EXHIBIT 10.34
CONFIDENTIAL
SEPARATION AGREEMENT AND RELEASE
Xxxxx X. Xxxxxxx, Xx. ("Xxxxxxx") and HEI, Inc. (the "Company") have
reached this Separation Agreement and Release ("Agreement") effective as of the
20 day of June, 2003 (the "Effective Date").
1. RESIGNATION. Xxxxxxx has resigned from his employment and all other roles
with the Company, including his positions as Chief Financial Officer and as a
member of the Board of Directors and any Board committee, and from all positions
with any subsidiary of the Company, effective as of June 20, 2003.
2. SEPARATION PAYMENTS AND BENEFITS. In return for entering into this Agreement,
Xxxxxxx will receive the following:
A. The Company will, on or about eighteen (18) days following Xxxxxxx'x
signing of this Agreement, pay Xxxxxxx a xxxxx lump sum payment of
Thirty Seven Thousand and No/100 Dollars ($37,000.00).
B. For the period of June 20,2003 through August 3 1,2003 (the "Premium
Payment Period"), the Company will pay the monthly health, dental and
life insurance premiums for Xxxxxxx to continue his insurance under the
Company's group plans subject to these plans' eligibility requirements.
The Premium Payment Period shall run concurrently with Xxxxxxx'x COBRA
and state benefits continuation period. In order to receive the
benefits described in this Paragraph 2(B), Xxxxxxx must execute all
documentation necessary to elect insurance continuation. Xxxxxxx agrees
he has received appropriate notice regarding his benefits continuation
rights.
All of the above will be subject to deductions that the Company is obligated, or
believes in good faith it is obligated, by law to deduct. No tax representations
have been made to Xxxxxxx.
Xxxxxxx will receive the foregoing only if he signs this Agreement and does not
cancel it within the fifteen (15) calendar days described below under
"Opportunity to Rescind." If he chooses to cancel this Agreement, he shall not
be entitled to any of the payments or benefits described in this Agreement.
3. CONSULTING RELATIONSHIP. As further consideration for Xxxxxxx entering into
this Agreement, Xxxxxxx and the Company agree to the following consulting
arrangement and payments.
3.1 CONSULTATION SERVICES. Beginning July 1,2003, and continuing for
five (5) months through November 30,2003 (the "Consultation Period"), Xxxxxxx
agrees to provide consulting services to the Company as may be requested by the
Company. Such consulting services may include, but are not limited to, reviewing
the Company's financial statements, assisting in the Company's preparation of
its SEC quarterly and annual filings, negotiating lease transactions, assisting
with the Company's transition following the hiring of a Chief Financial Officer,
and other consulting services that may be requested by the Company.
Xxxxxxx agrees to use his best efforts in providing such consultation
services to the Company, and shall comply with all reasonable requests for said
consultation by the Company. The Company will have the right to immediately
terminate its consulting relationship with Xxxxxxx if it determines that he is
not using his best efforts to provide and perform his consulting services for
the Company.
3.2 CONSULTATION PAYMENTS. For the Consultation Period, provided that
the consulting relationship has continued, the Company shall pay Xxxxxxx a
monthly consulting fee on or before the 10th day of the month following the
month for which services were rendered in the amount of Fourteen Thousand Four
Hundred Twenty Five and No/100 Dollars ($14,425.00).
The Company agrees that it will reimburse Xxxxxxx for reasonable
expenses that he incurs as a result of providing consulting services to the
Company, such as travel expenses, provided that Xxxxxxx obtains the Company's
advance approval before incurring such expenses and provided that Xxxxxxx
submits documentation to the Company verifying such expenses, including but not
limited to original receipts, within forty-five (45) days of incurring the
expense.
The Company shall issue a Form 1099 with respect to such consultation
payments, and Xxxxxxx understands and agrees that he shall be solely responsible
for the payment of any taxes, which he may owe with respect to his receipt of
such consultation payments. Xxxxxxx acknowledges and agrees that he has neither
received nor relied upon any advice or representations of the Company or its
legal counsel concerning the taxability of the consulting payments.
