SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement") is made and entered into this 28th
day of June, 2001 (the "Effective Date"), by and between Westell, Inc., an
Illinois corporation (the "Company"), and X. Xxx Xxxxxxx (the "Executive").
ARTICLE 1. DEFINED TERMS
For the purposes of this Agreement, the following terms shall have the
following assigned meanings:
"Board" - means the board of directors of the Company.
"Business" - means means the design, development, manufacture
and sale of DSL modem, broadband products and
telco access products and related services of
the Company, the Parent and its other
subsidaries as they exist or are being developed
on the date hereof, extensions of those products
and services during Executive's employment and
new products and services commenced or in
development during his employment (except for
the teleconferencing business of Conference
Plus, Inc.).
"Cause" - means termination of Executive's employment by
the Company because of: (i) the continued
failure of the Executive to comply timely (when
action is required in the interest of the
Westell Companies or their commitments), with
specific directions of the Board after a cure
period determined by the Board, as communicated
in a written notice from the Board or
appropriate senior officer, which notifies him
of the specific failure to comply; or the taking
of any action contrary to specific direction of
the Board, or (ii) failure to comply with
written policies of the Company regarding
expenditure authority or otherwise, or iii) the
engaging by the Executive in willful, reckless
or grossly negligent misconduct which, in the
good faith determination of the Board, is
materially injurious to the Westell Companies,
their clients or their reputations, monetarily
or otherwise, or (iv) the aiding or abetting a
competitor or other breach by the Executive of
his fiduciary duty of loyalty to the Company; or
(v) a breach (other than an immaterial
-1-
and inadvertent breach) by Executive of his
obligations of confidentiality or nondisclosure
or (if applicable) any breach of his obligations
of noncompetition or nonsolicitation under any
written agreement in effect between Executive
and the Westell Companies; or (vi) unlawful use
or possession of illegal drugs on the Company's
premises; or (vii) conviction of Executive or
pleading guilty or no contest to any felony or
crime involving moral turpitude.
"Company" - means, subject to section 4.2, (i) Westell,
Inc., an Illinois corporation, (ii) any parent,
subsidiary or sister company of Westell, Inc.
that employs Executive during the Term and (iii)
any purchaser of the business and assets of
Westell, Inc., or such subsidiary or sister
company, that assumes the obligations of the
"Company" under this Agreement.
"Disability" - means a disability that entitles Executive to
benefits under the Company's long term
disability insurance plan, but only after
expiration of all waiting periods.
"Entity" - means any business, whether a corporation,
partnership, sole proprietorship, limited
liability company, joint venture or other
entity.
"Good Reason" - means:
(i) without the Executive's written approval,
the Company reduces the Executive's base
salary (as it may be increased from time to
time), unless such reduction is in
connection with a change in the salary
structure commensurate, in the good faith
determination of the Board, with changes in
salary for other executives of the Company
generally (but, if occurring after a sale or
merger of the Company to or with another
entity or, if occurring after employment of
Executive by an entity which has purchased
Company assets, only if commensurate, in the
good faith determination of the board of
such entity, with changes in salary for
other executives of such entity; or
(ii) without the Executive's written approval,
the Company makes a material reduction in
Executive's responsibilities listed on
Exhibit
-2-
A hereto (which shall not necessarily be
indicated by a change in title); or
(iii) without the Executive's written approval,
the Company makes a change in Executive's
principal place of employment of more than
35 miles farther from Executive's then
principal residence.
"Participate In" - means the having of any direct or indirect
interest in any Entity, whether as a partner,
shareholder, member, operator, sole proprietor,
agent, representative, independent contractor,
consultant, franchiser, franchisee, joint
venturer, owner or otherwise, or the rendering
of any direct or indirect service or assistance
to any Entity (whether as a director, officer,
manager, supervisor, employee, agent, consultant
or otherwise); provided that the term
"Participate In" shall not include the mere
ownership of less than 5% of the stock of a
publicly-held corporation whose stock is traded
on a national securities exchange or in the
over-the-counter market.
