Exhibit 10.5
QUANTUM CORPORATION
XXXXXXX X. XXXXX EMPLOYMENT AGREEMENT
This Agreement is made by and between Quantum Corporation, a Delaware
corporation (the "Company"), and you, Xxxxxxx X. Xxxxx, as of September 3, 2002
(the "Effective Date").
1. Duties and Scope of Employment.
(a) Positions and Duties. You will serve as the employee Chairman of
the Board of Directors of the Company (the "Board"). Your duties will include,
but not be limited to, (1) advising, coaching and mentoring the Company's Chief
Executive Officer and other senior management, (2) chairing the meetings held by
the Board, (3) leading corporate governance initiatives, (4) assisting with
remaining issues relating to the Maxtor divestiture, and (5) other duties as
agreed between you and the Board. Prior to January 1, 2003, you shall make
yourself available for full-time employment. Beginning January 1, 2003, you
shall make yourself available for employment on a part-time basis as required by
the Company. If the Board appoints the Company's CEO as Chairman of the Board
during your term of employment with the Company, you will serve as the employee
Vice-Chairman of the Board.
(b) Board of Directors. You will continue to serve as a member and
Chairman of the Board, subject to any required Board and/or stockholder
approval. If the Board appoints the Company's CEO as Chairman of the Board, you
will serve as a member and Vice-Chairman of the Board, subject to any required
Board and/or stockholder approval. You agree that you will not receive
additional compensation (including option grants) for your service as a member
of the Board during your employment with the Company. After your employment with
the Company ends and for so long as you remain a member of the Board, you shall
be eligible to receive compensation (including option grants) for your services
as a director comparable to that paid to other members of the Board.
(c) Obligations. During the Employment Term (as defined in Section
1(d)), you will devote your full effort to the performance of your duties and
will perform them faithfully and to the best of your ability. For the duration
of the Employment Term, you agree not to actively engage in any other
employment, occupation or consulting activity for any direct or indirect
remuneration without the prior approval of the Board, which approval will not be
unreasonably withheld; provided, however, that you may, without the approval of
the Board, serve in any capacity with any civic, educational or charitable
organization.
(d) Employment Term. Your term of employment with the Company is
referred to as the "Employment Term." The Employment Term shall commence on the
Effective Date of this Agreement and shall continue through September 2, 2003.
Subject to the Company's obligation to provide separation benefits as specified
in the Separation Agreement between you and the Company, dated as of September
3, 2002 (the "Separation Agreement"), you and the Company acknowledge that this
employment relationship may be terminated at any time, upon thirty (30) days
written notice
to the other party, with or without cause and for any or no cause or reason, at
the option of either you or the Company.
2. Compensation.
(a) Base Salary. During your employment with the Company, the
Company will pay you a base salary ("Base Salary"). As of the Effective Date,
your annualized Base Salary shall be $600,000. Effective as of January 1, 2003,
your monthly Base Salary shall be $75,000. The Base Salary will be paid through
payroll periods that are consistent with the Company's normal payroll practices.
(b) Bonus. For calendar year 2002, you will continue to be eligible
to receive a bonus based upon the achievement of one or more performance goals
specified by the Compensation Committee of the Board (the "Committee"), as
provided in the Company's Executive Officer Incentive Plan.
(c) Separation Transition Award. In recognition of your services and
contributions to the Company, you will receive an award of $3.6 million (the
"Separation Transition Award"). The Separation Transition Award is guaranteed
and will be paid to you in a lump sum on or about January 1, 2003 regardless of
your employment status on that date.
(d) Options.
(i) You agree that you will authorize the cancellation of
1.531 million outstanding options, whether vested or unvested, as of November 3,
2002.
(ii) On the date you sign this Agreement, one hundred
percent (100%) of the shares of Company common stock ("Common Stock") subject to
any stock option held by you under the Company's stock option plans and
outstanding on that date will accelerate and vest. Your outstanding vested stock
options will remain exercisable until September 2, 2005 (but in no event later
than the expiration of the term of the options as set forth in the related stock
option agreements).
(iii) You acknowledge and agree that during the Employment
Term and thereafter, your outstanding options to purchase Company Common Stock
shall be governed by the terms of the applicable stock plans, your option
agreements, this Agreement and your Separation Agreement. The Board retains the
discretion to modify such options as it determines in its sole discretion,
consistent with past practice and subject to the terms of the applicable stock
plans (provided that no such modification shall impair your rights unless
mutually agreed in writing).
(e) Employee Benefits. During your employment with the Company, you
will be eligible to participate in all Company employee benefit plans, policies
and arrangements that are applicable to other employees of the Company (subject
to the terms of such plans, policies and arrangements), as such plans, policies
and arrangements and terms may exist from time to time; provided, however that
you will not be eligible to participate in any Company bonus plan after December
31, 2002.
-2-
3. Assignment. This Agreement will be binding upon and inure to the
benefit of (a) your heirs, executors and legal representatives upon your death,
and (b) any successor of the Company. Any such successor of the Company will be
deemed substituted for the Company under the terms of this Agreement for all
purposes. For this purpose, "successor" means any person, firm, corporation or
other business entity which at any time, whether by purchase, merger or
otherwise, directly or indirectly acquires all or substantially all of the
assets or business of the Company. None of your rights to receive any form of
compensation payable pursuant to this Agreement may be assigned or transferred
except by will or the laws of descent and distribution. Any other attempted
assignment, transfer, conveyance or other disposition of your right to
compensation or other benefits will be null and void.
