January 22, 2000
Xx. Xxxxxx X. Xxxxx
0000 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
RE: Separation Agreement
Dear Xxxxxx:
You have agreed to remain an employee of Storage Technology Corporation
("StorageTek" or the "Company") through March 31, 2000 or such earlier date as
you may be terminated for "Cause" (the "Termination Date"). This letter will
confirm our agreement concerning the termination of your employment with
StorageTek on that date and will define the terms of your severance under this
Separation Agreement (the "Separation Agreement") and your Executive Employment
Agreement dated October 1, 1999 (the "Employment Agreement") at the Termination
Date. This Separation Agreement supersedes all previous oral and written
agreements regarding your employment with StorageTek, it being understood that
the terms and conditions of this Separation Agreement, to the degree that they
may conflict with the terms and conditions of your Employment Agreement, shall
in all cases supersede the terms of the Employment Agreement, which agreement
shall unless otherwise stated herein, remain in full force and effect.
REPORTING RELATIONSHIP AND DUITES: You will retain the title of Executive
Vice President and Chief Operating Officer (COO) through the Termination
Date. However, your current duties as COO will end on January 31, 2000.
For the period from January 31, 2000 through the Termination Date, your
duties and responsibilities will be significantly altered, including the
understanding that you will no longer have operational responsibility for
any portion of the Company. During your period of continued employment and
up until the Termination Date, you will continue to receive your current
salary, which amounts will be Grossed Up (as defined below) and your
current officer benefit package, including, but not limited to, your auto
allowance, executive life insurance and 1999 income tax preparation
expenses and 1999 income tax equalization with respect to Puerto Rico.
During your employment with the Company through the Termination Date, you
will report to the President and Chief Executive Officer (CEO). However,
this reporting relationship may be changed at any time before the
Termination Date by the Company.
GOALS AND OBJECTIVES: During your period of continued employment with the
Company you have agreed to focus on: (i) assisting in defining,
implementing and achieving the on-going corporate restructuring and
corporate-wide cost reductions, (ii) assisting in the disposition of
certain Company assets, including its facilities in Toulouse, France,
(iii) assisting in the negotiation of and entering into definitive
agreements regarding strategic business alliances, and (iv) such other
tasks as may be reasonably requested of you, from time-to-time, by the
Board of Directors, the CEO, or President, as the case may be. On the
Termination Date you will also execute such documents or letters as may be
necessary to resign from any positions you may then hold as an officer
and/or director of any subsidiaries or affiliates of the Company.
SEPARATION PAYMENT: The Company will pay, within 30 days of the
Termination Date, a separation payment to you equal to: (i) one and
one-half times your then current annual salary, and (ii) one and one-half
times your then current target annual MBO bonus. It is further agreed that
you will submit a pro forma tax return for the year 2000 to the Company on
the Termination Date and that the Company will use such pro forma
information to gross up your income tax payments vis-a-vis Puerto Rico as
has been the past practice in your employment relationship with the
Company (hereafter to be called the "Gross Up" or to be "Grossed up" as
the case may be), said amounts to be paid by StorageTek Puerto Rico as
directed by you and no later than 30 days after the Termination Date
subject to a reconciliation between you and the Company based on actual
tax amounts owed as though you were working in Puerto Rico. This
reconciliation is agreed to have been completed on or before April 15,
2001.
CONSULTING AGREEMENT: Effective from the Termination Date, you will be
offered a consulting agreement with the Company, which consulting
agreement will end on September 30, 2000 (the "Consulting Period
Termination Date"). Under the terms of this consulting agreement, you will
be paid a consulting fee equal to $50,000 per quarter for the two quarters
ending June 30, 2000 and September 30, 2000. During this consulting period
one of your primary objectives will be to resolve the matters pertaining
to the Toulouse, France facility project. In regard to the Toulouse
project, should you successfully conclude this project to the satisfaction
of StorageTek via one or more definitive agreements that will have been
entered into on or before September 30, 2000, then you shall be entitled
to receive an incentive bonus equal to $50,000. If during the term of your
consulting agreement, the Company determines, for reasons that are not
related to the lack of attractive transaction proposals, that the Toulouse
project should be terminated, then you will be entitled to receive the
$50,000 incentive bonus as though you had successfully completed the
project in addition to your full consulting fee for the period ended
September 30, 2000. In all respects regarding your consulting agreement,
you will be reimbursed for all reasonable out of pocket expenses by
StorageTek. Additionally, all consulting fees shall be Grossed Up for the
year 2000.