3.3 CONSULTATION PERIOD COMPLETION AND RELEASE AGREEMENT. Upon
Xxxxxxx'x completion of the consulting services to be provided during the
Consultation Period, and contingent upon him entering into a release agreement
prepared by and in a form acceptable to the Company, the Company shall pay
Xxxxxxx the sum of Fourteen Thousand Four Hundred Twenty Five and No/100 Dollars
($14,425.00) as consideration for his execution of such release agreement.
3.4 INDEPENDENT CONTRACTOR STATUS. Xxxxxxx understands and agrees that
he will be an independent contractor and not an employee of the Company during
the Consultation Period. Xxxxxxx understands that he will not be treated as an
employee of the Company for federal or state tax purposes, and that he will not
be eligible for or participate in any pension, health, workers compensation or
other fringe benefit plans provided by the Company to its employees. Xxxxxxx
agrees that he shall not hold himself out as an employee of the Company, or as
having the power or authority to incur any debt, obligation or liability on
behalf of the Company. The Company will not control or direct the details,
manner or means by which Xxxxxxx executes his obligations and responsibilities
with respect to the consulting services described in this Agreement. Unless
otherwise prohibited under this Agreement or any other agreement, Xxxxxxx shall
have the right to provide additional services to any other person when not
performing his responsibilities under this Agreement.
3.5 CONDITION OF RELATIONSHIP. Xxxxxxx understands and agrees that he
shall receive the foregoing consulting arrangement and payments only if he signs
this Agreement and does not
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rescind the Agreement within the fifteen (15) calendar days described below
under "Opportunity to Rescind."
4. REPAYMENT OF PROMISSORY NOTE. Xxxxxxx shall be obligated to pay the Company
the total amount that Xxxxxxx owes to the Company under his Promissory Note,
dated April 2,200 1, as amended on July 17,2002 (the "Note"). During the
Consultation Period and following his execution of the release agreement
contemplated by Section 3.3, Xxxxxxx shall make payments on the Note by making
installment payments to the Company in the amount of Nine Thousand One Hundred
Sixty Six and 66/100 Dollars ($9,166.66) each immediately upon his receipt of
each payment he receives from the Company under Sections 3.2 and 3.3 of this
Agreement until the Note has been paid in full. In the event that Xxxxxxx has
not paid the Note in full after making the payments required by this Section 4,
Xxxxxxx shall be obligated to pay any remaining amount owed under the Note in
accordance with the terms of the Note. A true and correct copy of the Note is
incorporated herein and attached hereto as Exhibit A to this Agreement.
5. STOCK OPTIONS. All stock options that have been granted to Xxxxxxx by the
Company shall be governed by the terms of the Company's stock option agreements
with Xxxxxxx, a copy of which agreements are attached hereto and incorporated
herein as Exhibit B, and the applicable stock option plans.
6. NO OTHER BENEFITS. Except as set forth in this Agreement, Xxxxxxx shall
receive no other benefits and shall no longer participate in the Company's
benefit plans except as required by benefits continuation laws. All of Xxxxxxx'x
rights shall be governed by the terms of such plans. The Company has provided
Xxxxxxx applicable summary plan descriptions for its plans.
7. SURVIVAL OF HEI NONDISCLOSURE AND NONCOMPETE AGREEMENT. Xxxxxxx agrees that,
in consideration of his past employment with the Company and the payments and
benefits to be provided to him under this Agreement, his various obligations
under the HE1 Nondisclosure and Noncompete Agreement between him and the
Company, signed by Xxxxxxx on January 20, 1999, shall survive his resignation
from his employment and positions with the Company and that he is and shall
remain bound by the provisions of that agreement. A copy of the HE1
Nondisclosure and Noncompete Agreement is incorporated herein and attached
hereto as Exhibit C to this Agreement.
