Exhibit
10.2
SEVERANCE AGREEMENT AND
GENERAL RELEASE
SimpleTech, Inc., a California
corporation, (“Company”) and Mike Moshayedi
(“Executive”) agree that this Severance Agreement and
General Release (“Agreement”) and the Exhibit A
attached herewith set forth their complete agreement and
understanding regarding the termination of Executive’s
employment with Company.
RECITALS
A. Executive is a co-founder of the
Company and has served as an executive officer of the Company in
various capacities since the Company’s formation in 1990.
Executive currently serves as the Company’s President and the
Head of the Company’s Consumer Division.
B. Concurrent with the execution of
this Agreement, the Company is consummating a sale of certain of
the assets of its Consumer Division to a third party, which
transaction will result in the elimination of Executive’s
position and the termination of Executive’s employment with
the Company, without cause, effective as of the date hereof
(“Separation Date”).
C. Executive and Company wish to
resolve fully any past, present or future disputes they have, may
have, or may have had relating to Executive’s employment with
the Company, and to set forth terms and conditions relating to the
termination of Executive’s employment.
AGREEMENT
In consideration of the releases,
representations and obligations stated below, Executive and Company
agree as follows:
1. Separation Date .
Effective as of the Separation Date, Company is terminating
Executive’s employment without cause. Except as specifically
provided under this Agreement or as otherwise required by law,
Executive shall not be entitled to receive any benefits of
employment following the Separation Date. Any benefits provided
under this Agreement shall be reduced to the extent that severance
or similar benefits are provided under any other plan, program, or
arrangement of the Company or its affilitates.
2. Continuing Obligations .
Up through the Separation Date, Executive shall continue to perform
his job duties as set forth in Section 1 of the Employment
Agreement. From the Separation Date and beyond, Executive shall
remain bound to the nondisclosure obligations set forth in
Paragraph 6 below, and the post-termination obligations set forth
in Paragraph 7 below. Any material breach of these obligations
shall void the Company’s offer contained herein, shall
constitute a material breach of this Agreement and shall nullify
the Company’s obligation to provide any benefits or make any
payments otherwise provided herein.
3. Consideration of Company .
In consideration for the releases and covenants by Executive in
this Agreement and in consideration of Executive’s execution
of the General
Release and Waiver attached as Exhibit A hereto,
and for Executive’s continued good faith performance of his
job duties through the Separation Date, Company shall provide
Executive with:
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(a)
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Payment of
eighteen (18) months of base salary equal in the aggregate to
Five Hundred Sixty-Two Thousand Five Hundred Dollars ($562,500),
which is based on Executive’s current annual base salary of
Three Hundred Seventy Five Thousand Dollars ($375,000). The lump
sum payment shall be paid on the day after the date which is the
six (6) month anniversary of the Separation Date. Said payment
is subject to the provisions of Internal Revenue Code
Section 409A which could result in the imposition of
additional income tax to Executive if the six (6) month delay
in payment did not occur; the delay in payment is for the benefit
of Executive and the parties hereto agree as such;
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(b)
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For a period of
eighteen (18) months from the Separation Date, payment of the
premium for Executive’s continued coverage under the
Company’s group health insurance plan, provided that
Executive elects and remains eligible for coverage as provided
under the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended (“COBRA”). Company represents that COBRA
applies, and for the duration of eighteen (18) months from the
Separation Date will continue to apply, to Company and to the
health care coverage referenced in this Section 3(b). For
purposes of the COBRA commencement date, the Separation Date shall
be deemed the COBRA commencement date;
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(c)
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Within thirty
(30) calendar days following the Separation Date, Company
shall reimburse Executive for all reasonable business expenses
incurred through the Separation Date, provided that Executive
submits all requests for reimbursement by the Separation Date in
accordance with Company’s business expense reimbursement
policy in effect on the Separation Date; and
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(d)
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Any benefits to
which Executive may be entitled under any plans, programs or
policies of Company or its affiliates shall be determined in
accordance with such plans, programs or policies of Company or its
affiliates, as applicable.
