Severance Agreement and General Release
1. This Severance Agreement and General Release ("Agreement") is entered into
by and between Iomega Corporation, a Delaware corporation with its
principal headquarters in Roy, Utah, on behalf of itself and each of its
subsidiaries ("Iomega" or the "Company"), and Xxx X. Xxxxxxx ("Xxxxxxx")
for the purposes of amicably concluding their employment relationship. By
entering into this agreement neither party admits any deficiency,
wrongdoing or liability, expressly or by implication.
2. Xxxxxxx and Iomega hereby agree as follows:
(1) Xxxxxxx ceased to serve as an executive officer of the Company
effective March 24, 1998 upon his resignation as President and Chief
Executive Officer of the Company. Xxxxxxx will cease to be employed by
the Company effective April 15, 1998 (the "Termination Date").
(2) On the Termination Date, Iomega will pay Xxxxxxx a lump-sum amount of
$500,000, less any required and authorized payroll deductions and any
applicable withholding requirements. Such payment represents Xxxxxxx'
compensation as an employee for the period from March 24, 1998 until
the Termination Date and a severance allowance.
(3) Until March 25, 1999, Iomega will continue to provide healthcare,
dental, optical and insurance benefits (to the extent permitted under
the applicable policies) to Xxxxxxx and his family which are
substantially equivalent to those being provided to Xxxxxxx and his
family as of March 24, 1998; provided, however, that if Xxxxxxx
becomes employed prior to March 25, 1999 and is eligible to receive a
particular type of benefits (e.g., healthcare) from his new employer
on terms substantially as favorable to Xxxxxxx and his family as those
being provided by the Company, then the Company shall no longer be
required to provide those particular benefits to Xxxxxxx and his
family.
(4) Until the earlier of (i) the date on which Xxxxxxx commences
employment with another employer or (ii) March 25, 1999, Iomega will
provide Xxxxxxx with the following outplacement and administrative
support services: (1) continued use of the home computer, laptop
computer and home fax machine previously provided to Xxxxxxx by the
Company; (2) continued use of Xxxxxxx' current Company-provided cell
phone and AT&T phone credit card for Iomega and job search related
calls with Iomega to pay the charges; (3) continued use of the
Company's voice mail and e-mail systems in accordance with Company
policies; (4) office supplies, postage and limited secretarial support
to be coordinated by Xxxxxxx Xxxxxx or another executive
administrative assistant designated by the Company; (5) continued use
of Xxxxxxx' corporate American Express card, provided Xxxxxxx shall
have full and exclusive responsibility for the payment of all charges
made to the card; (6) reimbursement of up to $10,000 of job
search-related transportation expenses not reimbursed by the
prospective employer; and (7) subscriptions sent to Xxxxxxx' home for
the periodicals previously identified by Xxxxxxx to the Company.
Xxxxxxx shall promptly notify Iomega upon commencing employment with
another employer.
(5) Except as otherwise provided in this Agreement, no bonuses or other
incentive compensation will be due or paid to Xxxxxxx. All
unreimbursed travel and business expenses for which Xxxxxxx is
entitled to reimbursement as of the Termination Date will be promptly
paid to Xxxxxxx after submission of expense reports in accordance with
standard Iomega policy.
(6) Xxxxxxx acknowledges and agrees that under the terms of any
outstanding stock option agreement(s) between Xxxxxxx and the Company,
the vesting of any options to purchase shares of the Company's Common
Stock granted to Xxxxxxx will cease as of the Termination Date, and
Xxxxxxx has a period of three months following the Termination Date
within which to exercise any options which were vested as of the
Termination Date. Any options not exercised within said three-month
period shall expire and thereafter not be exercisable.
(7) On the Termination Date, Iomega shall issue to Xxxxxxx 40,000 shares
of Common Stock (representing one-half of the total number of share
remaining unissued under Xxxxxxx' 1995 bonus arrangement) at a
purchase price per share equal to par value. Xxxxxxx may pay the
aggregate purchase price of $1,333 (40,000 x 0.03a) and required
withholding taxes with respect to such 40,000 shares by surrendering
to Iomega shares of Common Stock having a fair market value equal to
the purchase price and withholding taxes. Xxxxxxx acknowledges that he
shall have no right to receive the other 40,000 shares remaining
unissued under his 1995 bonus arrangement.