"Restricted Period" - means the period commencing on the date of any
termination of Executive's employment with the
Company and expiring 24 months thereafter.
"Severance Pay" - means payment at the rate of $300,000 per annum,
payable in installments over the two years
following termination at the times Executive's
base salary would have been paid if Executive's
employment had not terminated.
"Term" - means the period commencing on the Effective
Date and expiring two years thereafter.
"Termination Notice" means a written notice which shall indicate the
specific termination provisions of this
Agreement upon which the Company relies in
effecting such termination. For purposes of this
Agreement, no such purported termination by the
Company shall be effective without Termination
Notice.
"Westell Companies" means Westell Technologies, Inc., all of its
subsidiary companies, and any of them.
ARTICLE 2. SEVERANCE PAY
-3-
2.1 Termination with Severance Pay. The Company may at any time terminate
Executive's employment without cause or reason, by delivery to Executive of a
Termination Notice. Subject to section 2.3, and provided Executive is not in
breach of any of his obligations hereunder, Executive shall be entitled to
Severance Pay upon execution of a general release of the Westell Companies in
the form of Exhibit B hereto, if, during the Term, (i) the Company terminates
Executive's employment without Cause or (ii) the Executive resigns his position
for Good Reason. The Executive's employment shall not be deemed to have been
terminated if, in connection with a sale of assets and/or business of the
Company, the Executive is offered employment by the purchaser for at the least
the same equivalent total cash compensation (base salary plus cash short term
incentives) which does not require (without Executive's written approval)
changes described in clauses (ii) or (iii) of the definition of "Good Reason, "
including but not limited to any subordination of his duties set forth on
Exhibit A. Notwithstanding the foregoing, unless such purchaser assumes the
Company's obligations under this Agreement, the Company shall remain liable to
Executive for Severance Pay upon a subsequent termination of the Executive in
accordance with this section 2.1, within 12 months following the sale.
2.2 Termination without Severance Pay. The Company may at any time terminate the
Executive for Cause, effective upon delivery to the Executive of a Termination
Notice. Executive shall not be entitled to Severance Pay if the Executive dies,
resigns his position for other than Good Reason, does not accept employment
described in the third sentence of Section 2.1, or is terminated by the Company
for Cause or at a time that there exists Disability. Subject to applicable law,
the Company may terminate the Executive for Disability at any time if, within 30
calendar days after the Company delivers a Termination Notice to the Executive,
the Executive has not returned to the full-time performance of the Executive's
essential duties. Notwithstanding the foregoing, if the Company terminates the
Executive at a time that there exists Disability, the Company may, in its sole
discretion, elect to pay Severance Pay to the Executive, in which case Executive
shall be bound by section 3.2.
2.3 Forfeiture of Severance Pay. If Executive shall breach (other than an
immaterial and inadvertent breach) any obligation of confidentiality,
nondisclosure, noncompetition or nonsolicitation under any written agreement in
effect between Executive and the Westell Companies, then in addition to any
rights the Westell Companies have under those agreements to enjoin action and
recover damages, the Company shall be released from any further obligation to
pay Severance Pay to the Executive.
2.4. Accord, Satisfaction, Settlement and Release. Executive agrees, for himself
and for Executive's personal and legal representatives, assigns, executors,
administrators, successors, heirs, distributees, devisees and legatees, that
payment by the Company of Severance Pay to the extent required by this Agreement
shall constitute a full, final and complete accord, satisfaction, settlement and
release of any and all claims and/or suits against, and liabilities of, the
Westell Companies, whether existing as of the Effective Date, or thereafter
arising, that any of the
-4-
foregoing persons may have in connection with Executive's employment with the
Westell Companies.
