Severance and Release Agreement dated October 20, 2006 between HEI, Inc. and Mack V. Traynor III SEVERANCE AND RELEASE AGREEMENT
Exhibit 10.54
Severance
and Release Agreement dated October 20, 2006 between HEI,
Inc. and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
SEVERANCE
AND RELEASE AGREEMENT
In exchange for the promises and covenants contained herein,
HEI, Inc. (“Company”) and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
(“Employee”) hereby agree as follows:
1. Definitions. We intend all
words used in this Severance Agreement (“Agreement”)
to have their plain meanings in ordinary English. Specific terms
we use in this Agreement have the following meanings:
A. Employee, as used herein, shall include
the undersigned Employee and anyone who has obtained any legal
rights or claims through the undersigned Employee.
B. Company, as used herein, shall at all
times mean HEI, Inc., its parent company, its subsidiaries,
successors and assigns, its affiliated and predecessor
companies, their successors and assigns, their affiliated and
predecessor companies and the present or former directors,
shareholders, officers, employees, representatives and agents
(including, without limitation, its accountants and attorneys)
of any of them, whether in their individual or official
capacities, and the current and former trustees or
administrators of any pension or other benefit plan applicable
to employees or former employees of Company, in their official
or individual capacities.
C. Employee’s Claims, as used herein,
means all of the rights Employee individually and on behalf of
his spouse, heirs, administrators, executors, assigns has now to
any relief of any kind from Company whether or not Employee now
knows about those rights, arising out of his employment with
Company and member of the Board of Directors, and his
resignation of employment and as a member of the Company’s
Board of Directors, including, but not limited to, claims
arising under the Age Discrimination in Employment Act, as
amended by the Older Worker Benefit Protection Act; the
Minnesota Human Rights Act; the Americans with
Disabilities Act; Title VII of the Civil Rights Act of
1964, as amended; claims under the Family Medical Leave Act; the
Fair Labor Standards Act of 1938, as amended; the Worker
Adjustment and Retraining Act, the Sarbanes Oxley Act; the
Minnesota Whistleblower Statute; or other federal, state or
local civil rights laws; claims for breach of contract; fraud or
misrepresentation; defamation, intentional or negligent
infliction of emotional distress; breach of covenant of good
faith and fair dealing; promissory estoppel; negligence;
wrongful termination of employment; claims pursuant to that
certain Employment Agreement dated April 19, 2004 between
Employee and Company; claims for any form of compensation,
including without limitation, claims for severance, salary,
bonus, and vacation pay; and any other claims for unlawful
employment practices.
2. Resignation. Company and
Employee agree that Employee will voluntarily resign his
employment as Chief Executive Officer and President of the
Company and as a member of Company’s Board of Directors
effective Friday, October 20, 2006 and the Company has
accepted his resignation effective Friday, October 20, 2006.
3. Company’s Obligations and Severance
Agreements. In consideration for
Employee’s promises contained herein, specifically
including, but not limited to the release of all claims by
Employee and Employee’s promises to refrain from:
(i) competing with the Company; (ii) soliciting the
Company’s clients and employees; and (iii) disclosing
confidential information and trade secrets of Company, Company
agrees as follows:
▇. ▇▇▇▇▇▇▇▇▇ Payment. Company
agrees to pay to Employee a Severance payment of $145,000
(“Severance Payment”). This Severance Payment will be
payable in one lump sum after the expiration of the Rescission
Periods, as hereinafter defined. The Severance Payment shall be
subject to federal and state withholding taxes and FICA.
B. Stock Options/Restricted
Shares. Company acknowledges and agrees that
Employee shall have a period of 90 days from the date of
this Agreement to exercise the following stock option agreements:
(i) Option agreement dated March 19, 2003.
(ii) Option agreement dated December 19, 2001.
(iii) Option agreement dated July 1, 2005.
Company and Employee agree that all remaining stock options and
restricted shares have not vested and may be cancelled.
C. Medical Insurance Benefits and
Benefits. Company, pursuant to federal and
state law, will provide, for a period of eighteen
(18) months following the effective date of Employee’s
termination (“COBRA Period”), a continuation of the
group medical insurance coverage previously provided to Employee
by Company. Through April 19, 2007, Company will pay that
portion of the premium for group medical insurance that it paid
during Employee’s employment. After April 19, 2007,
Employee will be required to pay for such benefits for the
remainder of the COBRA Period, should Employee elect to continue
COBRA coverage. Company shall also, through April 19, 2007,
maintain and pay for all the benefits provided under the
April 19, 2004 Employment Agreement between Employee and
Company, a copy of which is attached hereto as
Exhibit A to this Agreement, including dental
insurance and supplemental life insurance coverage.
