EXHIBIT 10(cc)
TERMINATION AGREEMENT AND RELEASE
---------------------------------
This Termination Agreement and Release, executed as of this l9th day of July
1995, is by and between Xxxxxxx X. Xx Xxxxx (hereinafter referred to as
"Employee") and Applied Magnetics Corporation, a Delaware corporation
(hereinafter referred to as "Employer").
Recitals
--------
A. Employee is currently serving as Vice President, Secretary and
General Counsel of Employer and has management responsibilities for Employer's
Legal Department.
B. Employer has decided to discontinue its Legal Department,
eliminate the position of General Counsel and to procure legal services from
other sources.
C. Employee and Employer desire to resolve all claims by Employee
and to reach a mutual understanding and acceptance of the terms and conditions
related to the termination of Employee's employment with Employer.
Agreement
---------
NOW, THEREFORE in consideration of the mutual promises and covenants
herein contained it is hereby agreed as follows:
1. Employee will be terminated from employment by Employer
effective March 1, 1996 ("Termination Date"). Employee will cease to be an
officer of Employer and its subsidiary and affiliated corporations and entities
as of the date hereof and except as otherwise expressly provided herein is
relieved of his duties and responsibilities as an officer and employee of
Employer. Employee shall also no longer be considered by Employer to be a
"reporting person" for purposes of Rule 16b promulgated under the Securities and
Exchange Act of 1934, as amended. Employee agrees that from the date of this
Agreement to the Termination Date he will be available to respond to inquiries
from Employer regarding information he obtained while an employee of Employer,
provided that the time spent by Employee on such matters during that period
shall not exceed four (4) hours per month, unless the parties agree otherwise in
writing. In the event the Employer utilizes the services of Employee in excess
of four (4) hours per month prior to the Termination Date and at any time after
the Termination Date, Employee shall charge Employer for such time and Employer
shall pay for such time, at his normal hourly rate of $250 and for reasonable
costs and expenses. Employer will promptly cause a person other than Employee to
be designated as Employer's agent for service of process in each jurisdiction
where Employer is qualified to conduct business and Employee is hereby relieved
of any and all duties as agent for service process.
2. Employee will not report to work at any of Employer's
facilities. He will, however, remain on employee status to and including the
Termination Date subject to the provisions of paragraph 1 above. At no time from
and after the date of this Agreement shall Employee be authorized to represent
or bind Employer or any of its subsidiary or affiliated corporations or entities
in any way, or incur any reimbursable business expenses, unless expressly
authorized in advance in writing by the Chief Executive Officer of Employer.
During the period from the date hereof to the Termination Date, Employer shall
provide to Employee during normal business hours reasonable secretarial support
(but not office space) to assist Employee in his efforts to seek other
employment. Employee shall be kept in Employer's voice mail system until March
1, 1996.
3. During the period from the date of this Agreement to and
including the Termination Date, Employer will pay to Employee $3,269.20 per week
in accordance with Employer's standard payroll practices. Employee, or his
heirs or personal representative in the case of death or disability shall be
paid said salary, and shall receive the benefits referred to in paragraph 4
below, except as otherwise expressly provided therein, even in the event
Employee dies or becomes disabled (as defined in section 1.6 of the Retention
Agreement), is employed by another entity, he establishes his own law practice
or otherwise becomes self-employed, provided,
1
however, upon occurrence of any of these events he shall cease to be an employee
of Employer. Employer may deduct from said salary all customary and usual
payroll deductions, including contributions to Employer's 401(k) Plan in an
amount consistent with Plan limitations. Notwithstanding the foregoing, in the
event Employee is not employed by a third party or has not established his own
law practice or otherwise become self-employed by October 1, 1996, commencing on
that date, Employer agrees to pay Employee $3,269.20 per week, provided that
such obligation shall cease on the earliest to occur of (i) Employee becoming
employed by another entity, (ii) Employee establishing his own law practice or
otherwise becoming self-employed, or (iii) April 1, 1997.