2.5 No Obligation to Seek Further Employment. Executive shall not be required to
seek other employment in order to be entitled to Severance Payments. In
addition, the securing of other employment (so long as not in violation of his
Article 3 covenants) shall not waive his rights to Severance Payments, nor shall
the amount of any Severance Payment provided hereunder be reduced by any
compensation earned by the Executive by virtue of other employment after the
date of termination of Executive's employment with the Company.
2.6 Effect on Other Contractual Rights. The provisions of this Agreement, and
any payment provided hereunder, shall not reduce any amounts otherwise payable,
or in any way diminish Executive's existing rights to COBRA benefits or vested
benefits under retirement plans of the Westell Companies, but except for stock
option matters, are provided in lieu of any other termination benefits or
severance payment obligations under any policy or practice of the Westell
Companies now or hereafter in effect.
ARTICLE 3. EXECUTIVE COVENANTS
3.1 Confidential Information. Executive acknowledges that the information,
observations and data obtained by him during the course of his employment by the
Company concerning the Business and affairs of the Westell Companies (the
"Westell Company Information") are confidential and are the property of the
Westell Companies. Executive hereby agrees that he shall not disclose to any
unauthorized person or use for his own account or for the account of any third
party any Westell Company Information without the Company's written consent,
unless and then only to the extent the Westell Company Information becomes
generally known to and available for use by the public other than as a result of
Executive's acts or failure to act. Executive shall use his best efforts to
prevent the unauthorized misuse, espionage, loss or theft of the Westell Company
Information. Executive further agrees to deliver to the Company at the
termination of his employment, or at any other time the Company may request in
writing, all memoranda, notes, plans, records, reports and other documents (and
copies thereof) relating to the Business of the Westell Companies that Executive
may then possess or have under his control.
3.2 No Competition. If following termination of Executive's employment with the
Company, Executive is entitled to receive, or in connection with a Disability,
the Company elects to pay, Severance Pay and provide Severance Benefits, then in
consideration for the Severance Pay and Severance Benefits, Executive agrees
that during the Restricted Period, Executive shall not, directly or indirectly,
for himself, or for any Entity, without the prior written consent of the Board
of Directors of Westell Technologies, Inc. through its Chairman (which may be
given or denied in his sole discretion):
-5-
(a) engage in or Participate In the Business or any other business
that directly competes with, or develops or offers products or
services directly competitive with the products or services of
the Business, from Illinois or any state or country in which
the Westell Companies have Business or customers, or have
solicited customers; nor
(b) engage in or Participate In the Business or any other business
that directly competes with, or develops or offers products or
services directly competitive with the products or services of
the Business, from any other location throughout the world;
nor
(c) call upon, solicit, serve, or accept business, from any
customer or prospective customer (wherever located) of the
Westell Companies for the purpose of selling products or
services directly competitive with the products or services of
the Business; nor
(d) interfere with any business relationship of the Westell
Companies, with any of their customers or prospective
customers or induce any such customers or prospective
customers to discontinue or reduce their relationship with the
Westell Companies.
To the extent that Executive is employed by or consults for an
entity which is a subsidiary, division or other affiliate of a larger business
enterprise, the determination as to whether the employment violates this
Section 3.2 shall be made solely by reference to the business activities
conducted by the particular subsidiary, division or affiliate by which
Executive becomes employed or serves as consultant. This Section 3.2 shall not
prohibit Executive from working as employee or consultant for a company or
entity which does not engage in the Business or any other business that
directly competes with, or develops or offers products or services directly
competitive with the products or services of the Business but which is
affiliated with an entity or company which does engage in the Business or any
other business that directly competes with, or develops or offers products or
services directly competitive with the products or services of the Business,
so long as the duties of the position held by Executive do not require him to
directly participate in the Business or any other business that directly
competes with, or develops or offers products or services directly competitive
with the products or services of the Business.
