(l)
SEPARATION AGREEMENT BETWEEN THE COMPANY
AND XXXXX X. XXXX, XX.
DATED JANUARY 3, 1997
CONFORMED COPY
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SEPARATION AGREEMENT
This Separation Agreement ("Agreement") is made and entered into by
and between Xxxxx X. Xxxx, Xx. ("Xxxx") and Digi International Inc., a Delaware
corporation (the "Company"), on the dates set forth below.
WHEREAS, Xxxx has been employed by the Company since October 1994
pursuant to a written Employment Agreement; and
WHEREAS, the Company and Xxxx have agreed that it is in their mutual
interests that Xxxx resign as a director, officer, and employee of the Company
and its subsidiaries and AetherWorks Corporation as of December 31, 1996; and
WHEREAS, the parties are attempting to conclude their employment
relationship amicably, but mutually recognize that any significant employment
relationship may give rise to potential claims or liabilities; and
WHEREAS, Xxxx and the Company expressly deny that they may be liable
to each other on any basis or that they have engaged in any improper or unlawful
conduct or wrongdoing against each other; and
WHEREAS, Xxxx and the Company desire to resolve all issues potentially
in dispute between them; and
WHEREAS, Xxxx and the Company have agreed to a full settlement of all
issues potentially in dispute between them; and
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WHEREAS, it is one of the purposes of this Agreement to provide for
the exchange of consideration between the parties, to provide for the exchange
of releases of potential claims between the parties, and to consolidate within
one document the parties' obligations to each other,
NOW, THEREFORE, in consideration of the mutual promises and provisions
contained in this Agreement and the Releases referred to below, the parties
agree as follows:
1. RELEASE OF CLAIMS BY XXXX. At the same time Xxxx executes this
Agreement, he also will execute a Release, in the form attached to this
Agreement as Exhibit A, in favor of the Company, its insurers, parent companies,
subsidiaries, AetherWorks Corporation, joint venture partners, divisions,
committees, directors, officers, employees, agents, predecessors, successors,
and assigns (the "Xxxx Release"). This Agreement will not be interpreted or
construed to limit in any manner the Xxxx Release. The existence of any dispute
respecting the interpretation of this Agreement will not nullify or otherwise
affect the validity or enforceability of the Xxxx Release.
2. RELEASE OF CLAIMS BY THE COMPANY. At the same time the Company
executes this Agreement, the Company also will execute a Release, in the form
attached to this Agreement as Exhibit B (the "Company Release"), in favor of
Xxxx and his heirs, representatives, successors, and assigns. The Company
Release releases claims by the Company and its subsidiaries against Xxxx and his
heirs, representatives, successors and assigns. The Company will indemnify Xxxx
for any liability arising to AetherWorks Corporation for actions or inactions
occurring prior to the date hereof. This Agreement will not be interpreted or
construed to limit in any manner the Company Release. The existence of
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any dispute respecting the interpretation of this Agreement will not nullify or
otherwise affect the validity or enforceability of the Company Release.
3. RESIGNATIONS BY XXXX. At the same time Xxxx executes this
Agreement, he will also sign two documents, in the form attached to this
Agreement as Exhibits C-1 and C-2, respectively, resigning, effective as of
December 31, 1996, (i) as a director, an officer, and an employee of the
Company, and as a director and/or an officer of any of the Company's
subsidiaries and (ii) as a director of AetherWorks Corporation.
