On behalf of the Board of Directors of Iomega Corporation ("Iomega"),
I am pleased to offer you the position of President and Chief
Executive Officer of Iomega ("CEO") reporting to the Board of
Directors. As CEO, you will be responsible for Iomega's strategic
and operational leadership and will devote your entire business
time, attention and energies to the business and interests of Iomega.
We would like you to join us as soon as possible.
The following sets forth the terms and conditions of your employment.
Your base salary for the balance of 2001 and for calendar year 2002
will be at the rate of $475,000 per year, payable in monthly
installments, subject to withholding taxes and other normal
deductions and Iomega's standard payroll policies.
Your targeted incentive award will be equal to 100% of your annual
base salary for the balance of 2001 and for the calendar year 2002,
prorated over the period of your actual employment during each year.
You will be paid at this rate for the balance of 2001 and for the
calendar year 2002 and payments will be made monthly. In future
years, incentive awards will be based on goals and performance
criteria determined by mutual agreement of you and the Board of
Directors and may vary from 0% to 200% of your then annual base
Our normal practice is to determine and pay annual incentive awards
in cash by mid-March following the close of the fiscal year on
Option Loss Payment
In consideration of your loss of potential gain from your stock
options with your current employer, Iomega will pay you the sum of
$200,000 upon your commencement of employment.
Long Term Incentives
You will be granted options to purchase an aggregate of 1,000,000
shares of Iomega common stock with an exercise price equal to the
Fair Market Value per share on the date of grant. Fair Market Value
means the average of the high and low New York Stock Exchange price
on the day preceding the day on which the option or options are
granted. The date(s) of grant of such option(s) shall be determined
mutually by you and the Chairman of Iomega's Board of Directors.
Each option shall be exercisable and the shares subject thereto (the
"Option Shares") shall vest as follows: 33% of the Option Shares on
the date of grant and an additional 16.75% of the Option Shares on
each of the first, second, third and fourth anniversaries of the date
of your commencement of employment with Iomega. Each option will be
subject to a stock option agreement, which contains, among other
terms, requirements regarding confidentiality, non-solicitation, and
Iomega provides a comprehensive program of employee benefits,
o Medical expense protection, including hospitalization, major
medical and dental coverage;
o 401(k) retirement savings plan;
o Vacation and Holidays;
o Participation in the Executive Life Insurance Program at
two times annual base salary, subject to medical underwriting;
o Participation in the Executive Long Term Disability
o Participation in the Executive Tax Planning Services
provided by Price Waterhouse.
Your employment with the Company is on an "at will" basis, which means
that either you or Iomega may terminate the employment relationship
at any time for any reason or for no reason and with or without
advanced notice. However, if the Company terminates your employment
without "cause", the Company will:
o Continue to pay you your then base salary (prorated and
payable monthly) for a period of 12 months
following the date of your termination;
o Pay you your target incentive award for the year in which such termination occurs (which amount shall be
paid on a prorated basis during a period of 12 months following the date of your
o Continue to provide you the benefits described above until the earlier of (i) 12 months following the
date of your termination and (ii) the date that you commence a new employment relationship;
provided, however, that if you become employed or otherwise engage in gainful employment during the 12 month
period following your termination, fifty percent (50%) of the amount that you obtain from such other employment
will be applied against and reduce the post-employment termination payments payable by Iomega; provided, however,
that notwithstanding the application of such mitigation payments, Iomega shall be obligated to pay you a minimum
of six months of your then base salary and 50% of your target incentive award.
For purposes of this agreement, "cause" for termination shall be deemed to exist upon (a) a good faith
finding by Iomega's Board of Directors of (i) your failure to perform your assigned duties for Iomega, after
written notice furnished to you by Iomega of such failure and your failure or inability to remedy the same within
30 days after such notice, or (ii) your dishonesty, gross negligence or misconduct, or (b) your conviction of, or
the entry of a pleading of guilty or nolo contendere by you to, any crime involving moral turpitude or any
You agree that if you are terminated without cause, you will engage in diligent and reasonable efforts
to seek other employment so as to mitigate, in part, the amount of payments which Iomega is required to pay you,
as set forth under "Termination Payment" above.
You agree that your service as a director of Iomega will automatically terminate, without any further
action by you or Iomega, upon the date that you cease to be the CEO of Iomega, unless the Board of Directors and
you otherwise agree.
As a condition of your employment, you will be required to sign and deliver Iomega's standard form of
agreement regarding confidentiality, non-competition and non-solicitation and to produce proof of your
eligibility under federal immigrations laws to work in the United States. In addition, Iomega will offer you the
opportunity to enter into Iomega's standard form of Executive Retention Agreement for its executive officers,
which provides certain rights and benefits in the event of a change in control of Iomega.
The start of your employment is contingent upon your acceptance of this offer and the terms and
conditions described in this letter. Additionally, it is Iomega's policy that all employees successfully pass a
drug screen at an Iomega approved facility prior to beginning employment. The actual test date is at Iomega's
You represent that you are not bound by the terms of any employment contract, restrictive covenant or
other agreement or restriction preventing you from accepting employment with or carrying out your
responsibilities for Iomega as contemplated.
This letter and the related agreements shall be governed by and construed in accordance with the laws of
the State of Delaware, without giving effect to any choice or conflict of law provision or rule, and supersede
any prior understandings or agreements, whether oral or written, between you and Iomega. This letter may not be
amended or modified except by an express written agreement signed by you and an authorized officer of Iomega.
We are looking forward to your joining Iomega. If this letter correctly sets forth the terms under
which you will be employed by Iomega, please sign the enclosed duplicate original copy of this letter and return
it to me, whereupon this letter shall constitute a binding agreement between you and Iomega with respect to the
subject matter set forth herein. The date you sign this agreement, as set forth below, will constitute your
employment commencement date.
By: /s/ David J. Dunn
David J. Dunn, Chairman
Accepted and Agreed this
18th day of June, 2001
/s/ Werner T. Heid
Werner T. Heid