3.3 No Solicitation. Whether or not Executive is entitled to Severance Pay,
Executive shall not, during the Restricted Period: (i) induce or attempt to
induce any person who is employed by the Westell Companies in any capacity to
leave such person's position, or in any way interfere with the relationship
between the Westell Companies and such person, or (ii) hire directly or through
another entity, in any capacity, any person who was employed by the Westell
Companies within 12 months prior to termination of Executive's employment or
during the Restricted Period, unless
-6-
and until such person has been separated from employment with the Westell
Companies for at least six months.
3.5 Inventions. Any methodologies, inventions, improvements, discoveries,
processes, programs or systems developed or discovered by the Executive, whether
during working hours or by using the Companies' facilities, equipment or trade
secrets, shall be the sole and exclusive property of the Company. The Executive
shall, upon reasonable request by the Company, execute and deliver such
assignments and other documents necessary to vest, at the Company's sole
expense, all right, title and interest in any discovery or development in the
Company. The Company may, upon prior notice to the Executive and without any
fee, film, videotape, photograph and record the Executive's voice and likeness,
and may utilize the Executive's name and likeness, in connection with the
promotion of the Company during employment upon prior notice. The Company shall
own all rights in any such film, videotape, photograph or record of the
Executive's voice and likeness for such use. The Executive acknowledges receipt
of the notice provided by the Company pursuant to the Employee Patent Act (765
Illinois Compiled Statutes, Act 1060), reproduced here:
NOTICE TO EMPLOYEE
This is to notify you that pursuant to the Employee Patent Act (765 Illinois
Compiled Statutes, Act 1060), the provisions of this Agreement regarding the
assignment of your rights in discoveries and inventions to the Company. DOES NOT
APPLY to an invention for which no equipment, supplies, facilities or trade
secret information of the Company was used and which was developed entirely on
your own time, unless (a) the invention relates (i) to the business of the
Company or (ii) to the Company's actual or demonstrably anticipated research or
development, or (b) the invention results from or is the product of any work
performed by you for the Company in the scope of your efforts on behalf of the
Company.
3.5 Reasonable Scope and Duration. Executive acknowledges that these
restrictions are reasonable in scope, are necessary to protect the trade secrets
and other confidential and proprietary information of the Westell Companies,
that the benefits provided hereunder are full and fair compensation for these
covenants and that these covenants do not impair Executive's ability to be
employed in other areas of his expertise and experience. Specifically, Executive
acknowledges the reasonableness of the international scope of these covenants by
reason of the international customer base and prospective customer base and
activities of the Westell Companies, the widespread domestic and international
scope of Executive's contacts created during his employment with the Westell
Companies, the domestic and international scope of Executive's responsibilities
with the Westell Companies and his access to marketing strategies of the Westell
Companies. Notwithstanding the foregoing, if any court determines that any of
the terms herein are unreasonable or unenforceable, such court may interpret,
alter, amend or modify any or all of such terms to include as much of the scope,
time period and intent as will render such restrictions enforceable, and then in
such reduced form, enforce such terms.
-7-
ARTICLE 4. ADDITIONAL PROVISIONS
4.1 Equitable Remedies. Executive agrees that any breach or violation of the
covenants contained in Articles 3 of this Agreement would cause the Westell
Companies irreparable loss and damage for which money damages would be
inadequate. Therefore the parties agree that in the event of any breach or
violation or attempted breach or violation by the Executive of the covenants
contained in Article 3, the Westell Companies may enforce the terms of this
Agreement in a suit to enforce the covenants contained in Article 3 at equity.
In connection therewith, the Westell Companies may obtain a preliminary
injunction or restraining order immediately upon the commencement of any such
suit to enforce the covenants contained in Article 3, without notice. Employee
hereby waives any requirement or entitlement to demand that the Westell
Companies post any bond in connection with such suit. Employee also agrees that
any action for an injunction or restraining order shall be without prejudice to
any other remedy, cause of action for money damages or otherwise that the
Westell Companies may have by reason of breach, violation or attempted breach or
violation of this Agreement by Executive.
