EXHIBIT 10(m)
EMPLOYMENT AGREEMENT WITH JERRY A. DUSA
DATED MARCH 12, 1997
EMPLOYMENT AGREEMENT
(Jerry A. Dusa)
This Agreement is made as of March 12, 1997 by and between DIGI
INTERNATIONAL INC., a Delaware corporation (the "Company"), and Jerry A. Dusa
(the "Executive").
WHEREAS the Company desires to employ Executive in accordance with the
terms and conditions stated in this Agreement; and
WHEREAS Executive desires to accept that employment pursuant to the terms
and conditions of this Agreement;
NOW THEREFORE, in consideration of the covenants and agreements contained
herein, the parties hereto agree as follows:
I. EMPLOYMENT
1.1 EMPLOYMENT AS SENIOR EXECUTIVE. The Company hereby agrees to employ
Executive, commencing the date hereof and continuing until the date his
employment terminates pursuant to Article III hereof, in a senior executive
capacity, initially as President and Chief Executive Officer of the Company.
Executive accepts such employment pursuant to the terms of this Agreement.
Executive shall perform such duties and responsibilities as may be determined
from time to time by the Board of Directors of the Company, which shall be
consistent with his position as an officer of the Company.
1.2 EXCLUSIVE SERVICES. Commencing on the date hereof, Executive agrees
to devote his full time, attention and energy to performing his duties and
responsibilities to the Company under this Agreement.
II. COMPENSATION, BENEFITS AND PERQUISITES
2.1 BASE SALARY. During the period this Agreement is in effect, the
Company shall pay Executive a base salary at the annual rate of $250,000,
payable semi-monthly. Beginning on or about October 1, 1997, the Board of
Directors of the Company (the "Board", which term shall include a duly
authorized committee of the Board of Directors) will review the base salary
annually, and may in its sole discretion increase it to reflect performance and
other factors. However, the Board is not obligated to provide for any
increases.
2.2 BONUSES. Executive shall be eligible to receive a cash performance
bonus of up to 100% base salary paid for each fiscal year during which this
Agreement is in effect, as follows:
(a) Executive shall be entitled to the target bonus amount if the
objectives set by the Board of Directors in its sole discretion for the
fiscal year are met. Such objectives may include, in the sole discretion
of the Board, the achievement of financial objectives set forth in the
Board-approved Budget Plan for a particular fiscal year, or such other
objectives as the Board, in its sole discretion, shall determine.
(b) If some or all of the objectives are not met for a fiscal year,
then the Board will determine in its discretion what portion, if any, of
the target bonus amount will be paid to Executive for that year.
(c) The target bonus for each fiscal year shall be paid to Executive
on September 30 of each year or as soon thereafter as the Company
determines whether the objectives for such bonus have been met for that
year.
(d) In any fiscal year in which the objectives for the cash bonus
are based upon financial objectives in the Board-approved Budget Plan for
such fiscal year, the Board will consult with Executive before determining
the Budget Plan for each fiscal year. However, the Board will have
authority to establish the Budget Plan for each year in its sole
discretion.
(e) In any fiscal year in which the objectives for the cash bonus
are based upon financial objectives in the Board-approved Budget Plan for
such fiscal year, the objectives set by the Company's Board-approved Budget
Plan for such fiscal year shall not be adjusted for the acquisition, by any
means, of any businesses or business units (and expenses related thereto)
that may occur during a particular fiscal year. The objectives set by the
Company's Board-approved Budget Plan for any such fiscal year shall be
equitably adjusted by the Board for the divestiture, by any means, of any
businesses or business units (and expenses related thereto) that may occur
during a particular fiscal year and to eliminate any reorganization,
restructuring or other extraordinary charge that may be incurred during a
particular fiscal year.
2.3 OVERACHIEVEMENT BONUSES. If the objectives set by the Board of
Directors for a cash performance bonus are exceeded for a fiscal year, the Board
may in its discretion award Executive a bonus that is larger than the target
bonus.
2.4 STOCK OPTIONS. As of the date of this Agreement, Executive has been
awarded a non-statutory stock option under the Digi International Inc. Stock
Option Plan (the "Stock Option Plan") for 240,000 Common Shares of the Company
(as defined in the Stock Option Plan). On or about September 30 of each year
the Compensation Committee of the Board of the Company considers and awards
stock options to key employees of the Company and its subsidiaries. These
awards are made in the discretion of the Compensation Committee and are
principally intended to recognize performance over the preceding fiscal year.
Executive acknowledges that he has received the maximum stock option grant
permitted under the Stock Option Plan for calendar 1997 and consequently would
not be eligible for consideration for additional stock option grants until on or
after January 1, 1998.
