Document:

EX-10.3

 

Exhibit 10.3

July 7, 2006

The Board of Directors

Gentlemen:

I hereby resign as Vice President, Sales and Marketing of Applied Innovation Inc. (Applied), and
any other offices I may hold with Applied or any of its subsidiaries effective this date.

I understand that this resignation will be treated as a termination without cause by Applied and
that I shall be entitled to the severance benefit provided under Section 9(d) of my Employment
Agreement dated October 4, 2004.

	 	 	 	 	 
	 	Sincerely,

 	 
	 	/s/ Angela R. Pinette
 	 
	 	 	 
	 	Angela R. Pinette 	 
	 

Accepted and agreed to as of

July 11, 2006

Applied Innovation Inc.

/s/ William H. Largent

	 	 	 
	By:

	 	William H. Largent
	 

	 	President and Chief Executive OfficerEX-10.4

 

Exhibit 10.4

SEPARATION AGREEMENT

AND RELEASE OF ALL CLAIMS

     This Separation Agreement And Release Of All Claims (the “Agreement”) is entered into
effective as of July 7, 2006, by Applied Innovation Inc., a Delaware corporation, hereinafter
referred to, together with all its predecessors and past, present and future assigns, successors,
affiliates, subsidiary organizations, divisions, and corporations, and including all past, present
and future officers, directors, shareholders, employees, and agents of the same, individually and
in their respective capacities, as the “Company,” and Angela R. Pinette, hereinafter referred to,
together with her heirs, executors, administrators, successors, assigns and other personal
representatives as “Ms. Pinette,” under the following circumstances:

     A. Ms. Pinette has been employed by the Company since October 4, 2004, and entered into a
written Employment Agreement with the Company dated October 4, 2004 (the “Employment Agreement”).

     B. The Company has proposed, and Ms. Pinette has agreed, to certain severance benefits in
connection with her resignation as an officer and the termination of her employment.

     C. Ms. Pinette acknowledges that the severance benefits described in the Agreement, other than
those described in Section 2(a) of this Agreement that are in accordance with Section 9(d) of the
Employment Agreement, include benefits to which she is not otherwise entitled.

     NOW THEREFORE, the parties agree, in consideration of the provisions contained herein, as
follows:

     1. Termination of Employment; Resignation from Office. Ms. Pinette’s employment with
the Company terminates effective July 7, 2006 (the “Termination Date”) and Ms. Pinette resigns as
an officer of the Company effective on the Termination Date. This
termination is categorized as “without cause” as defined in Section 9(d) of the Employment
Agreement.

 

 

     2. Severance Benefits.

          (a) In accordance with Section 9(d) of the Employment Agreement, the Company agrees to pay Ms.
Pinette her basic salary in the amount of $6,923.08 bi-weekly, less all applicable withholding and
FICA taxes, for six (6) months from the Termination Date, payable in accordance with the Company’s
normal salary payment schedule; provided, however, any such payments will immediately end if (i)
Ms. Pinette violates any of her obligations under Sections 6 (Confidential Information), 7
(Inventions) or 8 (Noncompetition and Nonsolicitation) of the Employment Agreement, which
obligations continue following the Termination Date; or (ii) the Company, after the Termination
Date, learns of any facts about Ms. Pinette’s performance or conduct that would have given the
Company Cause, as defined in Section 9(b) of the Employment Agreement, to terminate her employment
for Cause.

          (b) In addition to the severance benefits provided under the Employment Agreement as described
in Section 2(a) above, the Company agrees to pay Ms. Pinette an additional $769.23 bi-weekly
($10,000 total), less all applicable withholding and FICA taxes, for six months from the
Termination Date, payable in accordance with the Company’s normal salary payment schedule.

          (c) Furthermore, the Company agrees to pay Ms. Pinette for all sales invoiced prior to her
Termination Date in accordance with her sales compensation plan. Ms. Pinette will also be eligible
to receive her second quarter bonus in the amount of $5,000, if sales quota and operating profit is
achieved on a YTD basis at the end of the second quarter. Any commission payments due will be paid
during the first commission payroll period following the Termination Date. In the event the
second quarter bonus is earned, it will be paid the first commission payroll period following the
release of the quarterly financial results.

     3. Reference. The Company agrees to provide a neutral job reference for Ms. Pinette
stating the following information: hire and termination dates, and last position held.

     4. Benefit Programs. Ms. Pinette understands and agrees that all benefit programs she
participates in as a result of her employment with the Company have (except to the extent

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vested
and nonforfeitable by law) ceased effective upon the Termination Date, except for the Company
provided medical insurance, which will terminate on July 31, 2006. If Ms. Pinette elects to
continue her medical and/or dental coverage under COBRA, as an additional benefit, the Company
shall continue to pay the Company’s cost for continuing such coverage at the same rate as for
active employees, for six (6) months, or until she becomes eligible for group medical coverage
through another employer, whichever occurs first. Ms. Pinette
agrees that she will notify the
Company within one week of her becoming eligible for group insurance coverage through another
employer.