4. PAYMENTS. Provided that (i) Xxxx has not rescinded this
Agreement or the Xxxx Release within the applicable rescission period, (ii) the
Company has received written confirmation from Xxxx, in the form attached to
this Agreement as Exhibit D, dated not earlier than the day after the expiration
of the applicable rescission period, that Xxxx has not rescinded and will not
rescind this Agreement or the Xxxx Release, and (iii) Xxxx has not breached his
obligations pursuant to this Agreement or the Xxxx Release, then the Company
will make the following payments.
a. VACATION PAY. The Company will pay Xxxx $19,230.77, less
all applicable payroll withholding, for his accrued and earned vacation not yet
taken as of December 31, 1996, in a lump sum on the first business day following
the expiration of the applicable rescission period (the "Payment Date").
x. XXXXXXXXX PAY. The Company will pay Xxxx $250,000.00, less
all applicable payroll withholding, in a lump sum on the Payment Date.
c. MEDICAL INSURANCE REIMBURSEMENT. The Company will apply
$5,385.60 to offset the premiums that Xxxx otherwise would be required to pay
for the
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continuation of his group medical and dental insurance coverages under the terms
of paragraph 7 below; provided, however, that if Xxxx does not elect such
coverages, or discontinues such coverages before the full $5,385.60 is so
applied, then the Company will pay the balance of the $5,385.60, less all
applicable payroll withholding, to Xxxx promptly after the date on which Xxxx
declines or discontinues such coverages.
5. STOCK OPTIONS. The Company will accelerate the exercisability of
all unvested options to purchase shares of the Company's stock held by Xxxx (to
wit, 236,900 options), which acceleration will be deemed to have occurred
immediately prior to the termination of his employment with the Company as of
December 31, 1996. Assuming that Xxxx serves as a consultant to the Company
through March 31, 1997 as provided in paragraph 6 below, such options must be
exercised on or before three months after March 31, 1997, in accordance with the
terms of the Company's Stock Option Plan and applicable stock option agreements
between Xxxx and the Company, at which time all unexercised options held by Xxxx
will lapse. Xxxx understands that he will be solely responsible for the tax
consequences of the exercise of his options, and he acknowledges that he is not
relying on any representations by the Company regarding such tax consequences.
6. XXXX'X CONSULTANT RELATIONSHIP WITH THE COMPANY. Xxxx will serve
as a consultant to the Company during regular business hours for reasonable
amounts of time immediately upon the termination of his employment with the
Company and until March 31, 1997. Xxxx'x consultant relationship with the
Company cannot be terminated by either party for any reason before March 31,
1997. While he is a consultant to the Company, Xxxx will complete in a timely
fashion work suitable to his skills and abilities that will be
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assigned to him from time to time by the Company's Board of Directors or its
Chairman. As a consultant to the Company, Xxxx will be an independent
contractor and not an employee of the Company. During the time he is a
consultant to the Company, the Company will provide Xxxx with appropriate
secretarial and clerical support and other office services, including the
continuation of the direct dial telephone number and voice mail accounts he used
during his employment. Xxxx will incur no liability to the Company for services
he provides as a consultant, provided that he acts in good faith, has no
reasonable cause to believe that his conduct was unlawful, and reasonably
believes that his conduct is in the best interests of the Company.
7. INSURANCE CONTINUATION. After January 1, 1997, Xxxx will be
entitled to continue his group medical, dental, and life insurance coverages
under such terms as are made available to similarly situated former employees of
the Company, provided that Xxxx pays the entire cost of such insurance as
provided by law.
8. SAVINGS AND PROFIT SHARING PLAN. Xxxx is a participant in the
Company's 401-K Savings and Profit Sharing Plan (the "Plan"). Xxxx acknowledges
that no further salary reduction contributions will be made to the Plan from his
compensation after December 31, 1996, and that he will not be eligible for any
matching or profit sharing contributions to the Plan for 1996. Xxxx will
continue to be a participant in the Plan in accordance with the terms and
conditions set forth in the Plan. Xxxx will be entitled to begin receiving
benefits from his Plan account or to roll-over the amount in his account at the
times and under the terms and conditions set forth in the Plan.
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9. EMPLOYEE BENEFITS. Except as expressly provided in this
Agreement, Xxxx will not be eligible to participate in any of the Company's
employee benefit plans after December 31, 1996.