4. Employer will continue Employee's current group insurance, or
the equivalent thereof (including group medical, dental, long-term disability,
vision, basic life insurance, supplemental life insurance coverage, health care
spending account, and 401(k) plan), including dependent coverage as applicable,
through the Termination Date. From and after the date of this Agreement,
Employee will not be entitled to participate in any other employee benefit plans
of Employer except those specifically listed above, and Employee will not accrue
any vacation or paid time off or personal time, provided, however, that if it
should at any time be determined that Employee has accrued vacation/personal
time during the period from the date of this Agreement to the Termination Date,
the payments referred to in paragraph 3 above shall be deemed to include payment
in full for any accrued vacation/personal time. Commencing on March 1, 1996,
Employer agrees to reimburse Employee for COBRA premiums on the Employer's
regular group medical, dental and vision policies for a period of 18 months,
provided that in the event Employee becomes covered under plans offered by
another employer, generally comparable to the group plans provided by Employer,
prior to the expiration of the obligation of Employer to make such
reimbursements, the obligation of Employer to make such reimbursements shall
immediately cease. Reimbursement will be made within ten (10) days of receipt
by Employer of an invoice from Employee reflecting COBRA premium payments made.
5. Stock options providing for the purchase of 39,818 shares of the
Common Stock of Employer heretofore granted to Employee and as reflected on
Exhibit "A" attached hereto, and not vested are hereby deemed to be fully vested
as of the date hereof and shall be exercisable up to the Termination Date.
Employer represents that the acceleration of the exercisability of such stock
options does not require any amendments to any of the stock option plans
pursuant to which such options were granted and will hold Employee harmless and
indemnify him for any loss, damage, cost or expense suffered or incurred by
Employee in connection with any breach of this representation. So long as
employer is not in breach of the foregoing indemnification obligation, Employee
agrees (i) not to claim or assert that such acceleration requires any such
amendment to any such stock option plan, and (ii) to waive all rights with
respect to any such claim or assertion, or any cause of action relating thereto
(other than rights to the indemnification described in the immediately preceding
sentence).
6. For and in consideration of all claims that Employee has or may
have against Employer for emotional distress, personal injury or other tort
damages Employee claims to have suffered as a consequence of his termination,
Employer agrees to pay to Employee a sum equal to the current outstanding
principal balance under the Company Loan, as hereinafter defined (together with
any and all interest due thereunder), plus an amount equal to the closing price
of the Employers' Common Stock as reported on the New York Stock Exchange on the
date of this Agreement multiplied by 7,500, which shall be payable as follows:
(a) Employer's agreement, effective as of the date of this
Agreement to forgive, release, cancel and discharge all remaining indebtedness
due by Employee under the Company Loan; and
(b) Employer's agreement to release all restrictions against
the transfer, sale or hypothecation imposed by Employer on all shares of the
Common Stock of Employer issued to Employee under Employer's 1989 Amended and
Restated Long Term Incentive Plan ("Restricted Shares").
Upon execution of the Agreement, the Employer will deliver to Employee the
original Executive Note as hereinafter defined, marked "Canceled" and a full and
complete reconveyance of the Deed of Trust in recordable form and shall also
furnish to the Employer's Transfer Agent, First Interstate Bank of California,
written, irrevocable instructions to the effect that all restrictions
2
shall be immediately removed from the Restricted Shares and that such shares may
be transferred free and clear of such restriction and to the extent the
Restricted Shares are free of restrictions on sale provided under Rule 144
promulgated under the Securities Act of 1933, as amended, free of any
restrictive legends or stop codes. The consideration payable to Employee shall
not be reflected in his W-2 income, shall not be subject to withholding taxes or
other payroll deduction and shall not be reported on Form 1099. As used herein,
the term "Company Loan" shall mean that certain loan, with a current outstanding
principal balance of $60,000, made by Employer to Employee and represented by
(a) that certain Promissory Note dated January 10, 1994 (the "Executive Note")
and (b) a deed of trust dated January 10, 1994, on that certain improved real
property located at 0000 Xx. Xxxxx Xxxxx, Xxxxx Xxxxxxx, Xxxxxxxxxx ("Deed of
Trust").