8. RELEASE OF CLAIMS.
8.1 XXXXXXX'X RELEASE OF CLAIMS. Xxxxxxx agrees he is receiving pay and
benefits under this Agreement that he would not otherwise be entitled to receive
and that are adequate and sufficient consideration for this Agreement. In return
for this pay and benefits, Xxxxxxx, for himself and on behalf of all of his
past, present and future heirs, executors, administrators, agents, attorneys,
insurers, subrogees, lienors, trustees, indemnitors, principals, servants,
representatives, employees, partners, predecessors, successors and assigns,
hereby releases the Company, its subsidiaries and any affiliated companies,
businesses or entities and all of their respective current and former officers,
agents, directors, employees, independent contractors, shareholders, attorneys,
accountants, insurers, representatives, predecessors, successors and assigns,
both individually and in any representative capacity (collectively, the
"Released Parties"), from each and every legal claim or demand of any kind,
whether known or unknown,
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existing at any time up to and including the date of this Agreement, including
without limitation any claim or demand (a) in any way arising out of or related
to any action, conduct, decision or omission taking place during his employment
with the Company or its affiliates, (b) in any way arising out of or related to
his service as an officer, director, committee member or employee, or his
service in any other capacity with the Company or its affiliates or in any way
arising out of related to any oral or written agreement between him and the
Company related to or entered into during such service (other than the stock
option agreements attached hereto as Exhibit B), (c) in any way arising out of
or related to his separation from that employment or service with the Company or
its affiliates, (d) in any way arising out of or related to his status as a
shareholder of the Company, or (e) in any way arising out of or related to his
contact with or engagement of any of the Released Parties.
Xxxxxxx understands and agrees that this Agreement is a full, final and
complete settlement and release of the Released Parties of all his claims,
whether known or unknown, including but not limited to any claims or rights he
may have under the Employment Retirement Income Security Act, 29 U.S.C.
Section 1001 et. seq., the Minnesota Human Rights Act, Minn. Stat. Chapter 363,
Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000e,
et. seq., the Age Discrimination in Employment Act of 1967,29 U.S.C. Section 626
et. seq., the Americans with Disabilities Act, 42 U.S.C. Section 12101, et.
seq., The Family and Medical Leave Act, 29 U.S.C. Section 2601 et. seq., the
Minnesota Employment, Wages, Conditions, Hours, and Restrictions Laws, Minn.
Stat. Chapter 181, the Minnesota Whistleblower Act, Minn. Stat. Section 181.932,
Minnesota Worker's Compensation statute Minn. Stat. Section 176.82, the Fair
Labor Standards Act, 29 U.S.C. Section 201 et. seq., the Equal Pay Act, 29
U.S.C. Section 206 et. seq., the National Labor Relations Act, 29 U.S.C. Section
1501 et. seq., the Minnesota Business Corporations Act, Chapter 302A, and any
other federal, states', or local governments' laws and regulations or any
executive orders governing employment, service as an officer or director of a
corporation, corporate governance, or shareholder matters. Xxxxxxx further
understands and agrees that he is releasing any claims he may have, whether
known or unknown, for payment of compensation or benefits of any kind, fraud or
misrepresentation, promissory estoppel, wrongful or constructive discharge,
defamation, invasion of privacy, breach of covenant of good faith and fair
dealing, reprisal or retaliation, breach of contract (including but not limited
to the HE1 Nondisclosure and Noncompete Agreement), unjust enrichment,
negligence, negligent hiring, supervision and retention, intentional or
negligent infliction of emotional distress, and any other claims arising under
any law. Xxxxxxx agrees that if any claim he releases in this Agreement is
prosecuted in his name before any court or administrative agency, he will waive
any benefits he obtained through such prosecution and will not take any award of
money or other damages from such suit.
Xxxxxxx represents and warrants that the pay and benefits he is
receiving under this Agreement fully compensates him for any and all claims
against the Released Parties.