STOCK OPTIONS AND RESTRICTED STOCK: Due to your "Involuntary Termination"
on the Termination Date, in accordance with the terms of Section 5 of your
Employment Agreement all of your outstanding and unvested stock options
will immediately vest (according to the terms of your Stock Option
Agreements and the Company's 1995 Stock Option Plan) and the Company's
right to repurchase any of your previously granted restricted stock will
terminate on the Termination Date. Pursuant to the terms of StorageTek's
Stock Option Plan, you will have 90 days from the Consulting Period
Termination Date to exercise all of your vested options, which "exercise
window" will therefore remain open until December 31, 2000. However, if
because of your consulting responsibilities to the Company, your knowledge
of the Company's activities may render you ineligible to trade in the
Company's stock due to the possession of "material inside information",
the Company will extend its consulting agreement with you such that your
eligible "trading window" will be moved back to insure that you have a
90-day trading window, free from SEC trading prohibitions.
COBRA PAYMENTS: Starting from the Termination Date, you will be entitled
to receive COBRA benefits for the equivalent medical and dental coverage
for you and your family as may be in effect at the Termination Date, such
COBRA benefits will be paid for in full on your behalf by the Company.
These COBRA benefits will be paid for by the Company until the earlier to
occur of either (i) a date 18 months from the Termination Date, or (ii)
such time as you shall have entered into permanent employment with an
employer with a medical and dental plan.
DEFERRED COMPENSATION ACCOUNT: Per elections you have made under the
Storage Technology Corporation Deferred Compensation Plan (the "Plan"), at
the Termination Date you shall be entitled to receive a lump sum
distribution of your Plan account balances, said payments to be subject to
such federal, state and local income tax withholdings and other requisite
payments as may be required by the Plan and/or the relevant laws, it being
understood that no amendment to the Plan shall, in and of itself, cause
you to pay any penalties for receiving such lump sum distribution
immediately following the Termination Date. To the degree that your
contributions to your Plan account were subject to a tax equalization
Gross Up at the time they were made, then upon distribution those same
amounts, and all interest earned thereon, shall be Grossed Up for the year
of distribution, provided said contributions were not previously Grossed
Up.
OUT PLACEMENT SERVICES, ETC.: Starting on the Termination Date, you shall
be eligible to participate in and receive the Company's standard executive
job placement assistance, such assistance to be paid for on your behalf by
the Company. You will also receive tax preparation assistance in an amount
of up to 2% of your annual salary for the preparation of you 2000 tax
returns. You will also be authorized to purchase you office PC at its book
value on your Termination Date.
CHANGE IN CONTROL: If during your employment with the Company, the Company
should be acquired under a "Change in Control" event as that term has been
defined in your Employment Agreement, then you will receive the full
severance benefit as defined in the Employment Agreement. If a "Change in
Control" event were to occur after your employment with the Company had
been terminated, but prior to midnight December 31, 2000, then you will
receive an additional severance payment equal to one-half times your
salary and one-half times your on plan MBO bonus, as they were in effect
on the Termination Date. All amounts received by you on account of a
"Change in Control" shall be Grossed Up in the year received.
NO ADVERSE COMMENT: You agree that during your employment with the Company
through the Termination Date and for at least two years following the
Termination Date, you will not, except as specifically required by law or
court process or consented to in writing by the Company, (a) communicate
to any person or entity any adverse information, written or oral,
concerning the Company, its officers, directors, employees, attorneys,
agents or advisers (including any communication concerning information
that related to the business, operations, prospects or affairs of the
Company or any of its subsidiaries or affiliates) under the circumstances
in which there is a reasonable possibility that such information might be
publicly reported or disclosed or otherwise made available to third
parties (regardless of whether the communication of such information is
intended to have or cause that result is within your control), or (b)
provide to any person (other than your attorney, accountant and/or spouse)
or entity any information that concerns or related to the negotiations or
circumstances leading to the execution of this Separation Agreement.
Likewise, the Company shall refrain, for a similar period of time, from
communicating any adverse comments relating to you and/or your tenure with
the Company or the circumstances leading to the execution of this
Separation Agreement.
NON-SOLICITATION PROVISIONS: Per the terms of Section 8 of your Employment
Agreement, you confirm that during the two-year period commencing with the
Termination Date, you will not, directly, or indirectly, solicit, or
encourage any then-current Company employees to apply for employment with
any person or entity (a) with which you are (or intend to be) employed,
(b) by whom you or an entity in which you are employed or have a financial
interest is engaged as a consultant, recruited, independent contractor or
otherwise, or (c) in which you further covenant and agree that you will
not provide to any other person or entity the names of any person who is
then employed by the Company.