2.5 FORM OF STOCK OPTION AGREEMENT. Stock option awards to Executive
shall be pursuant to stock option agreements in substantially the form of
Schedule II, with such additions thereto and deletions therefrom as Executive
and the Chairman of the Board, the Chairman of the Compensation Committee or
another duly authorized officer of the Company shall agree, such agreement to be
conclusively evidenced by their execution and delivery thereof.
2.6 VACATIONS. Executive shall be entitled to vacation in accordance
with policies of the Company.
2.7 EMPLOYEE BENEFITS. Executive shall be entitled to the benefits and
perquisites which the Company generally provides to its other employees under
the applicable Company plans and policies, and to future benefits and
perquisites made generally available to employees of the Company. Executive's
participation in such benefit plans shall be on the same basis as applies to
other employees of the Company. Executive shall pay any contributions which are
generally required of employees to receive any such benefits.
2.8 EMPLOYMENT TAXES AND WITHHOLDING. Executive recognizes that the
compensation, benefits and other amounts provided by the Company under this
Agreement may be subject to federal, state or local income taxes. It is
expressly understood and agreed that all such taxes shall be the responsibility
of the Executive. To the extent that federal, state or local law requires
withholding of taxes on compensation, benefits or other amounts provided under
this Agreement, the Company shall withhold the necessary amounts from the
amounts payable to Executive under this Agreement.
2.9 COMPANY RESPONSIBILITY FOR INSURED BENEFITS. In this Article II, the
Company is agreeing to provide certain benefits which are provided in the form
of premiums of insurance coverage. The Company is not itself promising to pay
the benefit an insurance company is obligated to pay under the policy the
insurance company has issued. If an insurance company becomes insolvent and
cannot pay benefits it owes to Executive or his beneficiaries under the
insurance policy, neither Executive nor his personal representative or
beneficiary shall have any claim for benefits against the Company.
2.10 EXPENSES. During the term of his employment hereunder, Executive
shall be entitled to receive prompt reimbursement from the Company (in
accordance with the policies and procedures in effect for the Company's
employees) for all reasonable travel and other expenses incurred by him in
connection with his services hereunder.
2.11 RELOCATION. Executive shall relocate to the general vicinity of the
Minneapolis/St. Paul metropolitan area. The Company will pay for Executive's
direct relocation expenses, including the cost of moving Executive's household
goods.
2.12 COMPENSATION AS INTERIM ACTING CHIEF EXECUTIVE OFFICER. Executive
and the Company hereby confirm the terms of Executive's engagement and
compensation as interim
acting Chief Executive Officer for the period January 3, 1997 to the date hereof
as set forth on Schedule III hereto. Executive and the Company agree that the
stock option agreement pertaining to the 10,000 share option referred to in
Schedule III hereto shall be amended to add the terms of Section 6(c)
(Termination Without Cause) and (d) (Change in Control) set forth in Schedule II
hereto.
III. TERMINATION OF EXECUTIVE'S EMPLOYMENT
3.1 TERMINATION OF EMPLOYMENT. Executive's employment under this
Agreement may be terminated by the Company at any time for any reason; provided,
however, that if Executive's employment is terminated by the Company during the
term of this Agreement for a reason other than for cause, he shall be entitled
to continue to receive his base salary under Section 2.1 for a period of 12
months from his date of termination. Executive's employment under this
Agreement may be terminated by Executive at any time for any reason. The
termination shall be effective as of the date specified by the party initiating
the termination in a written notice delivered to the other party, which date
shall not be earlier than the date such notice is delivered to the other party.
Except as expressly provided to the contrary in this section or applicable law,
Executive's rights to pay and benefits shall cease on the date his employment
under this Agreement terminates. This Agreement shall terminate in its entirety
immediately upon the death of Executive.