Notwithstanding the foregoing, this Agreement does not release any
rights or claims Xxxxxxx may have under the Minnesota Human Rights Act or the
Age Discrimination in Employment Act or any of the Company's benefit plans,
which arise after he signs this Agreement or which arise from acts occurring
after he signs this Agreement, or any claims he may have under applicable law or
any Company insurance policy for defense, indemnification and/or contribution
with respect to claims made against him in connection with his conduct in the
scope of his employment with or services as a director of the Company.
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8.2 THE COMPANY'S RELEASE OF ANY KNOWN CLAIMS. In return for Xxxxxxx
entering into this Agreement, the Company, on behalf of itself and its
subsidiaries and any affiliated companies, businesses or entities, hereby
releases Xxxxxxx from each and every legal claim or demand of any kind of which
the Company's Board of Directors, other than Xxxxxxx Xxxx, has actual knowledge
as of the Effective Date of this Agreement including without limitation any such
known claim or demand (a) in any way arising out of or related to any action,
conduct, decision or omission taking place during Xxxxxxx'x employment with the
Company or its affiliates, or (b) in any way arising out of or related to his
separation from that employment.
The Company represents and warrants that Xxxxxxx'x entering into this
Agreement fully compensates the Company for its above release of claims.
9. NO FUTURE LAWSUITS.
X. Xxxxxxx, for himself and on behalf of all of his past, present and
future heirs, executors, administrators, agents, attorneys, insurers,
subrogees, lienors, trustees, indemnitors, principals, servants,
representatives, employees, partners, predecessors, successors and
assigns, hereby agrees never to commence an action or to authorize
anyone else to commence an action against the Released Parties with
respect to any matters released in this Agreement. If Xxxxxxx breaches
this Agreement, he shall pay the Released Parties' reasonable
attorneys' fees, disbursements and costs in connection with such
action. Xxxxxxx agrees that if such an action is commenced that the
filing of this Agreement shall constitute sufficient and adequate
evidence that any such action should be dismissed with prejudice and
that costs, disbursements and attorneys' fees should be awarded to such
Release Parties.
X. Xxxxxxx further agrees not to voluntarily aid, assist or cooperate
with any claimants, plaintiffs, adverse parties or their attorneys or
agents in any claims or lawsuits commenced against any of the Released
Parties; provided, however, that nothing in this Agreement shall
prevent Xxxxxxx from testifying in response to a lawfully issued
subpoena in any litigation or other legal proceeding involving any of
the Released Parties. In the event that Xxxxxxx receives a subpoena
from a party other than the Company, Xxxxxxx shall promptly notify the
Company and provide it with a copy of the subpoena so that the Company
has an opportunity to seek to quash or otherwise respond to the
subpoena. This provision is not intended to affect the substance of any
testimony that Xxxxxxx is required to provide. Rather, Xxxxxxx agrees
to provide truthful testimony in full compliance with all applicable
laws.
10. NONDISPARAGEMENT. Xxxxxxx will not, directly or indirectly, at any time,
make any disparaging remark, either oral or in writing, regarding any of the
Released Parties.
11. LITIGATION. In the event that any litigation or action arises in which the
Company deems Xxxxxxx'x testimony or participation to be relevant or necessary,
Xxxxxxx agrees to cooperate with the Company in connection with the litigation
or action, by providing testimony, through affidavit, in a deposition or at
trial, or otherwise assisting the Company with respect to the litigation or
action. The Company agrees that it will reimburse Xxxxxxx for any reasonable
expenses, such as travel expenses, that he incurs in connection with such
cooperation provided
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that Xxxxxxx submits documentation to the Company verifying such expenses,
including but not limited to original receipts, within forty-five (45) days of
incurring the expense. This provision is not intended to affect the substance of
any testimony that Xxxxxxx is asked to provide. Rather, Xxxxxxx agrees to
provide truthful testimony and to otherwise assist the Company in light of and
in full compliance with all applicable laws.
12. CONSULTATION. In the event that any questions arise following the Consulting
Period with regard to any information or subject that Xxxxxxx developed, of
which he had knowledge or with which he was otherwise involved during the period
of his various positions with the Company, he agrees to cooperate with and
respond to any request by the Company for advice, opinions or other information
responsive to the question posed.