10. NON-COMPETITION, CONFIDENTIALITY, AND TRADE SECRETS.
a. AGREEMENT NOT TO COMPETE. Before January 1, 1998 Xxxx will
not, unless he receives the prior approval of the Board of Directors of the
Company, directly or indirectly engage in any of the following actions:
(i) Own an interest in (except as provided below), manage,
operate, join, control, lend money or render financial or
other assistance to, or participate in or be connected with,
as an officer, employee, partner, stockholder, consultant,
or otherwise, any entity whose products or services compete
directly or indirectly with those of the Company, or any of
its subsidiaries or AetherWorks Corporation. However,
nothing in this subparagraph 10.a. will preclude Xxxx from
holding less than one percent of the outstanding capital
stock of any corporation required to file periodic reports
with the Securities and Exchange Commission under Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended,
the securities of which are listed on any securities
exchange, quoted on the National Association of Securities
Dealers Automated Quotation System, or traded in the
over-the-counter market.
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(ii) Intentionally solicit, endeavor to entice away from
the Company, or any of its subsidiaries or AetherWorks
Corporation, or otherwise interfere with the relationship of
the Company, or any of its subsidiaries or AetherWorks
Corporation with, any person who is employed by or otherwise
engaged to perform services for the Company, or any of its
subsidiaries or AetherWorks Corporation (including, but not
limited to, any independent sales representatives or
organizations), or any person or entity who is, or was
within the then most recent 12-month period, a customer or
client of the Company, or any of its subsidiaries or
AetherWorks Corporation, whether for Xxxx'x own account or
for the account of any other individual, partnership, firm,
corporation, or other business organization.
If the scope of the restrictions in this subparagraph 10.a. are determined by a
court of competent jurisdiction to be too broad to permit enforcement of such
restrictions to their full extent, then such restrictions will be construed or
re-written (i.e., blue-lined) so as to be enforceable to the maximum extent
permitted by law, and Xxxx hereby consents, to the extent he may lawfully do so,
to the judicial modification of the scope of such restrictions in any proceeding
brought to enforce them.
b. NON-DISCLOSURE OF INFORMATION. After December 31, 1996 Xxxx
will not, without the written consent of the Company, disclose to any person,
other than an employee of the Company, any parent company of the Company, or any
of their
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subsidiaries or other affiliates, except where such disclosure may be required
by law, any material confidential information obtained by him while in the
employ of the Company, with respect to any products, technology, know-how or the
like, services, customers, methods, or future plans of the Company, or any of
its subsidiaries or AetherWorks Corporation, all of which Xxxx acknowledges are
valuable, special, and unique assets, the disclosure of which Xxxx acknowledges
may be materially damaging.
c. REMEDIES. Xxxx acknowledges that the Company's remedy at
law for any breach or threatened breach by Xxxx of subparagraphs 10.a. and 10.b.
will be inadequate. Therefore, the Company will be entitled to injunctive and
other equitable relief restraining Xxxx from violating those provisions, in
addition to any other remedies that may be available to the Company under this
Agreement or applicable law.
11. FUTURE EMPLOYMENT. Except for Xxxx'x relationship with the
Company as a consultant as provided for in paragraph 5 above, Xxxx will not
apply for or seek re-employment at any time in the future with the Company.
Xxxx also will not apply for or seek employment at any time in the future with
any of the Company's present or future subsidiaries, or AetherWorks Corporation
or any of its present or future subsidiaries (so long as AetherWorks Corporation
remains an affiliate of the Company); provided, however, that this sentence
shall not prohibit Xxxx'x continued employment by any entity that becomes a
subsidiary of the Company or AetherWorks.
12. RECORDS, DOCUMENTS, AND PROPERTY. On or before December 31,
1996, or as soon as possible thereafter, Xxxx will return to the Company all
records,
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correspondence, documents, financial data, plans, computer disks, computer
tapes, keys, credit cards, and other tangible property in his possession
belonging to the Company.