NON-COMPETE PROVISIONS: Per the terms of Section 8 of your Employment
Agreement, you confirm that for a period of eighteen months from the
Termination Date that you will not, either directly or indirectly, engage
in any activity in competition with any product or service of the Company,
or harmful or contrary to the best interest of the Company, including
accepting employment with or serving as a consultant to any entity that is
in competition with the Company, provided however that if at any time
during this eighteen month prohibitionary period the Company shall have a
"Change in Control" event as defined in your Employment Agreement, then
this employment prohibition shall be retroactively reset so as to run
chronologically for a period of one year from the Termination Date. Per
Section 8, those companies deemed to be competitors to StorageTek are
ATL/Quantum, Exabyte, Xxxxxx Xxxx, EMC, Hewlett-Packard, Sun Microsystems
and IBM. Provided however, you may at any time request permission from the
Company, in writing, to accept employment with any of these designated
competitor companies. If the product areas or business units with which
you seek to affiliate do not compete with StorageTek, and StorageTek at
its reasonable discretion determines that such employment would not be
adverse to the interest of StorageTek, then the Company shall approve such
employment, such approval not to be unreasonably withheld or delayed and
such approval only to be effective if communicated in writing.
EARLY TERMINATION: In the event of your Involuntary Termination, prior to
the Termination Date, the Company will pay you the separation pay and
benefits identified above at the time of your termination, including but
not limited to the vesting of your stock options and restricted stock and
the lump sum distribution of your Plan account balance, provided that you
sign the Settlement and Release Agreement attached as Exhibit A to your
Employment Agreement. During the period of your employment with the
Company, all other terms of your employment as stated in your Employment
Agreement, including termination for "Cause" provisions will remain in
effect through the Termination Date. If you voluntarily terminate your
employment with the Company before the Termination Date, then you will not
be entitled to receive any of the separation benefits set forth in this
Separation Agreement.
SETTELMENT AND RELEASE: The payments recited in this Separation Agreement
are contingent upon your execution and delivery to the Company a
Settlement and Release Agreement substantially in the form attached as
Exhibit A to your Employment Agreement.
COMPANY RELEASE: The Company hereby irrevocably and unconditionally
releases and discharges you and your heirs, successors, and assigns
(separately and collectively, "Releasees"), jointly and individually, from
any and all claims, known or unknown, which it, its past and present
subsidiaries, divisions, officers, directors, agents, employees,
successors, and assigns have or may have against Releasees and any and all
liability which Releasees may have to it, whether denominated claims,
demands, causes of action, obligations, damages or liabilities arising
from any and all bases, however denominated, provided, however, that this
release does not affect any claims which are based on Releasees'
dishonesty in the performance of duties as an employee of the Company, nor
any claims which may arise after the execution of this Agreement. The
Company further agrees that it will not file or permit to be filed on its
behalf any claim against you which is released hereby
NONDISCLOSURE: Unless otherwise required to do so by law, subpoena or
court order, you will not in any way communicate or discuss the terms of
this Separation Agreement or the circumstances of its execution with any
person, other than your attorneys, accountants, immediate family members,
prospective employers, or authorized Company personnel (said personnel to
be explicitly designated by the Company's President and CEO). You
understand that this nondisclosure provision applies particularly to
current and former employees of the Company and the Company's customers,
clients and vendors. As to matters related to an anticipated announcement
via news releases, internal electronic postings and other communications
regarding your new reporting relationships, your new duties and your
pending departure from the Company and any subsequent news releases or
other announcements that may make reference to the fact of your
termination from the Company, the Company will work with you to insure
that suitable communications are drafted such that announcements do not
reflect adversely on your professional reputation or tenure with the
Company.
This Separation Agreement shall be deemed for purposes of the Older
Workers Benefits Protection Act to have been delivered to you for your
consideration on the date set forth above. You have 21 days from that date
to decide whether or not to accept this agreement. If you accept this
agreement, you will then have seven days from the date you sign and
deliver an executed copy of this agreement to the Company to revoke your
acceptance by notifying the Company in writing of your desire to do so. No
amounts otherwise due to you under this Separation Agreement will be paid
to you until the expiration of the seven day revocation period. When you
are ready to do so, please sign both copies of this letter below,
indicating your acceptance, and return one copy for our files.
Accepted and Agreed: Very truly yours,
STORAGE TECHNOLOGY CORP.
-------------------------- ------------------------------
Xxxxxx X. Xxxxx Xxxxx X. Xxxxx
Chairman, President and
Chief Executive Officer
