EXHIBIT 10.1
SEPARATION AGREEMENT
This Separation Agreement ("Agreement") is entered into by and between
Xxxxx X. Xxxxxx ("Xxxxxx") and Rehabilicare Inc. ("Rehabilicare").
WHEREAS, Xx. Xxxxxx has served as Chief Executive Officer of
Rehabilicare and is hereby separating from employment with Rehabilicare; and
WHEREAS, Xx. Xxxxxx and Rehabilicare desire to fully and finally settle
all issues, differences and actual and potential claims between them, including,
but in no way limited to, any claim that might arise out of Xx. Xxxxxx'x
employment with Rehabilicare or his separation therefrom;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, Xx. Xxxxxx and Rehabilicare agree as follows:
1. RESIGNATION. Xx. Xxxxxx represents, understands and agrees that his
employment with Rehabilicare is hereby terminated, with his last day of service
to Rehabilicare to be March 31, 2002. Effective as of that date, Xx. Xxxxxx
hereby resigns all positions as an officer or director of Rehabilicare and any
of its subsidiaries, or trustee or administrator of benefit plans of
Rehabilicare and any of its subsidiaries.
2. SEVERANCE COMPENSATION. In exchange for the agreement of Xx. Xxxxxx
in paragraph 6 below, Rehabilicare agrees to:
(a) provide Xx. Xxxxxx with a continuation of his current salary for a
period of eighteen months, ending September 30, 2003 (Xx. Xxxxxx'x continuing
salary to be paid pursuant to Rehabilicare's normal payroll practices, subject
to customary withholding and deductions);
(b) provide health, dental, life and disability insurance, and other
similar executive benefits for Xx. Xxxxxx through the date with respect to each
such benefits that is the earlier of September 30, 2003 or the date that Xx.
Xxxxxx has obtained other full-time employment which provides a replacement
benefit or benefits of equivalent type and value;
(c) provide Xx. Xxxxxx with additional compensation, representing the
parties' estimate of the bonus Xx. Xxxxxx would have achieved if he had remained
with Rehabilicare through June 30, 2002 and Rehabilicare had met its targeted
performance for the fiscal year ending June 30, 2002, but prorated for 9 months
service, in the amount of $86,000, payable in equal installments on a monthly
basis from April 1, 2003 through September 30, 2003, subject to customary
withholding and deductions;
(d) pay to Xx. Xxxxxx, promptly after expiration of the rescission
period set forth in paragraph 7 below, vacation pay totaling $19,599;
(e) accept as repayment of the outstanding balance of that certain
promissory note dated October 2000 in original principal amount of $210,417 (the
"Note"), the number of shares of Rehabilicare common stock as is equal to the
outstanding principal balance of the Note, plus accrued interest as of March 31,
2001, divided by the average trading price over the ten trading days preceding
March 31, 2002;
(f) transfer, and by execution of this Agreement does hereby transfer,
title to the laptop computer and facsimile machine purchased by Rehabilicare on
Xx. Xxxxxx'x behalf and maintained at Xx. Xxxxxx'x home; and
(g) pay all amounts payable under Rehabilicare's 401K plan pursuant to,
and at the time and in the manner specified in such Plan through March 31, 2002.
Xx. Xxxxxx and Rehabilicare agree that Rehabilicare shall promptly calculate and
inform Xx. Xxxxxx of the number of shares determined in accordance with
paragraph (d) above and inform Xx. Xxxxxx within three business days of the date
of this Agreement. Unless Xx. Xxxxxx disputes such calculation, Xx. Xxxxxx and
Rehabilicare agree that Rehabilicare may surrender to Xxxxx Fargo Bank
Minnesota, its transfer agent, the certificate or certificates representing the
shares of Rehabilicare's common stock pledged to secure the Note (the "Pledged
Shares") for cancellation of the shares so calculated and that Rehabilicare
shall direct the transfer agent to reissue to Xx. Xxxxxx, a certificate
representing the balance of the Pledged Shares not cancelled and shall deliver
to Xx. Xxxxxx the original Note appropriately marked cancelled and paid in full.
Xx. Xxxxxx agrees to execute such documents reasonably requested by Rehabilicare
as are necessary to complete the surrender and cancellation of such shares
3. NO OTHER COMPENSATION. All other items of compensation not mentioned
in paragraph 2 have been resolved, and Xx. Xxxxxx shall have no other claim to
any other items of compensation or benefits.
4. CONSIDERATION. Xx. Xxxxxx agrees that he was not entitled to all of
the payments and benefits outlined in paragraph 2 as a result of his employment
with Rehabilicare, but that the payments and benefits are being provided as
consideration for his acceptance and execution of this Agreement.
5. INDEMNITY. Rehabilicare hereby agrees to indemnify Xx. Xxxxxx to the
fullest extent permitted by Minnesota Statutes Section 302A.521 for any
proceeding resulting from Xx. Xxxxxx'x official capacity while an employee of
Rehabilicare. Rehabilicare agrees that such indemnity shall apply to disputes
arising out of or resulting from any matter, fact or thing occurring prior to
March 31, 2002 even though commenced after such date.