13. MUTUAL CONFIDENTIALITY.
a. GENERAL STANDARD. It is the intent of the parties that the
terms of Xxxx'x separation from the Company, including the provisions of this
Agreement, the Xxxx Release, and Company Release (collectively "Confidential
Separation Information"), will be forever treated as confidential. Accordingly,
Xxxx and the Company will not disclose Confidential Separation Information to
anyone at any time, except as provided in subparagraph 13.b.
b. EXCEPTIONS.
(i) It will not be a violation of this Agreement for the
parties to disclose Confidential Separation Information to
the Company's directors and stockholders or in public
filings in the form of proxy statements or other reports
required by securities laws or to governmental agencies as
required by law, including, but not limited to, the
Securities and Exchange Commission and any federal or state
tax authority.
(ii) It will not be a violation of this Agreement for Xxxx
to disclose Confidential Separation Information to his
immediate family, his attorneys, his accountants or tax
advisors, or any federal or state tax authority, or as may
be required by law.
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(iii) It will not be a violation of this Agreement for Xxxx
to disclose to employers and/or prospective employers that
he is constrained from certain activities as a result of the
terms of paragraph 10 above.
(iv) It will not be a violation of this Agreement for the
Company to disclose Confidential Separation Information to
its auditors, its attorneys, and its employees and agents
who have a legitimate reason to obtain the Confidential
Separation Information in the course of performing their
duties or responsibilities for the Company, or as may be
required by law.
(v) It will not be a violation of this Agreement for the
Company to release a media statement in the form attached to
this Agreement as Exhibit E.
(vi) If Xxxx or a director or senior executive officer of
the Company is asked by any person about any matters related
to the termination of Xxxx'x employment, it will not be a
violation of this Agreement to say in response only that
"all matters relating to Xxxx'x separation from the Company
were amicably and satisfactorily resolved" and/or that Xxxx
and the Company have "agreed not to discuss Xxxx'x
separation from the Company."
14. NON-DISPARAGEMENT. Xxxx will not disparage, defame, or besmirch
the reputation, character, image, products, or services of the Company, or the
reputation or
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character of its directors, officers, employees, or agents. The Company will
not disparage, defame, or besmirch the reputation, character, or image of Xxxx.
15. CLAIMS INVOLVING THE COMPANY. Xxxx will not recommend or suggest
to any potential claimants or plaintiffs or their attorneys or agents that they
initiate claims or lawsuits against the Company, any of its subsidiaries or
AetherWorks Corporation, or any of its or their directors, officers, employees,
or agents, nor will Xxxx voluntarily aid, assist, or cooperate with any
claimants or plaintiffs or their attorneys or agents in any claims or lawsuits
now pending or commenced in the future against the Company, any of its
subsidiaries or AetherWorks Corporation, or any of its or their directors,
officers, employees, or agents; provided, however, that this paragraph will not
be interpreted or construed to prevent Xxxx from giving testimony in response to
questions asked pursuant to a legally enforceable subpoena, deposition notice,
or other legal process, during any legal proceedings involving the Company, any
of its subsidiaries or AetherWorks Corporation, or any of its or their
directors, officers, employees, or agents.
16. XXXX'X CONTINUED AVAILABILITY. Xxxx will make himself reasonably
available upon request to confer with the Company's senior executive officers,
directors, and lawyers at mutually convenient times during regular business
hours for reasonable amounts of time regarding the Company's significant
business matters and legal affairs. The Company will reimburse Xxxx for any
actual out-of-pocket expenses that he incurs when conferring with the Company's
senior executive officers, directors, and lawyers, but will not make any other
payments to him for so conferring unless the time spent conferring exceeds 20
hours per year. If Xxxx spends more than 20 hours per year
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conferring with the Company's senior executive officers, directors, and lawyers,
the Company will reasonably compensate Xxxx for the time spent in excess of 20
hours.