7. Employer, shall at its cost, provide to Employee the
outplacement services of Drake, Beam, Morin, Inc. Pursuant to that firm's
Executive Six Month Program, such services to be provided at a Los Angeles area
office of that firm.
8. Employee shall be entitled to take title to the furniture in his
current office which consists of a desk, chair, filing cabinets, personal
computer, meeting table and chairs and book shelf, as well as the legal
reference materials located in Employer's "Law Library", including the book
shelves holding such materials, which are hereby conveyed to the Employee on an
"AS IS, WHERE IS" basis without any warranties either express or implied. Such
furniture must be removed from Employer's premises at Employee's cost on or
before July 28, 1995. Employee will be granted access to the premises to remove
above mentioned items.
9. Employee agrees that he has heretofore received payment in full
for any and all (i) paid time off (PTO) accrued to the date of this Agreement,
(ii) salary and other compensation through the date of this Agreement, and (iii)
outstanding business expenses incurred prior to the date of this Agreement.
10. In consideration of the above, Employee for and on behalf of
himself, his spouse, descendants, ancestors, dependents, heirs, executors,
administrators, assigns and successors, and each of them, hereby covenants not
to xxx and fully, forever and irrevocably releases, discharges and acquits
Employer its subsidiaries and affiliates, and each of them, and their respective
officers, directors, shareholders, employees, agents, affiliates and attorneys
and their respective heirs, representatives, successors and assigns, and each of
them (hereinafter collectively referred to as the "Employer Releases") from any
and all actions, causes of action, debts, agreements, promises, liabilities,
claims, damages or demands of any kind or nature whatsoever, that Employee has
had, may have had, or now has, or hereafter can, shall or may have against the
Employer Releases, and each of them, for or by reason of any matter, cause or
thing whatsoever, through and including the date hereof, including specifically,
but not exclusively and without limiting the generality of the foregoing,
employment of Employee by Employer and the termination thereof, and any and all
forms of compensation or reimbursement, including any incentive awards or
bonuses, relating to such employment, any claim for worker's compensation or any
claim under or pursuant to that certain Retention Agreement, dated as of January
2, 1994, by and between Employer and Employee (the "Retention Agreement").
Notwithstanding the foregoing, nothing contained herein shall be construed as a
waiver, release or discharge of any rights which Employee may have (i) to
indemnification under and subject to the provision of Article VII of the By-Laws
of Employer, (ii) under either Delaware General Corporation Law 145, or
California Labor Code 2802, or (iii) under the Company's directors' and
officers' liability insurance policies.
11. In consideration of the above, Employer, for and behalf of
itself, its subsidiaries and affiliates, and each of them and their respective
officers, directors, shareholders, partners, employees, agents, affiliates and
attorneys, and their respective heirs, representatives, successors and assigns,
and each of them hereby fully, forever, and irrevocably releases, discharges and
acquits Employee, his spouse, descendants, ancestors, dependents, heirs,
executors, administrators, assigns and successors, and each of them ("Employee
Releasees"), from any and all actions, causes of action, debts, agreements,
promises, liabilities, claims, damages or demands of any kind or nature
whatsoever, that Employer has had, may have had, or now has, or hereafter can,
shall or may have against Employee Releasees, and each of them, for or by reason
of any matter, cause or thing whatsoever, through and including the date hereof,
including specifically, but not exclusively and without limiting the generality
of the foregoing, any liability arising out or in connection with the employment
of Employee by Employer. Notwithstanding the foregoing, nothing contained herein
shall be construed as a waiver, releasee or discharge of any
3
rights which Employer may have in connection with any act or omission by
Employee at any time which constituted misappropriation, selfdealing, fraud or
intentional or willful misconduct of any nature.
