EXHIBIT 10.61
SEVERANCE AND RELEASE AGREEMENT
This Severance and Release Agreement (the "Agreement") is made and
entered into by and between Xxxx Xxxxx II ("Xxxxx") and MTI Technology
Corporation, a Delaware corporation ("MTI" or "the Company"), and shall become
effective on the Effective Date (as defined in Section 5c, below).
RECITALS
On or about July 12, 2000, Xxxxx commenced employment with MTI as the
Company's Chief Operating Officer.
On or about June 6, 2002, MTI and Xxxxx mutually agreed to terminate
Xxxxx'x employment. MTI does not have a uniform policy or practice of granting
particular severance benefits to its employees or executives. However, MTI
offered to pay to Xxxxx only those severance benefits described in the
paragraphs that follow in exchange for Xxxxx'x release of all claims against the
Company. Xxxxx accepted this offer.
NOW, THEREFORE, in consideration of the recitals listed above, and the
mutual promises contained in this Agreement, Xxxxx and the Company agree,
covenant, and represent as follows:
AGREEMENT
1. Termination Of Employment
x. Xxxxx and MTI hereby agree to mutually terminate Xxxxx'x
employment as the Chief Operating Officer of the Company and any and all other
positions that he may hold with the Company, with an effective date of June 6,
2002 (the "Termination Date").
b. As of the Termination Date, MTI shall pay to Xxxxx (i) all
accrued but unpaid salary as the Termination Date in the total gross amount of
$9,500.00 and (ii) all unused vacation pay accrued up to and including June 6,
2002 in the total amount of $30,465.31 (collectively, the "Termination
Payment"). The total gross amount of the Termination Payment is $43,152.81. MTI
shall withhold from the Termination Payment all applicable payroll taxes,
including federal and state income taxes, as well as other authorized
deductions.
2. Severance Benefits
a. After the Effective Date of this Agreement, Xxxxx shall
receive a severance payment from the Company in the total gross amount of
$154,375.00 (the "Severance Payment"), to be paid bi-weekly in thirteen equal
payments of $11,875.00 (the "Installment Payments"). The first Installment
Payment will be paid on MTI's first payroll date following the Effective Date of
this Agreement. MTI shall withhold from
the Installment Payments all applicable payroll taxes, including federal and
state income taxes, as well as other authorized deductions.
x. Xxxxx shall also receive from the Company, after the Effective
Date of this Agreement, a car allowance in the total gross amount of $12,000.00,
to be paid in six equal payments of $2,000.00 (the "Auto Allowance"), beginning
on MTI's first payroll date following the Effective Date of this Agreement. MTI
shall withhold from the Auto Allowance all applicable payroll taxes, including
federal and state income taxes, as well as other authorized deductions.
c. Subject to the approval of MTI's Board of Director's, MTI
agrees that Xxxxx'x Stock Options (as defined below) shall immediately vest and
become fully exercisable for a period beginning on the date of such approval and
ending on the date 90 days after the Termination Date. Xxxxx understands and
agrees that his right to exercise the Stock Options shall be in accordance with
and subject to the terms and conditions set forth in, as applicable, the MTI
Technology Corporation 1996 Stock Incentive Plan, as amended (the "1996 Stock
Incentive Plan"), the MTI Technology Corporation 2001 Stock Incentive Plan, as
amended (the "2001 Stock Incentive Plan"), and Xxxxx'x respective Stock Option
Award Agreements with MTI. The term "Stock Options" shall mean the 200,000
shares granted to Xxxxx on July 12, 2000 under the 1996 Stock Incentive Plan,
the 100,000 shares granted to Xxxxx on September 28, 2000 under the 1996 Stock
Incentive Plan, the 200,000 shares granted to Xxxxx on April 5, 2001 under the
1996 Stock Incentive Plan, the 13,542 shares granted to Xxxxx on July 9, 2001
under the 1996 Stock Incentive Plan, the 27,083 shares granted to Xxxxx on
October 3, 2001 under the 2001 Stock Incentive Plan, and the 100,000 shares
granted to Xxxxx on April 1, 2002 under the 2001 Stock Incentive Plan. Xxxxx
agrees that he has no other rights to acquire any other securities of MTI, or
any interest therein.