3.2 CAUSE. For purposes of this Article III, "cause" shall mean only the
following: (i) indictment or conviction of, or a plea of nolo contendere to,
(A) any felony (other than any felony arising out of negligence) or any
misdemeanor involving moral turpitude, or (B) any crime or offense involving
dishonesty with respect to the Company;(ii) theft or embezzlement of Company
property or commission of similar acts involving dishonesty or moral turpitude;
(iii) repeated material negligence in the performance of Executive's duties;
(iv) Executive's failure to devote substantially all of his working time and
efforts during normal business hours to the Company's business; (v) knowing
engagement in conduct which is materially injurious to the Company; (vi) knowing
failure, for Executive's own benefit, to comply with the covenants contained in
Sections 4.1 or 4.2 of this Agreement; (vii) knowingly providing materially
misleading information concerning the Company to the Company's Board of
Directors, any governmental body or regulatory agency or to any lender or other
financing source or proposed financing source of the Company; (viii) failure of
the Company to meet at least 70% of the Board-approved Budget Plan for either
net sales or after tax earnings in any fiscal year; or (ix) any other failure by
Executive to substantially perform his material duties under this Agreement
(excluding nonperformance resulting from Executive's disability) which failure
is not cured within thirty (30) days after written notice from the Chairman of
the Board or the Chairman of the Compensation Committee of the Company
specifying the act of nonperformance or within such longer period (but no longer
than ninety (90) days in any event) as is reasonably required to cure such
nonperformance. For purposes of Section 3.2(viii), the net sales and after-tax
earnings targets set by the Company's Board-approved Budget Plan for any fiscal
year shall not be adjusted for the acquisition, by any means, of any businesses
or business units (and expenses related thereto) that may occur during a
particular fiscal year, but shall be equitably adjusted by the Board for the
divestiture, by any means, of any businesses or business units (and expenses
related thereto) that may occur during a particular fiscal year and to eliminate
any reorganization, restructuring or other extraordinary charge that may be
incurred during a particular fiscal year.
3.3 DISABILITY. If Executive has become disabled from performing his
duties under this Agreement and the disability has continued for a period of
more than sixty (60) days, the Board may, in its discretion, determine that
Executive will not return to work and terminate his employment under this
Agreement. Upon any such termination for disability, Executive shall be
entitled to such disability, medical, life insurance, and other benefits as may
be provided generally for disabled employees of the Company during the period he
remains disabled.
3.4 RESIGNATION. Executive agrees that, upon termination of Executive's
employment hereunder for any reason, he shall be deemed to have resigned as a
director of the Company and as a director, officer and/or employee of any parent
company of the Company or any of their subsidiaries, unless prior to termination
of Executive's employment hereunder the provisions of this Section 3.4 shall
have been waived by vote of the Board (excluding Executive).
IV. NON-COMPETITION, CONFIDENTIALITY AND TRADE SECRETS
4.1 AGREEMENT NOT TO COMPETE. In consideration of the covenants and
agreements contained in this Agreement, Executive agrees that, on or before the
date which is one year after the date Executive's employment by the Company, any
parent company of the Company or any of their subsidiaries terminates, he 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:
(a) 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, any parent
company of the Company, or any of their subsidiaries. However, nothing in
this subsection (a) shall preclude Executive 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.
(b) Intentionally solicit, endeavor to entice away from the Company, any
parent company of the Company or any of their subsidiaries, or otherwise
interfere with the relationship of the Company, any parent company of the
Company or any of their subsidiaries with, any person who is employed by or
otherwise engaged to perform services for the Company, any parent company
of the Company or any of their
subsidiaries (including, but not limited to, any independent sales
representatives or organizations), or any persons or entity who is, or was
within the then most recent 12-month period, a customer or client of the
Company, any parent company of the Company or any of their subsidiaries,
whether for Executive's 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 section 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 shall be construed or
rewritten (blue-lined) so as to be enforceable to the maximum extent permitted
by law, and Executive 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.
4.2 NON-DISCLOSURE OF INFORMATION. During the period of his employment
hereunder, and at all times thereafter, Executive shall 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 subsidiaries or a
person to whom disclosure is reasonably necessary or appropriate in connection
with the performance by Executive of his duties as an executive of the Company,
except where such disclosure may be required by law, any material confidential
information obtained by him while in the employ of the Company, any parent
company of the Company or any of their subsidiaries with respect to any
products, technology, know-how or the like, services, customers, methods or
future plans of the Company, any parent company of the Company or any of their
subsidiaries, all of which Executive acknowledges are valuable, special and
unique assets, the disclosure of which Executive acknowledges may be materially
damaging.
4.3 REMEDIES. Executive acknowledges that the Company's remedy at law
for any breach or threatened breach by Executive of Section 4.1 or Section 4.2
will be inadequate. Therefore, the Company shall be entitled to injunctive and
other equitable relief restraining Executive from violating those requirements,
in addition to any other remedies that may be available to the Company under
this Agreement or applicable law.
V. MISCELLANEOUS
5.1 AMENDMENT. This Agreement may be amended only in writing, signed by
both parties and approved by the Board.