12. It is understood and agreed that the releases set forth in
paragraphs 10 and 11 above, respectively, are intended as and shall be deemed to
be full and complete releases of any and all claims that Employee may or might
have against the Employer Releasees, or any of them, or, except as noted in
paragraph 11 above, that Employer may have against Employee Releasees, or any of
them, arising out of any act, omission or occurrence to date and said releases
are intended to cover and do cover any and all future damages and Claims not now
known to Employee or Employer or which may later develop or be discovered,
including all causes of action therefor and arising out of or in connection with
any occurrence to date.
13. The parties hereto each hereby represent and warrant that they
are aware of the provisions of Section 1542 of the Civil Code of the State of
California, which section reads 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."
The provisions of Section 1542 are hereby expressly waived by each party hereto.
Each party hereto similarly expressly waives any and all rights and benefits
conferred by any law of any state or territory of the United States or of any
foreign country, or principle of common law, which is similar, comparable or
equivalent to Section 1542 of the California Civil Code. Nothing herein,
however, shall be deemed to release any claim by either party hereto which
arises out of the nonperformance or breach of any of the terms and conditions
contained herein. Notwithstanding the foregoing, nothing herein contained shall
limit the right of either party hereto to enforce the provisions of this
Agreement.
14. Employee expressly acknowledges and agrees that, by entering
into this Agreement, he is waiving any and all rights or claims that he may have
arising under the Age Discrimination in Employment Act of 1967, as amended,
which have arisen on or before the date of execution of this Agreement.
Employee further expressly acknowledges and agrees that:
(a) In return for this Agreement, he will receive compensation
beyond that which he was already entitled to receive before entering into this
Agreement;
(b) He is hereby advised in writing by this Agreement to consult
with an attorney before signing this Agreement;
(c) He was given a copy of this Agreement on July 19, 1995, and is
informed by this Agreement that he has 21 days within which to consider the
Agreement; and
(d) He is hereby advised that he has seven (7) days following the
date of execution of this Agreement in which to revoke this Agreement. Any
revocation of this Agreement must be in writing and hand delivered during the
revocation period. This Agreement will become effective and enforceable seven
days following execution by Employee unless it is revoked during the seven-day
period.
Notwithstanding subparagraph (c) above, Employee, with full knowledge of his
rights, waives the period of twenty-one (21) days within which to consider this
Agreement.
15. Employer and Employee each promise to maintain this Agreement in
strict confidence and to make no disclosure of the terms of this settlement to
any third party, except attorneys for the parties, Employer's accountants,
Employee's family members, Employee's tax accountant, banks or other lenders to
whom Employee may be indebted or from whom Employee may seek to obtain credit,
and subject to the consent of Employer, which will not be unreasonably withheld,
the non-financial portions of this Agreement may be made available to potential
employers of Employee. If requested either party may make this Agreement
available to
4
governmental tax authorities and as may be required by law, provided, however,
that nothing herein contained shall prohibit Employee from disclosing the terms
of this Agreement as may be required by law in order to assert a claim for
unemployment insurance benefits, provided, however, that the foregoing shall in
no way limit the effect of the releases set forth above.
16. It is hereby agreed that both parties to this Agreement shall
refrain from making any disparaging remarks about the other party to this
Agreement (including disparaging remarks by the directors and executive officers
of Employer, but excluding any such remarks by the other employees of Employer)
and shall further refrain from interfering or causing others to interfere in the
business or affairs of the other party.
17. Employee agrees to return all Employer property in his
possession to Employer on or before the date hereof, including but not limited
to company-issued credit cards and office keys. Employee acknowledges that he
has heretofore entered into a Confidentiality and Assignment Agreement
("Confidentiality Agreement") with the Employer. The Confidentiality Agreement
and Section 12 of the Retention Agreement are each by this reference
incorporated herein in their entirety and are made a part of this Agreement.