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The amounts owing under Subsection
(c) of this Section shall be paid within thirty
(30) calendar days following Company’s receipt of this
Agreement executed by Executive, provided that Executive does not
revoke this Agreement. As noted in Subsection (a) above, the
payment due thereunder will be subject to a six (6) month
delay in order to comply with Internal Revenue Code
Section 409A. Executive shall be responsible for all taxes
associated with any payments or benefits to be made or provided to
Executive hereunder, and agrees to indemnify and defend Company
against any claim arising out of this Agreement for unpaid taxes
which may be made by any state or federal agency for any taxes,
interest, fines or penalties
4. Acknowledgement of
Executive . Executive acknowledges that, with the payments and
benefits identified in Section 3 above, he will have received
all compensation and
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benefits owed to him in connection with his
employment with and termination from Company. Except for any vested
benefits under Company’s 401(k) plan or as otherwise
explicitly set forth herein, Executive acknowledges that he is not
and shall never be entitled to any additional compensation,
benefits or consideration from Company.
5. Mutual Release
.
(a) Executive Release of Rights
and Agreement Not to Sue . Executive agrees to that General
Release and Waiver as set forth in Exhibit A hereto.
(b) Company Release of Rights and
Agreement Not to Sue . In consideration of the promises and
other consideration from Executive described in this Agreement and
Exhibit A hereto, Company (on behalf of itself and its officers,
directors, parents, predecessors, successors, affiliates,
executives, employees, representatives, agents, and assigns), fully
and unconditionally releases the Executive from, and agrees not to
sue Executive with respect to, any and all liability, claims,
demands, actions, causes of action, suits, grievances, debts, sums
of money, agreements, promises, damages, costs, expenses, and
remedies of any type, whether known or unknown, arising before
Company signed this Agreement relating, directly or indirectly, to
Executive’s employment with or separation of employment from
Company; provided, however, that Company is not releasing its
rights under this Agreement. Company affirms that as of the time it
is signing this Agreement, no action or proceeding covered by this
Section 5 is pending against Executive.
6. Restrictive Covenants
.
(a) Executive’s
Acknowledgements . Executive acknowledges and agrees that
Executive has and will be exposed to data and information
concerning the business and affairs of Company and its affiliates,
including but not limited to, proprietary information such as
software systems, technology and methods, marketing and business
strategies, and financial information ( “Confidential
Information” ). Executive acknowledges and agrees that
such Confidential Information is vital, sensitive, confidential and
proprietary to Company and its affiliates, and that each and every
component of Confidential Information (i) has been developed
by Company or its affiliates at significant effort and expense and
is sufficiently secret to derive economic value from not being
generally known to other persons, and (ii) constitutes a
protectible business interest of Company and its
affiliates.
(b) Confidential Information
. Both during or after the term of his employment with Company,
Executive shall not disclose any Confidential Information to any
person, firm, corporation, association or other entity for any
reason whatsoever other than for the benefit of Company in the
ordinary course of its business, nor shall Executive make use of
any Confidential Information for his own purposes or for the
benefit of any person, firm, corporation or other entity, other
than Company, under any circumstances during or after the term of
his employment. As used herein, Confidential Information does not
include information that is in the public domain or generally known
to those in the business of Company, or becomes part of the public
domain or generally known to those in the business of Company
through no fault of Executive.
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(c) Blue-Pencil . If any
court of competent jurisdiction shall deem any provision in this
Section too restrictive, the other provisions shall stand, and the
court shall modify the unduly restrictive provision to the point of
greatest restriction permissible by law.
(d) Remedies . Executive
acknowledges and agrees that the restrictive covenants in this
Section 6 are reasonable and necessary for the protection of
the Company’s business interests, that irreparable injury
will result to Company if Executive breaches any of the terms of
said restrictive covenants, and that in the event of
Executive’s actual or threatened breach of any such
restrictive covenants, Company will have no adequate remedy at law.
Executive accordingly agrees that in the event of any actual or
threatened breach by him of any of the restrictive covenants,
Company shall be entitled to immediate temporary injunctive and
other equitable relief, without the necessity of showing actual
monetary damages, subject to hearing as soon thereafter as
possible. Nothing contained herein shall be construed as
prohibiting Company from pursuing any other remedies available to
it for such breach or threatened breach, including the recovery of
any damages which it is able to prove.