4. Notices. All notices, requests, demands and other communications
called for hereunder shall be in writing and shall be deemed given (i) on the
date of delivery if delivered personally, (ii) one (1) day after being sent by a
well-established commercial overnight service, or (iii) four (4) days after
being mailed by registered or certified mail, return receipt requested, prepaid
and addressed to the parties or their successors at the following addresses, or
at such other addresses as the parties may later designate in writing:
If to the Company:
Quantum Corporation
000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
If to you:
at the last residential address known by the Company.
5. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.
6. Entire Agreement. This Agreement, the Separation Agreement, the
Employee Agreement dated July 23, 1982 and your option and restricted stock
agreements (except as modified herein), represent the entire agreement and
understanding between you and Company concerning your employment relationship
with the Company, and supersede and replace any and all prior agreements and
understandings concerning your employment relationship with the Company,
including, but not limited to, your Chief Executive Officer Change of Control
Agreement with the Company dated April 1, 2001 (the "Change of Control
Agreement").
7. Arbitration.
(a) General. In consideration of your service to the Company, its
promise to arbitrate all employment related disputes your receipt of the
compensation, pay raises and other benefits paid to you by the Company, at
present and in the future, you agree that any and all controversies, claims, or
disputes with anyone (including the Company and any employee, officer,
-3-
director, shareholder or benefit plan of the Company in their capacity as such
or otherwise) arising out of, relating to, or resulting from your service to the
Company under this Agreement or otherwise or the termination of your service
with the Company, including any breach of this Agreement, shall be subject to
binding arbitration under the Arbitration Rules set forth in California Code of
Civil Procedure Section 1280 through 1294.2, including Section 1283.05 (the
"Rules") and pursuant to California law. Disputes which you agree to arbitrate,
and thereby agree to waive any right to a trial by jury, include any statutory
claims under state or federal law, including, but not limited to, claims under
Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act
of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers
Benefit Protection Act, the California Fair Employment and Housing Act, the
California Labor Code, claims of harassment, discrimination or wrongful
termination and any statutory claims. You further understand that this Agreement
to arbitrate also applies to any disputes that the Company may have with you.
(b) Procedure. You agree that any arbitration will be administered
by the American Arbitration Association ("AAA") and that a neutral arbitrator
will be selected in a manner consistent with its National Rules for the
Resolution of Employment Disputes. The arbitration proceedings will allow for
discovery according to the rules set forth in the National Rules for the
Resolution of Employment Disputes or California Code of Civil Procedure. You
agree that the arbitrator shall have the power to decide any motions brought by
any party to the arbitration, including motions for summary judgment and/or
adjudication and motions to dismiss and demurrers, prior to any arbitration
hearing. You agree that the arbitrator shall issue a written decision on the
merits. You also agree that the arbitrator shall have the power to award any
remedies, including attorneys' fees and costs, available under applicable law.
You understand the Company will pay for any administrative or hearing fees
charged by the arbitrator or AAA except that you shall pay the first $200.00 of
any filing fees associated with any arbitration you initiate. You agree that the
arbitrator shall administer and conduct any arbitration in a manner consistent
with the Rules and that to the extent that the AAA's National Rules for the
Resolution of Employment Disputes conflict with the Rules, the Rules shall take
precedence.
(c) Remedy. Except as provided by the Rules, arbitration shall be
the sole, exclusive and final remedy for any dispute between you and the
Company. Accordingly, except as provided for by the Rules, neither you nor the
Company will be permitted to pursue court action regarding claims that are
subject to arbitration. Notwithstanding, the arbitrator will not have the
authority to disregard or refuse to enforce any lawful Company policy, and the
arbitrator shall not order or require the Company to adopt a policy not
otherwise required by law which the Company has not adopted.
(d) Availability of Injunctive Relief. In addition to the right
under the Rules to petition the court for provisional relief, you agree that any
party may also petition the court for injunctive relief where either party
alleges or claims a violation of this Agreement or the Confidentiality Agreement
or any other agreement regarding trade secrets, confidential information,
nonsolicitation or Labor Code (S) 2870. In the event either party seeks
injunctive relief, the prevailing party shall be entitled to recover reasonable
costs and attorneys' fees.
(e) Administrative Relief. You understand that this Agreement does
not prohibit you from pursuing an administrative claim with a local, state or
federal administrative body such as
-4-
the Department of Fair Employment and Housing, the Equal Employment Opportunity
Commission or the workers' compensation board. This Agreement does, however,
preclude you from pursuing court action regarding any such claim.
(f) Voluntary Nature of Agreement. You acknowledge and agree that
you are executing this Agreement voluntarily and without any duress or undue
influence by the Company or anyone else. You further acknowledge and agree that
you have carefully read this Agreement and that you have asked any questions
needed for you to understand the terms, consequences and binding effect of this
Agreement and fully understand it, including that you are waiving your right to
a jury trial. Finally, you agree that you have been provided an opportunity to
seek the advice of an attorney of your choice before signing this Agreement.
8. No Oral Modification, Cancellation or Discharge. This Agreement may be
changed or terminated only in writing (signed by you and the Company).
9. Withholding. The Company is authorized to withhold, or cause to be
withheld, from any payment or benefit under this Agreement the full amount of
any applicable withholding taxes.
10. Governing Law. This Agreement will be governed by the laws of the
State of California (with the exception of its conflict of laws provisions).
11. Acknowledgment. You acknowledge that you have had the opportunity to
discuss this matter with and obtain advice from your private attorney, have had
sufficient time to, and have carefully read and fully understand all the
provisions of this Agreement, and are knowingly and voluntarily entering into
this Agreement.
-5-
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
respective dates set forth below:
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx Date: October 22, 2002
---------------------------
Xxxxxxx X. Xxxxx
QUANTUM CORPORATION
/s/ Xxxxxxx X. Xxxxxxx Date: October 24, 2002
---------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman, Compensation Committee
-6-