x. Xxxxx acknowledges that, as of July 1, 2002, he may be
eligible to obtain continuing coverage under MTI's group medical plan pursuant
to the provisions of the Consolidated Omnibus Reconciliation Act and its
implementing regulations ("COBRA"). From July 1, 2002 through December 31, 2002,
or until such time as Xxxxx obtains other employment, whichever occurs sooner,
MTI will pay the premium payments for any COBRA continuation coverage that Xxxxx
elects to obtain for himself and his family. In addition, from July 1, 2002
through December 31, 2002, or until such time as Xxxxx obtains other employment,
whichever occurs sooner, MTI will reimburse Xxxxx for medical expenses (and life
insurance) incurred by Xxxxx that are not covered by his COBRA continuation
coverage but that would be covered under MTI's Executive Medical Plan. As of
December 31, 2002, or such lesser time if Xxxxx obtains other employment sooner,
and at all times thereafter, Xxxxx shall be solely responsible for paying any
and all premiums necessary to continue such health insurance benefits. Xxxxx
hereby acknowledges that he has received from the Company all required
information and forms regarding his right to continue his health insurance
benefits under COBRA.
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x. Xxxxx shall not be eligible for, or entitled to receive, any
severance benefits, stock, stock options, or any other benefits other than those
specifically identified in this Agreement including, but not limited to, any
benefits under Xxxxx'x Xxxxxxxxx Agreement with the Company, dated July 10,
2000, which shall be of no further force or effect.
x. Xxxxx will cooperate with MTI in the orderly transfer of his
responsibilities to other MTI employees. Xxxxx will also cooperate in good faith
with MTI in the defense of any action that has been or will be brought against
MTI that arises out of, or relates in any way to his employment with MTI. MTI
agrees, covenants and represents that it will indemnify and hold Xxxxx harmless
to the extent required by law for all that Xxxxx necessarily expends or loses in
direct consequence of the discharge of his duties under this paragraph 2(f).
3. Release
a. In consideration of the promises specified in this Agreement
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Xxxxx, for himself and his heirs, assigns, executors,
administrators, and agents, past and present (collectively, the "Xxxxx
Affiliates"), hereby fully and without limitation releases, covenants not to
xxx, and forever discharges MTI and its respective subsidiaries, divisions,
affiliated corporations, affiliated partnerships, parents, trustees, directors,
officers, shareholders, partners, agents, employees, representatives,
consultants, attorneys, heirs, assigns, executors and administrators,
predecessors and successors, past and present (collectively with MTI, the "MTI
Releasees"), both individually and collectively, from any and all rights,
claims, demands, liabilities, actions and causes of action whether in law or in
equity suits, damages, losses, workers' compensation claims, attorneys' fees,
costs, and expenses, of whatever nature whatsoever, known or unknown, fixed or
contingent, suspected or unsuspected ("Claims"), that Xxxxx or the Xxxxx
Affiliates now have, or may ever have, against any of the MTI Releasees that
arise out of, or are in any way related to: (i) Xxxxx'x employment by MTI or any
of the other MTI Releasees; (ii) the termination of Xxxxx'x employment by MTI or
any of the other MTI Releasees; and (iii) any transactions, occurrences, acts or
omissions by MTI or any of the other MTI Releasees occurring prior to the
Effective Date of this Agreement.
b. Without limiting the generality of the foregoing, Xxxxx
specifically and expressly releases any Claims occurring prior to the Effective
Date of this Agreement arising out of or related to violations of any federal or
state employment discrimination law, including the California Fair Employment
and Housing Act; Title VII of the Civil Rights Act of 1964; the Americans with
Disabilities Act; the National Labor Relations Act; the Equal Pay Act; the
Employee Retirement Income Security Act of 1974; the Worker Adjustment and
Retraining Notification Act; as well as Claims arising out of or related to
violations of the provisions of the California Labor Code; state and federal
wage and hour laws; breach of contract; fraud; misrepresentation; common counts;
unfair competition; unfair business practices; negligence; defamation;
infliction
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of emotional distress; invasion of privacy; assault; battery; false
imprisonment; wrongful termination; and any other state or federal law, rule, or
regulation.
x. Xxxxx represents that he did not suffer any work-related
injuries while employed by the Company, that he has no intention of filing any
claims for workers' compensation benefits of any type against the Company, and
that he will not file or attempt to file any claims for workers' compensation
benefits of any type against the MTI Releasees. Xxxxx acknowledges that the
Company has relied upon these representations, and that the Company would not
have entered into this Agreement but for these covenants and representations. As
a result, Xxxxx agrees, covenants, and represents that the Company or any of the
other Releasees may, but are not obligated to, submit this Agreement to the
Workers' Compensation Appeals Board for approval as a compromise and release as
to any such new or unasserted workers' compensation claims or any of the other
Releasees.