D. Computer, Blackberry and Cellular
Phone. Employee shall be allowed to retain
possession of the Company computer (once the Company has
securely erased all Company documentation), blackberry and
cellular phone assigned to him during his employment with the
Company. The Company will continue service on the Company
blackberry and cellular phone assigned to Employee until
October 31, 2006.
E. Non-Disparagement. Company
agrees that its officers, directors and senior management shall
not disparage or defame Employee in any respect.
F. Remedies. Company acknowledges
that any breach of any of the promises set forth in
Section 3.E. will cause Employee irreparable harm for which
there is no adequate remedy at law and Company therefore
consents to the issuance of any injunction in favor of Employee
enjoining the breach of any of those promises by any court of
competent jurisdiction. Company further agrees that the remedies
provided for herein are in addition to, and are not to be
construed as replacements for, or a limitation of, rights and
remedies otherwise available to Employee.
4. Employee Obligations. As
material inducement to Company in entering into this Agreement
and providing the consideration described in Section 3,
Employee hereby agrees as follows:
A. Release. Employee agrees to
release all Employee’s Claims. Employee acknowledges that
the money and promises received and to be received by Employee
are in exchange for the release of Employee’s Claims.
Employee is not releasing any rights
and/or
obligations he may have as holder of shares
and/or
options of the Company and Employee’s rights
and/or
obligations in any shares
and/or
options of the Company shall be controlled by the terms and
conditions of applicable stock and option agreements, if any,
entered into between Company and Employee.
B. Covenant Not To ▇▇▇. Employee
agrees that he will not initiate any litigation to pursue claims
which Employee released in this Section 4.A. This covenant
does not apply to litigation challenging the validity of this
Section 4.A. Further, Employee agrees to pay Company’s
attorneys fees if Employee breaches the covenant not to ▇▇▇
contained in this Section 4.B.
C. Company Property. Unless
otherwise stated herein, Employee will return all property
belonging to Company to Company immediately upon the execution
of this Agreement, whether such property is currently on or off
the premises of Company, including, without limitation, any and
all Company documents on the computer hardware being retained by
Employee.
D. Non-Competition, Non-Solicitation, Confidentiality
and Inventions. Employee acknowledges and
confirms his continuing obligations to the Company to
(1) refrain from competition and solicitations,
(2) maintain the confidentiality of the Company’s
Confidential Information and (3) disclose and transfer
ownership, if necessary, of all Inventions, all of which shall
survive Employee’s separation from employment with the
Company, as more fully set forth in Sections 6, 7, 8
and 9 of the Agreement attached as
Exhibit A. Notwithstanding the foregoing,
the term of such obligations shall expire one year from the date
of this Agreement.
E. Confidentiality of
Agreement. Employee agrees that he will keep
the terms and conditions of this Agreement strictly confidential
for a period of at least one year from the date of this
Agreement except that Employee may disclose the terms and
conditions of this Agreement to his spouse, if any, attorney,
tax preparer, government agencies, or as required by law.
Employee agrees that in the event that Employee discloses any of
the terms of this Agreement, including the fact of payment other
than as set forth above, he shall be liable to Company as set
forth in Section 4. of this Agreement and for any and all
injuries or damages sustained by Company including costs,
disbursements and attorneys’ fees incurred by Company as a
direct result of Employee’s disclosure.
F. Non-Disparagement. Employee
agrees that he shall not disparage or defame Company in any
respect.
G. Remedies. Employee acknowledges
that any breach of any of the promises set forth in
Sections 4.C., 4.D., 4.E. and 4.F. will cause Company
irreparable harm for which there is no adequate remedy at law
and Employee therefore consents to the issuance of any
injunction in favor of Company enjoining the breach of any of
those promises by any court of competent jurisdiction. If any
promise made by Employee in this Section 4 should be held
to be unenforceable because of its scope or duration, or the
area or subject matter covered thereby, Employee agrees that the
court making such determination shall have the power to reduce
or modify the scope, duration, subject matter or area of that
promise to the extent that allows the maximum scope, duration,
subject matter or area permitted by applicable law. Employee
further agrees that the remedies provided for herein are in
addition to, and are not to be construed as replacements for, or
a limitation of, rights and remedies otherwise available to
Company.