7. Post-Termination
Obligations .
(a) Return of Company
Materials . No later than three (3) business days
following the Separation Date, Executive shall return to Company
all property of Company that is then in Executive’s
possession, custody or control, including, without limitation, all
keys, access cards, credit cards, computer hardware and software,
documents, records, policies, marketing information, design
information, specifications and plans, data base information and
lists, and any other property or information that Executive has or
had relating to Company or its affiliates (whether those materials
are in paper or computer-stored form), and including but not
limited to, any documents containing, summarizing, or describing
any Confidential Information.
(b) Executive Assistance .
After the Separation Date, Executive shall, upon reasonable notice,
furnish Company with such information as may be in
Executive’s possession or control, and cooperate with
Company, as Company may reasonably request (with due consideration
to Executive’s business activities and obligations after the
Separation Date), in connection with any litigation, claim, or
other dispute to which Company or any of its affiliates is or may
become a party. The Company shall reimburse Executive for all
reasonable out-of-pocket expenses incurred by Executive in
fulfilling Executive’s obligations under this Subsection (b).
If Executive’s fulfillment of his obligations under this
Subsection (b) exceeds three (3) calendar days in a month
or fifteen (15) calendar days in any 12-month period, measured
from the first day on which Executive’s fulfillment of
obligations under this Subsection (b) commences, in addition
to all reasonable out-of-pocket expenses incurred, Executive shall
be paid not less than one hundred eighty-seven and 50/100 dollars
($187.50) per hour for each additional hour during each additional
day he fulfills his obligations under this Subsection
(b).
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8. No Disparagement . Except
as required by lawful subpoena or other legal obligation, Executive
agrees not to make any oral or written statement that disparages or
places Company (including any of its past or present officers,
directors, executives, or its affiliates or direct or indirect
parents, or their respective officers, directors, or executives) in
a false or disparaging light, or to willfully and intentionally
encourage any person or entity who may or who has filed a lawsuit,
charge, claim or complaint against Company or any of its
affiliates; provided however, that Executive may make truthful
statements about Company’s or any of its affiliates’
products or services in connection with the fulfillment of his
duties with any subsequent employers. If Executive receives any
subpoena or becomes subject to any legal obligation that implicates
this Section, Executive will provide immediate written notice of
that fact to Company and enclose a copy of the subpoena and any
other documents describing the legal obligation, unless Executive
would be legally prohibited from providing such written notice or
providing a copy of the subpoena or any other such documents to
Company or any of its affiliates.
9. Public Statements . Before
it issues any public statements, including but not limited to press
releases, related in any way to Executive, Company shall provide
Executive with the opportunity to review and comment on any such
public statements. Company shall not issue any public statements
related in any way to Executive that are not approved by Executive
(provided that such approval by Executive shall not be unreasonably
withheld), other than any filings required by the rules and
regulations of the Securities and Exchange Commission or any stock
exchange upon which the Company’s common shares are publicly
traded.
10. No Mitigation . Executive
shall have no obligation or duty to seek subsequent employment or
engagement as an employee (including self-employment) or as a
consultant or otherwise mitigate Company’s obligations under
this Agreement. Payments and benefits due under this Agreement
shall not be reduced by any compensation earned by Executive as an
employee or consultant from any employment or consulting
arrangement after the Separation Date.
11. Approvals . Company
represents and warrants to Executive that it has taken all
corporate action necessary to authorize this Agreement.
12.
Non-Admission/Inadmissibility . This Agreement does not
constitute an admission by Company that any action it took with
respect to Executive was wrongful, unlawful or in violation of any
local, state, or federal act, statute, or constitution, or
susceptible of inflicting any damages or injury on Executive, and
Company specifically denies any such wrongdoing or violation. This
Agreement is entered into solely to resolve fully all matters
related to or arising out of Executive’s employment with and
termination from Company, and neither the Agreement nor testimony
regarding its execution or implementatio