4. Release of Unknown Claims
Xxxxx acknowledges that he is aware of and familiar with the
provisions of Section 1542 of the California Civil Code, which provides as
follows:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him, must have
materially affected his settlement with the debtor."
Xxxxx hereby waives and relinquishes all rights and benefits that
he may have under Section 1542 of the California Civil Code, or the law of any
other state or jurisdiction, or common law principle, to the same or similar
effect.
5. Older Worker's Benefit Protection Act.
a. This Agreement is subject to the terms of the Older Workers
Benefit Protection Act of 1990 (the "OWBPA"). The OWBPA provides that an
individual cannot waive a right or claim under the Age Discrimination in
Employment Act ("ADEA") unless the waiver is knowing and voluntary. Pursuant to
the terms of the OWBPA, Xxxxx acknowledges and agrees that he has executed this
Agreement voluntarily, and with full knowledge of its consequences.
b. In addition, Xxxxx hereby acknowledges and agrees that: (a)
this Agreement has been written in a manner that is calculated to be understood,
and is understood, by Xxxxx; (b) the release provisions of this Agreement apply
to rights and claims that Xxxxx may have under the ADEA, including the right to
file a lawsuit against the Company for age discrimination; (c) the release
provisions of this Agreement do not apply to any rights or claims that Xxxxx may
have under the ADEA that arise after the date Xxxxx executes this Agreement; (d)
the Company does not have a preexisting duty to pay the severance benefits
identified in this Agreement; (e) Xxxxx has been advised in writing to consult
with an attorney prior to executing this Agreement.
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x. Xxxxx agrees, covenants, and represents that the termination
of his employment shall not for any purpose be deemed to have resulted from an
"exit incentive program" or "any other termination program offered to a group or
class of employees," as those phrases are defined in the OWBPA and its
implementing regulations. Accordingly, Xxxxx acknowledges and agrees that: (i)
he shall have a period of 21 days in which to consider whether to execute this
Agreement; (ii) if he executes this Agreement prior to expiration of the 21-day
period, he has voluntarily decided to execute the Agreement; and (iii) he shall
have a period of seven days after execution of this Agreement to revoke this
Agreement. Xxxxx further understands that this Agreement shall not become
effective until expiration of this seven-day period (the "Effective Date").
6. Confirmation of Payment of Wages.
Xxxxx acknowledges that he has been paid all wages and other
compensation due and owing to him from the Company as of the Effective Date of
this Agreement, including all commissions, bonuses, and accrued vacation.
Accordingly, Xxxxx understands that the release provisions of Sections 3 and 4
of this Agreement release and discharge the Company from any and all claims that
he may have against the Company for unpaid wages and other compensation
including, but not limited to, any claims for salary; bonuses; commissions;
stock; stock options; other securities, or any other ownership interests or
rights to acquire, directly or indirectly, ownership interests in the Company;
vacation pay; fringe benefits; expense reimbursements; severance pay; or any
other form of compensation not listed as part of this Agreement.
7. Confidentiality and Non-Disparagement
x. Xxxxx agrees, covenants and represents that the facts relating
to the existence of this Agreement, the negotiations leading to the execution of
this Agreement, and the terms of this Agreement shall be held in confidence, and
shall not be disclosed, communicated, offered into evidence in any legal
proceeding, or divulged to any person other than those who must perform tasks to
effectuate this Agreement. Notwithstanding the foregoing, the parties may
disclose the terms of this Agreement to those persons to whom disclosure is
necessary for the preparation of tax returns and other financial reports; the
obtaining of legal advice; and to persons to whom disclosure is ordered by a
court of competent jurisdiction or as otherwise required by law, including the
Securities Exchange Act of 1934, as amended (including the regulations
promulgated thereunder), and the regulations of Nasdaq; by obligation to owners,
shareholders, partners, or members of the Company; or by MTI in connection with
any financing, merger, sale, or similar transaction. Without limiting the
foregoing, Xxxxx understands and acknowledges that MTI may be required to
disclose this Agreement, or the terms of this Agreement, in connection with its
filings with the Securities and Exchange Commission or Nasdaq, as well as in
connection with any potential financing, merger, sale, or similar transaction.