5. Employee’s
Understandings. Employee acknowledges and
represents that:
A. Employee understands that he has the right to consult
with an attorney regarding the meaning and effect of this
Agreement.
B. Employee also understands that he has a period of
twenty-one (21) calendar days from the date on which he
receives an unsigned copy of this Agreement in which to consider
whether or not to sign this Agreement and that, having been
advised of that entitlement, he may elect to sign this Agreement
at any time prior to the expiration of that time period.
C. Employee understands that he may rescind (that is,
cancel) within seven (7) calendar days of signing the
Agreement the provisions of Section 4.A. of this Agreement
with respect to claims arising under the Age Discrimination in
Employment Act (“ADEA Rescission Period”) and that he
may rescind within fifteen (15) calendar days of
signing the Agreement the provisions of Section 4.A. of
this Agreement with respect to claims arising under the
Minnesota Human Rights Act (“MHRA Rescission Period”)
(collectively, “Rescission Periods”). To be effective,
rescission must be in writing, delivered to Company at HEI,
Inc., PO Box 5000, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attn: ▇▇▇▇ ▇▇▇▇▇▇ within the applicable rescission
period, or sent to Company, at such address, by certified mail,
return receipt requested, postmarked within the applicable
rescission period.
6. Cancellation of Agreement By
Company. If Employee exercises his right of
rescission under Section 5.C. of this Agreement, Company
will have the right, exercisable by written notice delivered to
Employee, to terminate this Agreement in its entirety, in which
event Company will have no obligation whatsoever to Employee
hereunder. If Employee exercises his right of rescission under
Section 5.C. of this Agreement, and Company does not
exercise its right to terminate this Agreement hereunder, the
remaining provisions of this Agreement (including specifically
the remaining provisions of Section 4 of this Agreement)
shall remain valid and continue in full force and effect.
7. Performance By
Employee. Nothing contained herein shall
operate as a waiver or an election of remedies by Company should
Employee fail to perform any duty or obligation imposed upon him
hereunder. Notwithstanding anything contained herein to the
contrary, this Agreement and the duties and obligations of
Employee hereunder shall continue in full force and effect
irrespective of any violation of any term or provision of this
Agreement by Employee.
8. No Admission Of Liability. The
Parties agree that this Agreement shall not be considered an
admission of liability by Company. Company expressly denies that
it is in any way liable to Employee or that it has engaged in
any wrongdoing with respect to Employee.
9. Employee
Acknowledgments. Employee acknowledges and
represents that: (a) he has read this Agreement and
understands its consequences; (b) he has received adequate
opportunity to read and consider this Agreement; (c) he has
determined to execute this Agreement of his own free will and
acknowledges that he has not relied upon any statements or
explanations made by Company regarding this Agreement; and
(d) the promises of
Company made in this Agreement constitute fair and adequate
consideration for the promises, releases and agreements made by
Employee in this Agreement.
10. Entire Agreement. This
Agreement, including any exhibits attached hereto or documents
expressly referred to herein, contains the entire agreement
between Company and Employee and supersedes and cancels any and
all other agreements, whether oral or in writing, between
Company and Employee with respect to the matters referred to
herein.
11. Governing Law. This Agreement
shall be construed and enforced in accordance with the laws of
the State of Minnesota.
12. Effective Date. This Agreement
was originally offered to Employee on or about October 20,
2006. Employee shall have until the close of business on
November 10, 2006 to accept this Agreement. If Employee
desires to accept this Agreement, Employee shall execute the
Agreement and return the same to Company at the address set
forth in Section 5.C. hereof. If Employee does not so
accept this Agreement, this Agreement, and the offer contained
herein, shall be null and void as of the close of business on
November 20, 2006.
(The remainder of the page is intentionally left blank.)
13. Counterparts. This Agreement
may be executed in counterparts with an executed counterpart to
be delivered to the other party. Each such executed counterpart
shall be deemed an original but shall constitute one and the
same instrument.
HEI, Inc.
| By: |
/s/ ▇▇▇▇
▇. ▇▇▇▇▇▇
|
Its: CFO
Dated: 10-20-06
/s/ ▇▇▇▇
▇. ▇▇▇▇▇▇▇ III
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Dated: 10-20-06