17. INDEMNIFICATION. Notwithstanding Xxxx'x separation from the
Company, with respect to events that occurred during his tenure as a director,
an officer, or an employee of the Company, Xxxx will be entitled, as a former
director, officer, and employee of the Company, to the same rights as are
afforded to senior executive officers of the Company now or in the future, to
indemnification and advancement of expenses provided in the charter documents of
the Company, under applicable law, and under the Company's indemnification
agreement with Xxxx dated November 30, 1994 (the "Indemnification Agreement"),
and to coverage and a legal defense under any applicable general liability
and/or directors' and officers' liability insurance policies maintained by the
Company.
18. XXXX REPRESENTATION. Xxxx represents that, during the entire
period that he was a director, an officer, and an employee of the Company, he
acted in good faith, had no reasonable cause to believe that his conduct was
unlawful, and reasonably believed that his conduct was in the best interests of
the Company. The parties intend that the terms used in this paragraph will have
the same meaning as the same terms used in Section 145 of the Delaware General
Corporation Law.
19. COMPANY REPRESENTATION. The Company represents that, at the time
it executes this Agreement, the members of its Board of Directors are not aware
of the existence of any facts upon which any claim or cause of action could be
asserted against Xxxx.
20. TIME TO CONSIDER AGREEMENT. Xxxx understands that he may take at
least 21 calendar days to decide whether to sign this Agreement and the Xxxx
Release,
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which 21-day period will commence on the date on which Xxxx first receives
copies of this Agreement and the Xxxx Release for review. Xxxx represents that
if he signs this Agreement and the Xxxx Release before the expiration of the
21-day period, it is because he has decided that he does not need any additional
time to decide whether to sign this Agreement and the Xxxx Release.
21. RIGHT TO RESCIND OR REVOKE. Xxxx understands that he has the
right to rescind or revoke this Agreement and the Xxxx Release for any reason
within 15 calendar days after he signs them. Xxxx understands that this
Agreement and the Xxxx Release will not become effective or enforceable unless
and until he has not rescinded this Agreement and the Xxxx Release and the
applicable rescission period has expired. Xxxx understands that if he wishes to
rescind, the rescission must be in writing and hand-delivered or mailed to the
Company. If hand-delivered, the rescission must be: (a) addressed to Xxxx X.
Xxxxxxx, Chairman of the Board, Digi International Inc., 00000 Xxxx Xxxx Xxxx,
Xxxxxxxxxx, XX 00000 and (b) delivered to Xx. Xxxxxxx within the 15-day
period. If mailed, the rescission must be: (a) postmarked within the 15-day
period; (b) addressed to Xxxx X. Xxxxxxx, Chairman of the Board, Digi
International Inc., 00000 Xxxx Xxxx Xxxx, Xxxxxxxxxx, XX 00000 and (c) sent by
certified mail, return receipt requested. Whether hand-delivered or mailed,
Xxxx will, in addition, simultaneously provide copies of his rescission to the
Company's Director of Human Resources at the address of the Company listed in
this paragraph and to Faegre & Xxxxxx, 2200 Norwest Center, 00 Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxxx, XX 00000-0000, Attention: Xxxxx X. Xxxxxxxxx.
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22. XXXX'X DUTY TO INFORM COMPANY OF DECISION TO REVOKE. If Xxxx
decides to rescind or revoke this Agreement and the Xxxx Release by mail, as
provided for in paragraph 21 above, he will so inform Xxxx X. Xxxxxxx, Chairman
of the Board, of his decision by telephone before 5:00 p.m. on the 15th day of
the rescission period.
23. FULL COMPENSATION. Xxxx understands that the payments made and
other consideration provided by the Company under this Agreement will fully
compensate Xxxx for and extinguish any and all of the claims Xxxx is releasing
in the Xxxx Release, including, but not limited to, his claims for attorneys'
fees, costs, and disbursements, and any and all claims for any type of equitable
or legal relief.
