EXHIBIT 10.62
SEVERANCE AND RELEASE AGREEMENT
This Severance and Release Agreement (the "Agreement") is made and
entered into by and between Xxxxxxx Xxxxxxx ("Xxxxxxx") and MTI Technology
Corporation, a Delaware corporation ("MTI" or "the Company"), and shall become
effective on the Effective Date (as defined in Xxxxxxx 0x, xxxxx).
NOW, THEREFORE, in consideration of the recitals listed above, and the
mutual promises contained in this Agreement, Xxxxxxx and the Company agree,
covenant, and represent as follows:
1. Termination Of Employment
x. Xxxxxxx hereby agrees to voluntarily resign his employment
with MTI as the Vice President, Information Technology and Chief Information
Officer and any and all other positions that he may hold with the Company, with
an effective date of July 5, 2002 (the "Termination Date").
b. As of the Termination Date, MTI shall pay to Xxxxxxx (i) all
accrued but unpaid salary as the Termination Date in the total gross amount of
$5,480.77 and (ii) all unused vacation pay accrued up to and including July 5,
2002 in the total amount of $2,771.90 (collectively, the "Termination Payment").
The total gross amount of the Termination Payment is $8,252.67. 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, Xxxxxxx shall
receive a severance payment from the Company in the total gross amount of
$60,000.00 (the "Severance Payment"), to be paid in a lump sum within ten days
of the Effective Date of this Agreement. MTI shall withhold from the payment all
applicable payroll taxes, including federal and state income taxes, as well as
other authorized deductions.
x. Xxxxxxx acknowledges that, as of August 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 August 1, 2002 through September 30,
2002, or until such time as Xxxxxxx obtains other employment, whichever occurs
sooner, MTI will pay the premium payments for any COBRA continuation coverage
that Xxxxxxx elects to obtain for himself and his family. In addition, from
August 1, 2002 through September 30, 2002, or until such time as Xxxxxxx obtains
other employment, whichever occurs sooner, MTI will reimburse Xxxxxxx for
medical expenses (and life insurance) incurred by Xxxxxxx that are not covered
by his COBRA continuation coverage but that would be covered under MTI's
Executive Medical Plan. As of September 30, 2002, or such lesser time if Xxxxxxx
obtains other employment sooner, and at all times thereafter, Xxxxxxx shall be
solely responsible for paying any and all premiums necessary to continue such
health insurance benefits. Xxxxxxx 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.
x. Xxxxxxx will be allowed to keep a Company Compaq 1750 laptop.
x. Xxxxxxx 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 the Offer Letter, which shall be of no further force or effect.
x. Xxxxxxx will cooperate with MTI in the orderly transfer of his
responsibilities to other MTI employees. Xxxxxxx 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
Xxxxxxx harmless to the extent required by law for all that Xxxxxxx necessarily
expends or loses in direct consequence of the discharge of his duties under this
Section 2(d).
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, Xxxxxxx, for himself and his heirs, assigns, executors,
administrators, and agents, past and present (collectively, the "Xxxxxxx
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 Xxxxxxx or the Xxxxxxx
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) Xxxxxxx'x employment by MTI or
any of the other MTI Releasees; (ii) the termination of Xxxxxxx'x employment by
MTI or any of the other MTI Releasees; (iii) any contracts or agreements between
MTI and Xxxxxxx including, but not limited to, the offer letter signed by
Xxxxxxx on or about March 9, 2001; 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, Xxxxxxx
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
2
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 of emotional distress; invasion of
privacy; assault; battery; false imprisonment; wrongful termination; and any
other state or federal law, rule, or regulation.
x. Xxxxxxx 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. Xxxxxxx 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, Xxxxxxx 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
Xxxxxxx 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."
Xxxxxxx 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, Xxxxxxx acknowledges and agrees that he has executed
this Agreement voluntarily, and with full knowledge of its consequences.
b. In addition, Xxxxxxx hereby acknowledges and agrees that: (a)
this Agreement has been written in a manner that is calculated to be understood,
and is understood, by Xxxxxxx; (b) the release provisions of this Agreement
apply to rights and
3
claims that Xxxxxxx 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 Xxxxxxx may have
under the ADEA that arise after the date Xxxxxxx executes this Agreement; (d)
the Company does not have a preexisting duty to pay the severance benefits
identified in this Agreement; (e) Xxxxxxx has been advised in writing to consult
with an attorney prior to executing this Agreement.
x. Xxxxxxx 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, Xxxxxxx 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. Xxxxxxx 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
x. Xxxxxxx 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, Xxxxxxx understands that the release provisions 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.
b. This Agreement shall not modify or in any way change the
existing terms and conditions governing stock options previously granted by the
Company to Xxxxxxx. Xxxxxxx understands and agrees that his right to exercise
these options shall be in accordance with the terms and conditions of the stock
option plan applicable to any options granted to him by the Company.
7. Confidentiality and Non-Disparagement
x. Xxxxxxx 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
4
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, Xxxxxxx 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.
x. Xxxxxxx 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
Xxxxxxx 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,
Xxxxxxx 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 Xxxxxxx agree that, to the fullest extent permitted by
law, any and all claims or controversies between them (or between Xxxxxxx and
any present or former officer, director, agent, or employee of the Company or
any parent, subsidiary, or other entity affiliated with the Company), including,
but not limited to, any and all claims or controversies relating in any manner
to Xxxxxxx'x employment or the termination of Xxxxxxx'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,
5
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 Xxxxxxx or the 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 Xxxxxxx and MTI.
6
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.
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 and the Proprietary Information Agreement attached
as Exhibit "A" 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 Xxxxxxx 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.
7
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.
18. Representations And Warranties
x. Xxxxxxx represents and warrants that he has the authority to
enter into this Agreement and to bind all persons and entities claiming through
him.
x. Xxxxxxx 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. Xxxxxxx 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 XXXXXXX SIGNS THIS AGREEMENT BEFORE THE EXPIRATION OF THE 21-DAY
REVIEW PERIOD PROVIDED BY SECTION 5(c), XXXXXXX AGREES THAT HE HAS VOLUNTARILY
WAIVED THE REVIEW PERIOD.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
which consists of 8 pages, on the dates indicated below.
XXXXXXX XXXXXXX MTI TECHNOLOGY CORPORATION
Signature: /s/ XXXXXXX XXXXXXX Signature: /s/ XXX XXXXXXXX
------------------------- -------------------------
Xxx Xxxxxxxx
President
Date: 7/11/2002 Date: 7/12/02
------------------------------ ------------------------------
8
