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Exhibit 10.1
SEVERANCE AND RELEASE AGREEMENT
This Severance and Release
Agreement (the "Agreement") by and between MTI Technology
Corporation ("MTI" or "the Company") and Richard Ruskin ("Ruskin")
documents the terms and conditions of Ruskin’s termination
from the Company, and is effective September 30, 2006, (the
"Effective Date").
Recitals
On or about September 22,
2003, Ruskin commenced employment with MTI. Ruskin was formerly the
Company’s Executive Vice President of US Sales and
Marketing.
MTI terminated Ruskin’s
employment effective on September 30, 2006 (the "Termination
Date"). MTI does not have a uniform policy or practice of granting
particular severance benefits to its employees or executives.
However, in accordance with the terms set forth under the offer
letter between MTI and Ruskin, MTI agrees to pay Ruskin those
severance benefits described in the paragraphs that follow in
exchange for Ruskin’s release of all claims against the
Company and performance of his other obligations hereunder. Ruskin
accepted this offer.
NOW, THEREFORE, in consideration
of the recitals listed above, and the mutual promises contained in
this Agreement, Ruskin and the Company agree, covenant, and
represent as follows:
Agreement
1. Termination of Employment and Severance Payment
In consideration of the covenants
and promises in this Agreement, and for the good and valuable
consideration, the sufficiency of which are hereby acknowledged,
the Parties agree as follows:
a. Within
a reasonable period after the Effective Date of the Agreement, and
subject to the condition that seven days have passed and Ruskin has
not revoked this Agreement pursuant to Paragraph 3(b), MTI
shall pay Ruskin’s in the total gross amount of $154,500.00
(six months base salary, six months draw, and six months auto
allowance) minus all applicable taxes, social security, and other
government required deductions (the "Severance Payment"). The
Severance Payment shall be paid in eleven equal payments in the
gross amount of $14,045.46, beginning on MTI’s first
scheduled payroll date following October 1, 2006 and
concluding with the payment on March 2, 2007. Notwithstanding
any provision herein to the contrary, in no event will the
Severance Payment be paid to Ruskin later than two and one-half (2
1 /
2 ) months following
January 1, 2007.
b. Ruskin
acknowledges that, as of Employment Termination Date, he may be
eligible to obtain continuing coverage under MTI’s group
medical, vision and dental plans pursuant to the provisions of the
Consolidated Omnibus Reconciliation Act and its implementing
regulations ("COBRA"). MTI agrees that for a six month period
beginning on October 1, 2006, MTI will pay the monthly premium
for any COBRA continuation coverage that Ruskin elects to obtain.
In no event shall MTI be liable for, or be required to pay premiums
for any COBRA continuation coverage Ruskin may elect or be eligible
to obtain thereafter. Beginning April 1, 2007, Ruskin shall be
solely responsible for paying any and all premiums and
administrative fees necessary to continue such COBRA benefits.
c. Subject
to the approval of the Compensation Committee of MTI’s Board
of Directors, the parties agree that 50,000 shares of the 250,000
unvested shares of Restricted Stock awarded to Ruskin on
June 21, 2006, under the Company’s 2001 Stock Incentive
Plan, as amended (the "2001 Plan"), shall vest and released on
June 21, 2007 and the remaining 200,000 unvested shares shall
be forfeited, cancelled and become null and void on the Termination
Date.
All
vested Stock Options granted to Ruskin under the 2001 Plan are
fully exercisable until the date 90 days after the Termination
Date and all unvested Stock Options shall be cancelled on the date
of Termination.
d. Ruskin
agrees that from the Termination Date to and including
June 30, 2007, he will be available to consult with MTI as
needed by MTI (the "Consulting Period) in accordance with the
Consulting Agreement attached to this Agreement as Exhibit "A."
Ruskin further agrees, covenants and represents that during the
Consulting Period and thereafter he shall 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 shall indemnify and hold Ruskin harmless to the extent required
by law for all that Ruskin necessarily expends or loses in direct
consequence of the discharge of his duties under this
paragraph.
e. Ruskin
and MTI agree, covenant and represent that Ruskin shall not be
eligible for, or entitled to, any benefits of employment other than
those specifically identified in this Agreement.
2. General Release And Covenant Not To Sue
a. Ruskin,
for himself and his heirs, assigns, executors, administrators, and
agents, past and present (collectively, the "Ruskin Affiliates"),
hereby fully and without limitation releases, covenants not to sue,
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, the "MTI Releasees"), both
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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, attorneys’ fees, costs,
and expenses, of whatever nature whatsoever, known or unknown,
fixed or contingent, suspected or unsuspected ("Claims"), that
Ruskin or the Ruskin 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) Ruskin’s employment by MTI or any of the
other MTI Releasees; (ii) the termination of Ruskin’s
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, Ruskin 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 Age
Discrimination In Employment Act; the National Labor Relations Act;
the Equal Pay Act; the Employee Retirement Income Security Act of
1974; 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.