Employee agrees and acknowledges that, as an employee of Employer, he is obliged
to comply with Employer's policies and procedures with respect to confidential,
proprietary and non-public information. Employee agrees that he will not,
without the Employer's prior written consent, at any time after the date of this
letter, divulge, furnish or make accessible to anyone or use in any way, any
information which is subject to the Confidentiality Agreement or Section 12 of
the Retention Agreement. Employee understands and agrees that any material
disclosure in contravention of the foregoing may release Employer from any
obligations it may have to Employee under this Agreement.
18. This Agreement supersedes any prior written, oral or implied
agreement between the parties hereto regarding the subject matter hereof,
particularly including, but not limited to, the Retention Agreement, which shall
in all respects, except Section 12 thereof which shall remain binding on
Employee and which is hereby incorporated herein by reference, be deemed null
and void effective as of the date hereof. This Agreement may only be amended by
a written agreement signed by the parties hereto.
19. Employee agrees and understands that the execution of this
Agreement shall not constitute or be construed as an admission by Employer of
any liability to or of the validity of any claim whatsoever by Employee.
20. Employer agrees and understands that the execution of this
Agreement shall not constitute or be construed as an admission by Employee of
any liability to or of the validity of any claim whatsoever by Employer.
21. Employer and Employee acknowledge that they have been advised to
obtain and have obtained the advice of legal counsel of their choice (in the
case of Employer, someone other than Employee) regarding their execution of this
Agreement.
22. Employee hereby represents and agrees that in entering into this
Agreement he has relied solely upon his own judgment, belief and knowledge and
that, except as set forth herein, no statement made by or on behalf of Employer
has in any way influenced him in such regard.
23. Employer hereby represents and agrees that in entering into this
Agreement it has relied solely upon its own judgment, belief and knowledge and
that, except as set forth herein, no statement made by or on behalf of Employee
has in any way influenced it in such regard.
24. Each party hereto represents and warrants to the other party
hereto that he or it has not assigned any claim he or it may or might have
against the other party to any third party.
25. This Agreement shall inure to the benefit of and be binding upon
each of the parties hereto and their respective successors and assigns. This
Agreement is in the nature of a personal services contract and may not be
assigned by Employee without the prior written consent of Employer. Any
assignment by Employee without Employer's consent shall be null and void.
5
This Agreement constitutes the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and may be amended only
by a written instrument executed by both parties hereto.
26. This Agreement shall be governed by and construed in accordance
with the laws of the State of California.
27. If either party files any action or brings any proceeding
against the other arising out of this Agreement, the prevailing party in any
such action or proceeding shall be entitled to recover as an element of his or
its costs of suit, and not as damages, reasonable attorneys' fees to be fixed by
the court.
28. The parties hereto acknowledge that the payments, benefits and
other accommodations provided for in this Agreement are not intended to and do
not establish any severance or termination allowance policy, plan or procedure
of Employer.
29. Employer represents that the material terms and conditions
contained herein have been approved by the Board of Directors of Employer.
30. It is agreed by each of the parties hereto that they have read
the above and fully understand the terms of this Agreement which they
voluntarily executed in good faith and deemed to be a full and equitable
settlement of this matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
__________________________________
Xxxxxxx X. Xx Xxxxx
APPLIED MAGNETICS CORPORATION
By_________________________________
Xxxxx X. Xxxxxxx, Chairman and
Chief Executive Officer
6
Exhibit A
XxXxxxx Stock Option Analysis
Accelerated Cash Value Total
Option Shares Option of Option Cash
Number Grant date Vested Price Per Share Value
---------------------------------------------------------------------------
I-0641 Oct-94 5000 $3.875 $3.38 $16,875
LB0001 Sep-94 1113 $4.250 $3.00 $ 3,339
S-0012 Feb-94 20000 $5.125 $2.13 $42,500
I-0629 Oct-93 7800 $5.875 $1.38 $10,725
A-0379 Oct-93 2200 $5.875 $1.38 $ 3,025
LT-0008 June-82 3705 $1.296 $5.95 $22,061
TOTALS 39818 $98,525
Shares With Accelerated Vesting as of July 17, 1995
Assumes a Stock Price of $7.25
7