6. RELEASE.
(a) As an essential inducement to Rehabilicare to enter into this
Agreement, and as consideration for the foregoing promises of Rehabilicare, Xx.
Xxxxxx hereby releases and discharges Rehabilicare, its officers, employees,
agents, assigns, insurers, representatives, counsel, administrators, successors,
shareholders, and/or directors from all liability for damages or claims of any
kind and agrees not to institute any claim for damages or otherwise, by charge
or otherwise, nor authorize any other party, governmental or otherwise, to
institute any claim seeking damages on his behalf via administrative or legal
proceedings against Rehabilicare for any claims including, but not limited to,
any claims arising under or based upon the Minnesota Human Rights Act, Minn.
Stat. ss.ss.363.01 et seq.; Title VII of the Civil Rights Act, 42
U.S.C.ss.ss.2000e et seq.; the Age Discrimination in Employment Act, 29
U.S.C.ss.ss.621 et seq.; or the Americans With Disabilities Act, 42
U.S.C.ss.ss.12101 et seq.; and any other statutory, contract, quasi contract, or
tort claims, whether developed or undeveloped, arising from or related to Xx.
Xxxxxx'x employment with Rehabilicare, and/or the cessation of Xx. Xxxxxx'x
employment with Rehabilicare. Xx. Xxxxxx and Rehabilicare agree that, by signing
this Agreement, Xx. Xxxxxx does not waive any claims arising after the execution
of this Agreement.
(b) Except to the extent otherwise prohibited by applicable law or
regulation, Rehabilicare hereby releases and discharges Xx. Xxxxxx from any and
all liability for damages or claims of any kind, and agrees not to institute any
claim for damages or otherwise, by charge or otherwise against Kaysen for any
claims, including, but not limited to any statutory, contract, quasi contract,
or tort claims, whether developed or undeveloped, arising from or related to Xx.
Xxxxxx'x employment with Rehabilicare, and/or the cessation of Xx. Xxxxxx'x
employment with Rehabilicare, except to the extent such claims or liability
arise out of conduct by Kaysen with respect to which he would not be permitted
indemnity under Minnesota Law. Xx. Xxxxxx and Rehabilicare agree that, by
signing this Agreement, Rehabilicare does not waive any claims arising after the
execution of this Agreement.
7. CONSIDERATION PERIOD; RIGHT TO RESCIND; ACKNOWLEDGMENT OF EXECUTIVE.
Xx. Xxxxxx is also hereby informed that the terms of this Agreement shall be
open for acceptance by him for a period of twenty-one (21) days during which
time he may consider whether to accept this Agreement.
Xx. Xxxxxx is hereby informed of his right to rescind this Agreement as
far as it extends to potential claims under Minn. Stat.ss.ss.363.01 et seq. by
written notice to Rehabilicare within fifteen (15) calendar days following his
execution of this Agreement. To be effective, such written notice must either be
delivered by hand or sent by certified mail, return receipt requested, addressed
to: Chief Financial Officer, Rehabilicare Inc., 0000 Xxx Xxxxxxx 0, Xxx
Xxxxxxxx, XX 00000, delivered or post-marked within such fifteen (15) day
period. Xx. Xxxxxx understands that Rehabilicare will have no obligations under
this Agreement in the event such notice is timely delivered and that any
payments made as of that date by Rehabilicare pursuant to paragraph 2, above,
shall be immediately repaid by Xx. Xxxxxx to Rehabilicare.
Xx. Xxxxxx is hereby informed of his right to revoke this Agreement as
far as it extends to potential claims under the Age Discrimination in Employment
Act, 29 U.S.C.ss.ss.621 et seq. by informing Rehabilicare of his intent to
revoke this Agreement within seven (7) calendar days following his execution of
this Agreement, addressed to: Chief Financial Officer, Rehabilicare Inc., 0000
Xxx Xxxxxxx 0, Xxx Xxxxxxxx, XX 00000. Xx. Xxxxxx understands that Rehabilicare
will have no obligations under this Agreement in the event such notice is timely
delivered and that any payments made as of that date by Rehabilicare pursuant to
paragraph 2, above, shall be immediately repaid by Xx. Xxxxxx to Rehabilicare.
8. NONCOMPETITION AGREEMENT. Xx. Xxxxxx hereby acknowledges his
continuing obligations under that certain Employee Non-Disclosure Agreement
dated as of March 16, 1992 (the "Nondisclosure Agreement"), except that the
noncompetition and nonsoliciation period contained in sixth full paragraph of
such Nondisclosure Agreement is hereby modified to extend only for a period of
eighteen months after March 31, 2002, expiring on September 30, 2003. With that
sole exception, the Nondisclosure Agreement shall remain fully enforceable in
accordance with its terms.