13. CONFIDENTIALITY OF TERMS. The parties agree that this Agreement and its
terms shall remain completely confidential, and that they shall share them with
no one before or after signing this Agreement, except that (a) Xxxxxxx may
disclose this Agreement and its terms to his financial advisors and accountants,
attorneys, and appropriate governmental agencies, and (b) the Company may
disclose this Agreement and its terms to its financial advisors and accountants,
insurers, and attorneys, or to its officers, directors or employees with a need
to know such information in the course of their duties for the Company. In
addition, the Released Parties may disclose this Agreement and its terms to the
extent required by any law or regulation or any applicable stock exchange rules,
or in the event Xxxxxxx violates this Agreement.
Xxxxxxx recognizes that if he violates his confidentiality obligations under
this Agreement, irreparable damage will result to the Company that could not be
adequately remedied by monetary damages. As a result, he agrees that in the
event of any such breach, or in the event of apparent danger of such breach, the
Company shall be entitled, in addition to any other legal or equitable remedies
available to the Company, to an injunction to restrain the violation of any and
all portions of this Agreement and to its reasonable attorney's fees and costs
in enforcing this Agreement.
14. RETURN OF PROPERTY. Xxxxxxx warrants that he has returned the originals and
all copies of all Company files, documents, software, hardware, keys, credit
cards, office equipment, and all other Company property in his possession or
under his control. However, if he should locate any Company property after he
signs this Agreement, he shall promptly return said property.
Notwithstanding the foregoing, the Company agrees that Xxxxxxx may keep the
Company-owned desk top computer, mouse, and keyboard in Xxxxxxx'x possession.
15. PERIOD FOR REVIEW AND CONSIDERATION. Xxxxxxx understands that he has been
given a period of 21 days to review and consider this Agreement before signing
it. He further understands that he may use as much of this 21-day period as he
wishes prior to signing this Agreement.
16. OPPORTUNITY TO RESCIND. Xxxxxxx may cancel this Agreement for any reason
within fifteen (15) days after signing it. If he decides to do so and to mail
his notice of cancellation, Xxxxxxx understands that it must be postmarked
within the fifteen (15) day period and addressed to Xxxx Xxxxxxx at HE1 and sent
by certified mail, return receipt requested.
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17. OPPORTUNITY TO CONSULT. Xxxxxxx agrees that he has been advised by the
Company to seek the advice of an attorney of his choosing prior to signing this
Agreement.
18. COMPLETE AGREEMENT. This Agreement and its exhibits incorporated herein
contain the entire agreement between the parties, and there are no other written
or oral agreements.
19. MISCELLANEOUS.
A. LAW AND VENUE. This Agreement will be construed and interpreted in
accordance with the laws of the state of Minnesota, without regard to its choice
of law provisions, and any action arising out of related to this Agreement shall
be brought only within the state of Minnesota whether or not that forum is then
convenient to Xxxxxxx.
B. NO ADMISSION. Nothing contained in this Agreement is to be construed
by anyone as an admission that the Company has violated any law or engaged in
any wrongdoing. In fact, the Company denies any wrongdoing of any kind.
C. SEVERABILITY. In the event that any paragraph or provision of this
Agreement is found to be illegal or unenforceable, it shall not affect the
validity or enforceability of the remaining provisions. To the extent that any
provision of this Agreement is unenforceable because it is overbroad, that
provision shall be limited to the extent required by applicable law and enforced
as so limited.
D. INTENDED THIRD-PARTY BENEFICIARIES. The Released Parties are
intended third party beneficiaries of this Agreement.
20. SIGNATURE. The parties agree that they have read this Agreement, know its
contents and have signed it as a free and voluntary act after having had
adequate opportunity to consider its terms and conditions and consult with an
attorney of their choosing.
Date:
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XXXXX X. XXXXXXX, XX.
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Date: HEI, Inc.
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By
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Its
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