(8) On the Termination Date, Iomega shall loan $5,000,000 to Xxxxxxx on
the terms set forth in the form of Secured Promissory Note attached
hereto as Exhibit A. No proceeds from such loan shall be used by
Xxxxxxx to pay the exercise price of any stock options. Xxxxxxx'
obligations under the Promissory Note shall be secured pursuant to a
Pledge Agreement in the form attached hereto as Exhibit B.
(9) Xxxxxxx and Iomega shall, simultaneously with the execution hereof,
and as a condition to the effectiveness hereof, enter into a
Non-Competition and Non-Recruitment Agreement in the form attached
hereto as Exhibit C.
(10) All amounts paid to Xxxxxxx hereunder will be subject to any required
and authorized payroll deductions and any applicable withholding
requirements.
3. Xxxxxxx may elect optional health insurance continuation under COBRA
following the Termination Date at Xxxxxxx' expense. Procedures for electing
to continue such benefits will be provided under separate cover by the
Human Resources Department.
4. Xxxxxxx acknowledges that the payments and benefits described in this
Agreement exceed any amount to which Xxxxxxx would be entitled under
Iomega's standard policies, procedures and benefit programs and that such
payments and benefits are in lieu of any amounts to which he may otherwise
have been entitled to receive pursuant to a certain letter agreement dated
November 29, 1993, which letter agreement is hereby terminated. In
consideration for entering into this Agreement and for the payments and
benefits described herein, and subject to the terms and conditions of this
Agreement, (i) Iomega Corporation, its subsidiaries and each of their
respective officers, directors, successors and assigns, hereby release and
forever discharge Xxxxxxx, his heirs, legal representatives, estates and
successors in interest and (ii) Xxxxxxx, his heirs, legal representatives,
estates and successors in interest hereby release and forever discharge
Iomega Corporation, its subsidiaries and each of their respective officers,
directors, employees, successors and assigns from any and all claims,
demands, obligations and causes of action of any and every kind, known or
unknown, which the releasing parties may have against the released parties
as of the date and time of signing this Agreement which arise out of
Xxxxxxx' employment by Iomega or the termination of that employment,
including without limitation all wrongful discharge actions; all actions
arising under the Americans with Disabilities Act, 42 U.S.C., ' 12101 et
seq., the Age Discrimination in Employment Act, 29 U.S.C., ' 621 et seq.,
Title VII of the Civil Rights Act of 1964, 42 U.S.C. ' 2000e et seq., and
the Utah Anti-Discrimination Act, Utah Code Xxx '34-35-1, et seq. or any
other federal or state statute which may be held applicable; all actions
for breach of contract or the covenant of good faith and fair dealing; all
tort claims; and any and all claims for compensation, wages, bonuses,
severance pay, commissions, vacation pay, or reimbursement for expenses,
attorneys' fees and costs, except for claims for workers' compensation
insurance benefits. Notwithstanding the foregoing, nothing in this
Agreement shall be construed as a waiver or release of rights to enforce
the provisions of this Agreement (including the exhibits referred to
herein).
THIS MEANS THAT BY SIGNING THIS AGREEMENT, EACH PARTY WILL HAVE WAIVED ANY
RIGHT TO BRING A LAWSUIT AGAINST THE OTHER PARTY BASED ON ANY ACTIONS TAKEN
BY ANY OF THEM UP TO THE DATE AND TIME OF SIGNING THIS AGREEMENT, AND THAT
THE PARTIES WILL HAVE RELEASED EACH OTHER FROM ANY AND ALL CLAIMS OF ANY
NATURE RELATING TO XXXXXXX' EMPLOYMENT, ARISING UP TO THE DATE AND TIME OF
SIGNING THIS AGREEMENT.
The parties acknowledge that this is a full and final release, and that
they intend and expressly agree that it shall be effective as a bar to each
and every claim, demand and cause of action each party has against the
other party as of the date of this Agreement with respect to Xxxxxxx'
employment with the Company.
5. Iomega acknowledges and agrees that the Indemnification Agreement dated
January 1, 1994 between Iomega and the Employee shall remain in full force
and effect in accordance with its terms. Xxxxxxx agrees to reasonably
cooperate with and assist Iomega in matters relating to, or arising in
connection with, any pending or future litigation in which the Company is
or may become involved.