9. CONFIDENTIALITY. The terms of this Agreement shall remain strictly
confidential between the parties hereto, and shall not be disclosed to third
persons; provided, however, that Xx. Xxxxxx may disclose such terms to his
spouse and that the parties may disclose the terms to their respective legal
counsel, accountants and financial advisors so long as such counsel, accountants
and advisors agree to maintain the confidentiality thereof and provided further
that such terms may be disclosed where compelled by judicial process, by the
rules and regulations of the Securities and Exchange Commission or by the
Internal Revenue Service or other appropriate agency, or in any proceedings in
which one of the parties hereto alleges a breach of, or seeks the enforcement
of, this Agreement.
10. RETURN OF RECORDS. By April 30, 2002, Xx. Xxxxxx shall deliver to
Rehabilicare all records, manuals, books, blank forms, documents, letters,
memoranda, notes, notebooks, reports, data, tables, calculations or copies
thereof, which are the property of Rehabilicare or the Bank or which relate in
any way to the business, products, practices or techniques of Rehabilicare , and
all other property, trade secrets and confidential information of Rehabilicare,
including, but not limited to, all documents which in whole or in part contain
any trade secrets or confidential information of the Rehabilicare, which in any
of these cases are in his possession or under his control.
11. DISPARAGEMENT. Xx. Xxxxxx agrees that he will refrain from making
any statements, whether written or oral, which are disparaging of Rehabilicare,
its directors, officers, employees, agents, or representatives and Rehabilicare
agrees that it, through its directors and officers, will refrain, and will use
best efforts to cause its employees and agents to refrain, from making any
statements, whether written or oral, that are disparaging of Xx. Xxxxxx.
12. NO ADMISSION. This Agreement shall not in any way be construed as
an admission by Rehabilicare that it has acted wrongfully with respect to Xx.
Xxxxxx or any other person, or that Xx. Xxxxxx has any rights whatsoever against
Rehabilicare. Rehabilicare specifically disclaims any liability to, or wrongful
acts against, Xx. Xxxxxx or any other person, on the part of itself, its
directors, its officers, its employees, its representatives or its agents.
13. REMEDIES.
(a) THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR STATE COURT
SITTING IN HENNEPIN COUNTY, MINNESOTA AND EACH PARTY CONSENTS TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN
SUCH FORUM IS NOT CONVENIENT. EACH PARTY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. The parties agree that the
costs and expenses of any litigation commenced with respect to this Agreement
shall be borne by the party against which judgment is entered, and in the event
judgment is entered against both parties, in proportion to the relative amounts
of such judgments.
(b) Both parties acknowledge that violation of certain provisions of
this Agreement and the Nondisclosure Agreement, including but not limited to
paragraphs 8, 9, 10, 11 and 12 of this Agreement, may result in damages that are
not compensable by monetary damage rewards alone. Accordingly, the parties agree
that, in addition to any other remedies available, the parties shall be entitled
to temporary and injunctive relief to enforce the provisions of this Agreement
and that such relief may be granted without the necessity of proving actual
damages. Such injunctive relief shall not be an exclusive remedy or in any way
limit its right to claim and recover additional damages.
14. MISCELLANEOUS.
(a) Entire Agreement. This Agreement, together with the Nondisclosure
Agreement, contains the entire agreement of the parties with respect to the
subject matter hereof. Xx. Xxxxxx hereby affirms that his rights to payments or
benefits from Rehabilicare are specified exclusively and completely in this
Agreement and the
Nondisclosure Agreement. Any modification of, or addition to, this Agreement
must be in writing, signed by Rehabilicare and Xx. Xxxxxx.
(b) Nonassignable. This Agreement is personal to Xx. Xxxxxx and may not
be assigned by Xx. Xxxxxx without the written agreement of Rehabilicare.
(c) Severability. This Agreement constitutes a contract enforceable
against either party and shall be construed and enforced in accordance with the
laws of the State of Minnesota. Nothing contained in this Agreement is intended
to violate any applicable law. If any part of this Agreement is construed to be
in violation of a state and/or federal law, then that part shall be null and
void, but the balance of the provisions of this Agreement shall remain in full
force and effect.
(d) Consultation. Xx. Xxxxxx hereby affirms and acknowledges that he
has read the foregoing Agreement, that he has hereby been advised to consult
with an attorney prior to signing this Agreement, and that he has done so. Xx.
Xxxxxx agrees that the provisions set forth in this Agreement are written in
language understandable to him and further affirms that he understands the
meaning of the terms of this Agreement and their effect. Xx. Xxxxxx represents
that he enters into this Agreement freely and voluntarily.
(e) Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(f) Counterparts. This Agreement may be executed in separate
counterparts, each of which will be an original and all of which taken together
shall constitute one and the same agreement, and any party hereto may execute
this Agreement by signing any such counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement by their signatures
below.
Dated: March 31, 2002 /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Dated: March 31, 2002 REHABILICARE INC.
By /s/ Xxxx H.P. Xxxxx
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Xxxx H. P. Xxxxx
Chairman