4.2 Successors and Assigns.
----------------------
(a) The Westell Companies may, from time to time, cause a purchaser of
the business and assets of the Company to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such assumption had taken place. In that event,
such purchaser shall become primarily liable to Executive for payments
hereunder, and the Westell Companies shall be thereafter released from any
further obligations under this Agreement.
(b) This Agreement shall inure to the benefit of and be enforceable by
the parties and their personal and legal representatives, assigns, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts remain payable hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
4.3 Notice. For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested and postage prepaid, addressed, in the case of
Executive, to his latest address in the Company records, and in the case of the
Company, to the Company's principal office, provided that all notice to the
Company shall be directed to the attention of the Board of Directors with a copy
to the Secretary of the Company, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
-8-
4.4 Waiver, Amendment and Integration. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company. No waiver by
either party at any time of any breach by the other party of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
4.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, excluding conflicts of law
principles.
4.6 No Employment Contract. Nothing in this Agreement shall be deemed to
constitute a contract or guaranty of employment or alter the at-will status of
Executive's employment.
4.7 Validity. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
4.8 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
4.9 Interpretation. Except where otherwise set forth to the contrary, references
to Articles, sections and parties mean Articles, sections and parties to this
Agreement; The word "including" means "including without limitation;" The use of
any pronoun in the singular or masculine form shall be deemed to include the
plural, feminine or neuter forms, as appropriate.
4.10 Tax Effect. All payments made hereunder shall be subject to deduction for
applicable withholding.
-9-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
WESTELL, INC. EXECUTIVE
----------------------------------- ------------------------------
By: X. Xxx Xxxxxxx
Title:
LIMITED GUARANTY OF PERFORMANCE
The undersigned hereby guarantee performance by Westell, Inc. of its
payment obligations of Severance Payments under the above Severance Agreement in
accordance with its terms, provided that the undersigneds' liability shall not
exceed $300,000 in aggregate.
The undersigned's obligations under the Severance Agreement shall be
subject to all of the defenses to which Westell, Inc. is entitled, including but
not limited to performance by Executive of the covenants in Article 3.
The undersigned shall be subrogated to Executive's rights against
Westell, Inc. with regard to any payments by the undersigned pursuant to this
Limited Guaranty.
----------------------- -------------------------
Xxxxxx X. Xxxxx III Xxxxxxx X. Xxxxxx
ACKNOWLEDGED:
-----------------
X. Xxx Xxxxxxx
Westell, Inc.
By______________
-10-
EXHIBIT A
Key responsibilities not subject to material reduction.
1. The senior most Executive of the Company, responsible for developing and
executing strategic objectives, policies and operating plans of Westell
Technologies, Inc.
2. Provide leadership to the entire Company with overall responsibility for
domestic and international marketing, sales, engineering, production, human
resources and financial performance.
3. Represent the Company to its major customers, the telco
community, employees and shareholders.
-11-
EXHIBIT B
GENERAL RELEASE AGREEMENT
This General Release ("Agreement") is entered into by and
between Westell Technologies, Inc.. (together with its successors and assigns,
the "Company") and X. Xxx Xxxxxx (the "Executive"). In consideration of the
mutual promises set forth below, the Company and Executive agree and covenant as
follows:
1. Executive, hereby resigns from all board seats and officer
positions with the Company and any entity for which he has been so serving at
the Company's request.