24. NO ADMISSION OF WRONGDOING. Xxxx understands that this Agreement
does not constitute an admission that the Company has violated any local
ordinance, state or federal statute, or principle of common law, or that the
Company has engaged in any improper or unlawful conduct or wrongdoing against
Xxxx. Xxxx will not characterize this Agreement or the payment of any money or
the giving of other consideration in accordance with this Agreement as an
admission that the Company has engaged in any improper or unlawful conduct or
wrongdoing against him.
25. AUTHORITY. Xxxx represents that he has the authority to enter
into this Agreement and the Xxxx Release, and that no causes of action, claims,
or demands released pursuant to this Agreement and the Xxxx Release have been
assigned to any person or entity not a party to this Agreement.
26. REPRESENTATION. Xxxx acknowledges that he has had a full
opportunity to consult with his own attorneys in this matter, that he has had a
full opportunity
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to consider this Agreement and the Xxxx Release, that he has had a full
opportunity to ask any questions that he may have concerning this Agreement and
the Xxxx Release, or the settlement of his claims against the Company, and that
he has not relied upon any statements or representations made by the Company or
its attorneys, written or oral, other than the statements and representations
that are explicitly set forth in this Agreement, the Xxxx Release, the Company
Release, the Plan, and the Indemnification Agreement.
27. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
inure to the benefit of the parties and their respective heirs, representatives,
successors, and assigns, but will not be assignable by either party without the
prior written consent of the other party.
28. INVALIDITY. In the event that any provision of this Agreement or
the Xxxx Release or the Company Release is determined by a court of competent
jurisdiction to be invalid, illegal, or unenforceable in any respect, such a
determination will not affect the validity, legality, or enforceability of the
remaining provisions of this Agreement or the Xxxx Release or the Company
Release, and the remaining provisions of this Agreement and the Xxxx Release and
the Company Release will continue to be valid and enforceable, and any court of
competent jurisdiction may so modify the objectionable provision as to make it
valid and enforceable.
29. ENTIRE AGREEMENT. Before executing this Agreement, the parties
had several discussions, including negotiations, and generated certain
documents, in which the parties discussed the matters that are the subject of
this Agreement and the Xxxx Release and the Company Release. In such
discussions and documents, the parties may have
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expressed their judgments and beliefs concerning the intentions, capabilities,
and practices of the parties, and may have forecast future events. The parties
recognize, however, that all business transactions, including the transactions
upon which the parties' judgments, beliefs, and forecasts are based, contain an
element of risk, and that it is normal business practice to limit the legal
obligations of contracting parties only to those promises and representations
that are essential to the transaction so as to provide certainty as to their
respective future rights and remedies. Accordingly, this Agreement, the Xxxx
Release, the Company Release, the Plan, and the Indemnification Agreement are
intended to define the full extent of the legally enforceable undertakings of
the parties, and no promises or representations, written or oral, that are not
set forth explicitly in this Agreement, the Xxxx Release, the Company Release,
the Plan, or the Indemnification Agreement are intended by either party to be
legally binding, and all other agreements and understandings between the parties
are hereby superseded.
30. HEADINGS. The descriptive headings of the paragraphs and
subparagraphs of this Agreement are inserted for convenience only, and do not
constitute a part of this Agreement.
31. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
32. GOVERNING LAW. This Agreement and the Xxxx Release and the
Company Release will be interpreted and construed in accordance with, and any
dispute or controversy arising from any breach or asserted breach of this
Agreement or the Xxxx Release or the Company Release will be governed by, the
laws of Minnesota.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
dates indicated at their respective signatures below.
Dated: January 3, 1997. /s/ Xxxxx X. Xxxx, Xx.
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XXXXX X. XXXX, XX.
DIGI INTERNATIONAL INC.
Dated: January 3, 1997. /s/ Xxxx X. Xxxxxxx
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By: Xxxx X. Xxxxxxx
Its: Chairman of the Board
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