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x. Xxxxx agrees, covenants and represents that he shall not take
any action or make any comments that actually or potentially disparage, disrupt,
damage, impair, or otherwise interfere with MTI's business interests or
reputation.
8. Trade Secrets
Xxxxx acknowledges that he executed a Proprietary Information
Agreement and that he shall continue to be bound by this Proprietary Information
Agreement following the termination of his employment with MTI. A copy of the
Proprietary Information Agreement is attached to this Agreement as Exhibit "A."
Without limiting in any way the terms of the Proprietary Information Agreement,
Xxxxx agrees that he will not disclose over the Internet any confidential,
proprietary, or trade secret information of the Company.
9. Non-Admission of Liability
This Agreement shall not be treated as an admission of liability
by MTI, at any time or for any purpose, and this Agreement shall not be
admissible in any proceeding between the parties except a proceeding relating to
a breach of its provisions after execution, or a proceeding to obtain approval
of the Agreement as a compromise and release as provided in Section 3(c) of this
Agreement.
10. Arbitration of Disputes
a. MTI and Xxxxx agree that, to the fullest extent permitted by
law, any and all claims or controversies between them (or between Xxxxx and any
present or former officer, director, agent, or employee of the Company or any
parent, subsidiary, or other entity affiliated with the Company) relating in any
manner to Xxxxx'x employment or the termination of Xxxxx'x employment shall be
resolved by final and binding arbitration in accordance with the then-existing
National Rules for the Resolution of Employment Disputes of the American
Arbitration Association (the "AAA Rules"). Claims subject to arbitration shall
include, but are not limited to: contract claims, tort claims, claims relating
to compensation and stock options, as well as claims based on any federal,
state, or local law, statute, or regulation, including but not limited to any
claims arising under Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Americans with Disabilities Act, and the
California Fair Employment and Housing Act. However, claims for unemployment
compensation, workers' compensation, and claims under the National Labor
Relations Act shall not be subject to arbitration.
b. The arbitrator shall prepare a written decision containing the
essential findings and conclusions on which the award is based so as to ensure
meaningful judicial review of the decision. The arbitrator shall apply the same
substantive law, with the same statutes of limitations and same remedies, that
would apply if the claims were brought in a court of law. The arbitrator shall
have the authority to rule on a motion to dismiss and/or summary judgment by
either Xxxxx or the
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Company and shall apply the standards governing such motions under the
California Code of Civil Procedure.
c. The parties may bring an action in court to compel arbitration
under this Agreement and to enforce an arbitration award. Otherwise, neither
party shall initiate or prosecute any lawsuit or administrative action in any
way related to any arbitrable claim, including without limitation any claim as
to the making, existence, validity, or enforceability of the agreement to
arbitrate. Nothing in this Agreement precludes a party from filing an
administrative charge before an agency that has jurisdiction over an arbitrable
claim. All arbitration hearings under this Agreement shall be conducted in
Orange County, California. Notwithstanding the foregoing, either party may, at
its option, seek injunctive relief in a court of competent jurisdiction for any
claim or controversy arising out of or related to the unauthorized use,
disclosure, or misappropriation of the confidential and/or proprietary
information of either party.
d. THE PARTIES UNDERSTAND AND AGREE THAT THIS SECTION CONSTITUTES
A WAIVER OF THEIR RIGHT TO A TRIAL BY JURY OF ANY CLAIMS OR CONTROVERSIES
COVERED BY THIS AGREEMENT, AND THAT NONE OF THOSE CLAIMS OR CONTROVERSIES SHALL
BE RESOLVED BY A JURY TRIAL.
e. The arbitration provisions of this Section shall be governed
by the Federal Arbitration Act ("FAA"), unless a court of competent jurisdiction
determines the FAA to be inapplicable, in which case the parties agree that the
California Arbitration Act (Code Civil Procedure Section 1280 et seq.) shall
apply. In all other respects, this Section 10 is to be construed in accordance
with the laws of the State of California, without reference to conflicts of law
principles.