2. Executive hereby on behalf of himself and his heirs,
executors, administrators, attorneys, successors and assigns, hereby resigns
from all board seats and officer positions with the Company and any entity for
which he has been so serving at the Company's request, remises, releases,
forever discharges and covenants not to xxx the Company, its subsidiary and
affiliated companies, and their current and former shareholders, directors,
officers, attorneys, agents, employees, successors and assigns (the "Company
Released Parties"), with respect to all claims, suits, demands, actions or
causes of action of any kind or nature whatsoever, whether the underlying facts
are known or unknown, which Executive has had or now claims, pertaining to or
arising out of Executive's employment by the Company or Executive's separation
from employment with the Company, whether under any local, state or federal
common law, statute, regulation or ordinance, including, without limitation,
Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in
Employment Act, as amended (including the Older Workers Benefit Protection Act),
42 U.S.C. ss. 1981, the Civil Rights Act of 1991, the Family and Medical Leave
Act, the Americans with Disabilities Act, the Employee Retirement Income
Security Act, the Equal Pay Act, and the Illinois Human Rights Act, and any
tort, contract or quasi-contract claims, except as hereinafter stated, or to any
Workers' Compensation Act claim Executive may have.
Nothing herein shall however constitute a release by Executive of his
rights under the Severance Agreement dated June 12, 2001 that arise in
connection with termination without Cause or for Good Reason (as defined
therein), nor shall it release the Company from any indemnification obligations
it may have under Delaware law or the Company's certificate of incorporation or
bylaws with respect to Executive's role as an officer or director of the
Company, any rights under options that remain exercisable following termination,
nor any vested benefits under Company qualified benefit plans.
3. Executive agrees to cooperate fully in any investigation or
other legal proceeding relating to the Company with respect to any matter that
arose during his employment
-12-
with the Company, or that may involve matters within his knowledge. If any
claims are asserted by the Company or any of the Company Released Parties
against a third party (or by a third party against the Company or any of the
Company Released Parties) regarding such a matter, Executive agrees to cooperate
fully in the prosecution or defense of such claim by the Company and any of the
Company Released Parties.
4. Executive represents that Executive has not filed any
charges, suits, claims or complaints against the Company Released Parties with
respect to claims released under Section 2, and agrees not to do so in the
future with respect to any such claims.
5. Executive understands and expressly acknowledges that he is
not releasing or waiving any rights or claims that may arise after the date this
Agreement is executed. Executive understands and expressly acknowledges that, in
exchange for Executive's entry into this Agreement, Executive is receiving
consideration in addition to anything of value to which Executive is already
entitled.
6. Executive acknowledges that the Company has advised
Executive to consult an attorney, at Executive's expense, with respect to this
Agreement. Executive further acknowledges that Executive has twenty-one (21)
days from receipt of this Agreement and its waiver and release provisions to
accept and sign this Agreement and that Executive has seven (7) days to revoke
acceptance of this Agreement and its waiver and release provisions after signing
it. Notice of such revocation shall be provided to the attention of the vice
president of Human Resources and otherwise in accordance with the notice
provisions of the Severance Agreement. Executive further acknowledges that
Executive may waive the twenty-one day consideration period by requesting and
executing a form for that purpose. The form may be requested from the vice
president of Human Resources. This Agreement shall not become effective until
the revocation period has expired.
7. This Agreement is not, and shall not in any way be
construed as, an admission by the Company that it has acted wrongfully with
respect to Executive.
8. Executive acknowledges that he has carefully read and fully
understands all of the provisions of this Agreement, and that he is knowingly,
voluntarily and willfully entering into this Agreement.
9. Executive acknowledges that in executing this Agreement,
Executive has not relied upon any representation by the Company that is not set
forth in this Agreement or in the Severance Agreement.
13. This Agreement shall be construed and enforced pursuant to
the substantive laws of the State of Illinois.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-13-
PLEASE READ THIS AGREEMENT CAREFULLY
IT CONTAINS A RELEASE OF ALL KNOWN
AND UNKNOWN CLAIMS
Westell Technologies, Inc.
By:
----------------------------------------- --------------------------------
Executive
----------------------------------------- -------------------------------
Date Date
-----------------------------------------
Witness Signature
-----------------------------------------
Name of Witness (Printed)
-----------------------------------------
(Street Address)
-----------------------------------------
(City, State, Zip Code)
-14-