     5. Release of Claims. In exchange for the consideration set forth in paragraphs 2(b)
and 4 and other valuable consideration, the adequacy of which Ms. Pinette expressly acknowledges,
Ms. Pinette hereby releases and forever discharges the Company, and all of its affiliates, parent
corporations, subsidiaries, divisions, predecessors, successors, and assigns, and all of their
respective directors, officers, agents and employees, personally and in their representative and
official capacities, from any and all local, state and federal lawsuits, claims, remedies, damages,
demands, discrimination suits or charges, costs and attorneys fees, and any causes of action of
whatever type or nature, whether legal or equitable, whether known, unknown or unforeseen. The
rights, liabilities, claims and actions released, waived and extinguished here by Ms. Pinette, and
with respect to which Ms. Pinette covenants not to sue, shall include but not be limited to those
arising or which might arise under Title VII of the Civil Rights Act of 1964; any and all claims
under the Civil Rights Act of 1866; any and all claims under the Americans With Disabilities Act of
1990; any and all claims under the Age Discrimination in Employment Act, as amended, including the
Older Workers Benefit Protection Act of 1990; any and all claims under Family Medical Leave Act of
1993; any and all claims under the Employment Retirement Income Security Act; any and all claims
for attorneys fees; any and all contract, tort or common law claims, included but not limited to,
any and all claims for compensation or bonuses under any of the Company’s compensation plans; and
any and all claims under any federal, state or local statute or ordinance or under any federal,
state or local common law.

     6. No Admission. The parties agree that this Agreement is entered into solely because
of a desire of the parties to amicably resolve all matters between them, and nothing

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contained
herein, and no actions undertaken by the Company with respect to this Agreement, shall ever be
treated as, or claimed or construed to be, an admission by the Company of any fault, wrongdoing,
liability, injury or damages.

     7. Confidentiality. Ms. Pinette agrees to keep the existence and terms of this
Agreement strictly confidential, and further agrees not to disclose or permit disclosure of any
dollar amount, benefit or other term or information concerning this Agreement, to any other person,
commercial or non-profit entity, print, radio or television news media, or make other disclosure of
any kind whatsoever, except: (a) as required to do so by court order; (b) as necessary for tax
preparation or to respond to inquiries or audits by a federal, state or local taxing authority; (c)
to an immediate family member, such as a spouse (who must be instructed about the confidentiality
requirements and penalties of this Agreement); or (d) to her legal counsel in connection with her
execution of this Agreement.

     8. Company Property. Ms. Pinette agrees that all information, files, records,
materials and property furnished to her by or on behalf of the Company in the performance of her
employment for the Company and all information, files, records, materials and property prepared or
maintained by her in the performance of her employment for the Company are and shall remain the
sole and exclusive property of the Company. Ms. Pinette represents and agrees that all such
information, files, records, materials and property, company identification card, business cards
and any Company credit cards and all keys to any Company property or premises have been turned over
to the Company.

     9. Cooperation. Ms. Pinette agrees to cooperate fully with the Company in providing
information and assistance to make whatever transitions the Company deems necessary on any Company
matters or projects in which she is or may have been involved. Ms. Pinette also agrees to not make
any disparaging statements about the Company, including but not limited to, its management, staff,
products or services. Ms. Pinette further agrees that if future litigation or claims are asserted
against or by the Company, its assets, employees or officers
regarding any matter that arose during her employment and relate to her or her area of

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responsibility, that she will cooperate fully in supplying thorough and accurate information for
the Company’s investigation, defense or prosecution of such claims or litigation.

     10. Binding Agreement. This Agreement is binding on and will inure to the benefit of
both parties and the parties’ respective heirs, executives, administrators, personal
representatives, successors and assigns. Each party acknowledges and represents that they have the
authority to enter into and bind themselves to the terms and conditions of this Agreement.

     11. Saving. In the event that one or more of the provisions of this Agreement or
portions thereof are determined to be illegal or unenforceable, all remaining provisions will
remain valid and in full force and effect to the fullest extent permitted by law.

     12. Governing Law. This Agreement is entered into in the State of Ohio, enforceable
by either party, and will be construed and interpreted in accordance with Ohio law. This Agreement
also may be used as the basis for an injunction action in the event a breach or threatened breach
of its confidentiality provision occurs.

     13. Entire Agreement. This Agreement contains the entire agreement between the
parties and no additional promises have been made or relied upon and this Agreement supersedes all
previous agreements between the parties with respect to the employment of Ms. Pinette; provided,
however, this Agreement does not supersede, modify or affect Sections 6 (Confidential Information),
7 (Inventions), 8 (Noncompetition and Nonsolicitation), 9(b) (Termination by Company for Cause),
9(c) (Termination by You), 9(d) (Termination by Company Without Cause), 10 (Remedies; Venue;
Process), 12 (No Waiver), 13 (Saving), 14 (No Limitation), and 17 (Further Acknowledgement) of the
Employment Agreement, which sections of said agreement remain in full force and effect and Ms.
Pinette continues to be fully bound by the terms thereof. The terms of this Agreement are
contractual and not a mere recital and the parties intend this Agreement to be a substituted
contract, and not an executory accord.

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[INTENTIONALLY LEFT BLANK]

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     By their signature below, the parties acknowledge that they have read the foregoing
Agreement, and fully understand it. Ms. Pinette acknowledges that she was given up to twenty-one
(21) days within which to consider this Agreement, that she was advised to consult with legal
counsel prior to signing the Agreement, and that she has the right to revoke this Agreement, in
writing to the Company, for a period not to exceed seven (7) days after the date on which it is
signed by her. The parties hereby acknowledge that if Ms. Pinette fails to exercise this right to
revoke, this Agreement will immediately become a binding contract as to its terms. We now
voluntarily sign this Agreement effective as of the date first written above, signifying our
agreement and willingness to be bound by its terms.

     IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the date
first above stated.

	 	 	 	 	 	 	 	 	 
	Applied Innovation Inc.

	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	/s/ William H. Largent	 	 
	 	 	 	/s/ Angela R. Pinette
	 

	 
	 	 	 	 	 	 
	 

	William H. Largent
	 	 	 	 	 	Angela R. Pinette
	 

	President and CEO	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date: 

	July 11, 2006
	 	 	 	Date: 
	July 11, 20006

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