11. Successors and Assigns
This Agreement shall be binding upon and shall inure to the
benefit of the respective heirs, assigns, executors, administrators, successors,
subsidiaries, divisions and affiliated corporations and partnerships, past and
present, and trustees, directors, officers, shareholders, partners, agents and
employees, past and present, of Xxxxx and MTI.
12. Ambiguities
This Agreement has been reviewed by the parties. The parties have
had a full opportunity to negotiate the terms and conditions of this Agreement.
Accordingly, the parties expressly waive any common-law or statutory rule of
construction that ambiguities should be construed against the drafter of this
Agreement, and agree, covenant, and represent that the language in all parts of
this Agreement shall be in all cases construed as a whole, according to its fair
meaning.
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13. Choice of Law
This Agreement has been negotiated and executed in the State of
California and is to be performed in Orange County, California. This Agreement
shall be governed by and interpreted in accordance with the laws of the State of
California, including all matters of construction, validity, performance, and
enforcement, without regard to California's conflict of laws rules.
14. Integration
This Agreement, the Proprietary Information Agreement attached as
Exhibit "A," the 1996 Stock Incentive Plan, the 2001 Stock Incentive Plan, and
Xxxxx'x Stock Option Award Agreements with the Company together constitute a
single, integrated written contract expressing the entire agreement of the
parties. There are no other agreements, written or oral, express or implied,
between the parties with respect to the subject matter hereof. These agreements
may not be orally modified. These agreements may only be modified in a written
instrument signed by both parties.
15. Severability
The parties to this Agreement agree, covenant and represent that
each and every provision of this Agreement shall be deemed to be contractual,
and that they shall not be treated as mere recitals at any time or for any
purpose. Therefore, the parties further agree, covenant and represent that each
and every provision of this Agreement shall be considered severable, except for
the Release provisions of Sections 3 and 4 of this Agreement. If a court of
competent jurisdiction finds the release provisions of Sections 3 or 4 of this
Agreement to be unenforceable or invalid, then this Agreement shall become null
and void, and any severance benefits provided by MTI to Xxxxx pursuant to
Section 2 of the Agreement shall be returned to MTI within 15 days. If a court
of competent jurisdiction finds any provision other than the release provisions
of Sections 3 or 4, or part thereof, to be invalid or unenforceable for any
reason, that provision, or part thereof, shall remain in force and effect to the
extent allowed by law, and all of the remaining provisions of this Agreement
shall remain in full force and effect and enforceable.
16. Execution of Counterparts
This Agreement may be executed in counterparts, and if so
executed and delivered, all of the counterparts together shall constitute one
and the same Agreement.
17. Captions
The captions and section numbers in this Agreement are inserted for the
readers' convenience, and in no way define, limit, construe or describe the
scope or intent of the provisions of this Agreement.
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18. Representations And Warranties
x. Xxxxx represents and warrants that he has the authority to
enter into this Agreement and to bind all persons and entities claiming through
him.
x. Xxxxx represents that he has read this Agreement and fully
understands all of its terms; that MTI has advised him to consult with an
attorney, and that he has conferred with his attorneys or has knowingly and
voluntarily chosen not to confer with his attorneys about this Agreement; that
he has executed this Agreement without coercion or duress of any kind; and that
he understands any rights that he has or may have and signs this Agreement with
full knowledge of any such rights.
x. Xxxxx acknowledges that no representations, statements or
promises made by MTI, or by its agents or attorneys, has been relied on in
entering into this Agreement.
THE UNDERSIGNED HAVE READ THE FOREGOING AGREEMENT AND ACCEPT AND AGREE
TO THE PROVISIONS CONTAINED THEREIN, AND HEREBY EXECUTE IT, KNOWINGLY AND
VOLUNTARILY, AND WITH FULL UNDERSTANDING OF ITS CONSEQUENCES.
IF XXXXX SIGNS THIS AGREEMENT BEFORE THE EXPIRATION OF THE 21-DAY REVIEW
PERIOD PROVIDED BY SECTION 5(c), XXXXX AGREES THAT HE HAS VOLUNTARILY WAIVED THE
REVIEW PERIOD.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
which consists of 9 pages, on the dates indicated below.
XXXX XXXXX MTI TECHNOLOGY CORPORATION
Signature: /s/ XXXX XXXXX Signature: /s/ XXX XXXXXXXX
------------------------- -------------------------
Xxx Xxxxxxxx
President
Date: JULY 30, 2002 Date: 8/12/02
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