5.2 ENTIRE AGREEMENT. Before signing this Agreement the parties had
numerous conversations, including preliminary discussions, formal negotiations
and informal conversations, and generated correspondence and other writings, in
which the parties discussed the employment which is the subject of this
Agreement and their aspirations for its success. In such conversations and
writings, individuals representing the parties may have expressed their
judgments and beliefs concerning the intentions, capabilities and practices of
the parties, and may have forecasted future events. The parties recognize that
such
conversations and writings often involve an effort by both sides to be positive
and optimistic about the prospects for the employment. It is also recognized,
however, that all business transactions contain an element of risk, and that it
is normal business practice to limit the legal obligations of contracting
parties to only those promises and representations which are essential to their
transaction so as to provide certainty as to their respective future rights and
remedies. Accordingly, this Agreement is intended to define the full extent of
the legally enforceable undertakings of the parties hereto, and no related
promise or representation, written or oral, which is not set forth explicitly in
this Agreement is intended by either party to be legally binding. Both parties
acknowledge that in deciding to enter into this transaction they have relied on
no representations, written or oral, other than those explicitly set forth in
this Agreement. Executive has relied entirely on his own judgment and that of
his advisers in entering into this Agreement.
5.3 ASSIGNMENT. The Company may in its sole discretion assign this
Agreement to any entity which succeeds to some or all of the business of the
Company through merger, consolidation, a sale of some or all of the assets of
the Company, or any similar transaction. Executive acknowledges that the
services to be rendered by him are unique and personal. Accordingly, Executive
may not assign any of his rights or obligations under this Agreement.
5.4 SUCCESSORS. Subject to Section 5.3, the provisions of this Agreement
shall be binding upon the parties hereto, upon any successor to or assign of the
Company, and upon Executive's heirs and the personal representative of Executive
or Executive's estate.
5.5 NOTICES. Any notice required to be given under this Agreement shall
be in writing and shall be delivered either in person or by certified or
registered mail, return receipt requested. Any notice by mail shall be
addressed as follows:
If to the Company, to:
Digi International Inc.
11001 Bren Road East
Minnetonka, MN 55343
Attention: Chairman of the Board
With a copy to:
Faegre & Benson LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-3601
Attention: James E. Nicholson
If to Executive, to:
Jerry A. Dusa
Digi International Inc.
11001 Bren Road East
Minnetonka, MN 55343
or to such other addresses as either party may designate in writing to the other
party from time to time.
5.6 WAIVER OF BREACH. Any waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement. No waiver by the Company
shall be valid unless in writing and signed by the Chairman of the Board of
Directors or Chairman of the Compensation Committee.
5.7 SEVERABILITY. If any one or more of the provisions (or portions
thereof) of this Agreement shall for any reason be held by a final determination
of a court of competent jurisdiction to be invalid, illegal, or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions (or portions of the provisions) of this Agreement, and the
invalid, illegal or unenforceable provisions shall be deemed replaced by a
provision that is valid, legal and enforceable and that comes closest to
expressing the intention of the parties hereto.
5.8 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA, APPLICABLE TO CONTRACTS
EXECUTED AND FULLY PERFORMED WITHIN THE STATE OF MINNESOTA WITHOUT GIVING EFFECT
TO CONFLICT OF LAW PRINCIPLES. EXECUTIVE HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY MINNESOTA STATE OR FEDERAL COURT IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND THE COMPANY AND EXECUTIVE
HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED ONLY IN SUCH MINNESOTA STATE COURT OR SUCH FEDERAL
COURT AND IN NO OTHER COURT. EXECUTIVE HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT HE MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. EACH OF THE COMPANY AND EXECUTIVE
HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF COPIES OF THE SUMMONS AND
COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR
PROCEEDING BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY DELIVERING OF A
COPY OF SUCH PROCESS TO OF THE COMPANY OR EXECUTIVE, AS THE CASE MAY BE, AT THE
RESPECTIVE ADDRESS SPECIFIED IN SECTION 5.5 OR BY ANY OTHER METHOD PROVIDED BY
LAW. EACH OF THE COMPANY AND EXECUTIVE AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR BY ANY
OTHER MANNER PROVIDED BY LAW.
5.9 HEADINGS. The headings of articles and sections herein are included
solely for convenience and reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
5.10 COUNTERPARTS. This Agreement may be executed by either of the
parties hereto in counterparts, each of which shall be deemed to be an original,
but all such counterparts shall constitute a single instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement in Minnetonka,
Minnesota, effective as of the date set forth above.
DIGI INTERNATIONAL INC.
By /s/ JOHN P. SCHINAS
--------------------
Its Chairman of the Board
EXECUTIVE
/s/ JERRY A. DUSA
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Jerry A. Dusa