6. Xxxxxxx understands and acknowledges his continuing obligations toward
Iomega under the non-disclosure agreement he previously executed, a copy of
which is attached hereto as Exhibit D ("Nondisclosure Agreement"). Xxxxxxx
further agrees that any and all information obtained by or disclosed to him
at any time during his employment with Iomega which is not generally known
outside of Iomega on an unrestricted basis, including but not limited to
information concerning Iomega's products, research and development
projects, customers, prospects, discounts, unreleased products, methods of
operation, processes, practices, programs and procedures, are confidential
and proprietary to Iomega and subject to protection under the Nondisclosure
Agreement and under applicable law. Xxxxxxx expressly acknowledges that the
Company is prepared to vigorously enforce these promises, and that
violation of this provision could result in the assessment of damages and
other legal remedies against him and any of his subsequent employers. Any
breach by Xxxxxxx of this provision shall result in the immediate release
of the Company from any obligations it may have to provide further
payments, or benefits under this Agreement, or any agreement referenced
herein, except as may be required by applicable law.
7. In the event Xxxxxxx fails to return to Iomega any Company property, the
Company shall have the right to offset against payments or benefits owing
to Xxxxxxx hereunder the replacement value of any and all such unreturned
property. Xxxxxxx shall have the right to purchase from the Company the
home computer, laptop computer, home fax machine and other equipment
previously provided to him by the Company at a purchase price equal to the
depreciated book value of such equipment.
8. As further mutual consideration for this Agreement, the parties agree that
each party shall bear the cost of, and shall be responsible for its own
attorneys' and accountants' fees and costs, if any, in connection with the
negotiation and execution of this Agreement.
9. Xxxxxxx acknowledges that he has full responsibility for compliance with
all applicable obligations (including, but not limited to, all applicable
reporting obligations) under the Securities Exchange Act of 1934, as
amended, and all regulations thereunder, and any other applicable federal
and state securities laws and agrees to make all required filings and to
furnish the Company with any information the Company may reasonably request
to satisfy its obligations under the Securities Exchange Act of 1934, as
amended, and all regulations thereunder, and any other applicable federal
and state securities laws.
10. This Agreement shall be governed by and construed in accordance with the
law of the State of Utah.
11. The parties agree that any dispute of any kind whatsoever arising from the
subject matter of this Agreement, including claims regarding this Agreement
(other than claims for workers' compensation benefits), shall be resolved
under the following procedure:
(1) The party claiming to be aggrieved shall furnish the other party,
within fifteen (15) days of the disputed action, a written statement
of the grievance identifying any witnesses or documents that support
the grievance and the relief requested or proposed. Xxxxxxx is
required to furnish the written statement of grievance to Iomega's
General Counsel.
(2) If the grievance is denied, the parties agree that the dispute shall
be resolved by final and binding arbitration. A single arbitrator
shall be mutually selected by the parties. If no agreement on the
selection is reached within fifteen (15) days, then a neutral
arbitrator shall be selected under the Expedited Labor Arbitration
Rules of the American Arbitration Association, except that the
arbitrator shall be selected by alternately striking names from the
panel of five (5) neutral labor or employment arbitrators designated
by the American Arbitration Association. The arbitrator shall have the
authority to grant the requested relief if authorized by law provided,
however, that nothing herein shall limit the right of Iomega to obtain
injunctive relief in a court of competent jurisdiction to prevent a
violation of the Nondisclosure Agreement or the Non-Competition and
Non-Solicitation Agreement.
(3) Arbitration shall be exclusive and final remedy for any dispute
between the parties, and the parties agree that no dispute shall be
submitted to arbitration where the party claiming to be aggrieved has
not complied with the preliminary steps provided for above.
12. This Agreement (including the exhibits referred to herein) constitutes the
entire understanding of the parties with respect to the subject hereof.
Xxxxxxx warrants that he: (a) has read and fully understands this
Agreement; (b) has had the opportunity to consult with legal counsel of his
own choosing and have the terms of this Agreement fully explained; (c) is
not executing this Agreement in reliance on any promises, representations
or inducements other than those contained herein; and (d) is executing this
Agreement voluntarily, free of any duress or coercion.
I understand this document and have been given ample opportunity to consult with
someone whose opinion I trust before signing it. By my signature, I agree to the
terms set forth above.
Date: April 15, 1998 /s/ Xxx X. Xxxxxxx
Xxx X. Xxxxxxx
Date: April 15, 1998 IOMEGA CORPORATION
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title:Chairman of the Board
Exhibit A - Secured Promissory Note
Exhibit B - Pledge Agreement
Exhibit C - Non-Competition and Non-Recruitment Agreement
Exhibit D - Nondisclosure Agreement