3. Older Workers 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, Ruskin
acknowledges and agrees that he has executed this Agreement
voluntarily, and with full knowledge of its consequences.
b.
In addition, Ruskin hereby acknowledges and agrees that:
(a) this Agreement has been written in a manner that is
calculated to be understood, and is understood, by him;
(b) the release provisions of this Agreement apply to rights
and claims that Ruskin 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 Ruskin may have under the ADEA that arise
after the date he executes this Agreement; (d) Ruskin has been
advised in writing to consult with an attorney prior to executing
this Agreement; (e) Ruskin shall have a period of 21 days in
which to consider the terms of this Agreement prior to its
execution; and (f) Ruskin shall have a period of seven days
after execution of this Agreement in which to revoke this
Agreement.
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4. Release Of Unknown
Claims
Ruskin
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 or her, must have materially affected his or her
settlement with the debtor."
Ruskin hereby waives and relinquishes all rights and benefits
which 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. Representations And
Warranties
a. Ruskin
represents and warrants that he has the capacity and the authority
to enter into this Agreement on his own behalf, to bind all persons
and entities claiming through him, and to release all Claims on
behalf of the Ruskin Affiliates.
b. Ruskin
represents and warrants that he has not assigned or transferred any
Claims or any interest in any Claims that he or the Ruskin
Affiliates have or may have against any of the MTI Releasees.
Ruskin agrees to defend, indemnify and hold the MTI Releasees
harmless from any liability, claims, demands, damages, expenses,
and attorneys’ fees incurred as a result of any person or
entity who successfully asserts such assignment or transfer.
c. Ruskin
represents and warrants that no person, firm, or other entity has
asserted, currently asserts, or to his knowledge will assert a lien
or claim of lien with respect to the Severance Payment provided for
in this Agreement. Ruskin represents and warrants that he has the
authority to enter into this Agreement and to bind all persons and
entities claiming through him.
d. Ruskin
represents that he has not suffered any work-related injuries while
employed by the Company and accordingly, he has not filed and does
not intend to file any claim for workers’ compensation
benefits of any type against the Company. Ruskin acknowledges that
the Company has relied upon these representations, and that the
Company would not have entered into this Agreement but for these
representations. As a result, Ruskin agrees, covenants, and
represents that the Company may, but is not obligated to, submit
this Agreement to the Workers’ Compensation Appeals Board for
approval as a full compromise and release as to any workers’
compensation claims in the event that Ruskin files such a
claim.
6. Confidentiality and
Non-Disparagement
a. As
of the Effective Date, Ruskin agrees, covenants and represents that
the facts relating to the existence of this Agreement, the
negotiations leading to the execution of this Agreement, the terms
of this Agreement, and the amounts of the Severance Payment shall
be held in confidence, and shall not be disclosed, communicated
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or divulged to any person other than those who must perform
tasks to effectuate this Agreement, without first obtaining the
MTI’s written consent to each disclosure. Notwithstanding the
foregoing, Ruskin 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 whom disclosure is ordered by a court of competent
jurisdiction or otherwise required by law.
b. Ruskin
further 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.
7. Trade Secrets
Ruskin
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 "B."
8. Non-Admission of
Liability
Ruskin
agrees, covenants and represents that this Agreement shall not be
treated as an admission of liability by MTI, at any time, for any
purpose, and that 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 Paragraph 2(b) of this Agreement
9.
Non-Solicitation
Ruskin
acknowledges that, because of his responsibilities at the Company,
he helped to develop, learned of, and was exposed to the
Company’s business strategies, information on customers and
clients, and other valuable proprietary information, and that use
or disclosure of such proprietary information in breach of the
Employee’s obligations to the Company would be extremely
difficult to detect or prove. Employee also acknowledges that the
Company’s relationships with its employees are valuable
business assets. In light of these facts, Ruskin agrees that he
shall not, for a period of one year following the Termination Date
directly or indirectly, solicit, or induce any executive,
administrative, or other employee of the Company, or any of its
affiliates, divisions, or subsidiaries, to leave the
Company’s employment.
10. Arbitration of
Disputes
All
disputes between Ruskin (and his attorneys, successors, and
assigns) and MTI (and its affiliates, shareholders, directors,
officers, employees, agents, successors, attorneys, and assigns)
relating in any manner whatsoever to Ruskin�
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