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EXHIBIT 10.1
EMPLOYEE BENEFITS & OTHER EMPLOYMENT MATTERS
ALLOCATION AGREEMENT
THIS EMPLOYEE BENEFITS & OTHER EMPLOYMENT MATTERS ALLOCATION AGREEMENT
(this "Agreement") is made and entered into as of December 11, 1998, by and
between STAC, INC., a Delaware corporation ("Stac"), and HI/FN, INC., a Delaware
corporation ("Hi/fn," and collectively with Stac, the "Parties"), effective as
of the Distribution Date (as hereinafter defined).
R E C I T A L S
WHEREAS, subject to certain conditions, Stac intends to spin off its
semiconductor business by distributing to Stac stockholders a special dividend
(the "Distribution") of one share of Hi/fn Common Stock for every 3.9159 shares
of Stac Common Stock (subject to adjustment as described in the Distribution
Agreement) held as of the close of business on the Record Date (the
"Distribution Ratio"); and
WHEREAS, in connection with such spin-off, Stac and Hi/fn have entered
into a Distribution Agreement of even date herewith (the "Distribution
Agreement"); and
WHEREAS, pursuant to the aforesaid Distribution Agreement, Stac and
Hi/fn have agreed to enter into an agreement allocating responsibilities with
respect to employee compensation, benefits and certain other employment matters
pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Stac and Hi/fn agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the following
terms shall have the meanings indicated below:
COBRA: Code Section 4980B and ERISA Sections 601 through 608,
establishing employer requirements for continuation of health care benefits for
the benefit of certain current and former employees or dependents thereof.
Code: the Internal Revenue Code of 1986, as amended, or any successor
legislation.
Commission: the Securities and Exchange Commission.
Distribution: the spin-off of Hi/fn pursuant to the Distribution
Agreement.
Distribution Agreement: the agreement described in the second recital of
this Agreement.
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Distribution Date: the date on which the Distribution occurs.
Employee: any individual who is in one of the following categories: a
Stac Employee, a Stac Terminee, a Hi/fn Employee or a Hi/fn Terminee.
Employer: Stac or Hi/fn, as the context indicates.
Employer Common Stock: Stac Common Stock in the case of Stac Employees
and Stac Terminees and Hi/fn Common Stock in the case of Hi/fn Employees and
Hi/fn Terminees.
Employer Stock Option Plan: a plan which provides for awards of
additional compensation to eligible Employees in the form of nonqualified or
incentive options to purchase Employer Common Stock, including without
limitation, the Stac Director Option Plan, the Stac Stock Option Plan and the
Hi/fn Equity Plan.
ERISA: the Employee Retirement Income Security Act of 1974, as amended,
or any successor legislation.
Hi/fn: Hi/fn, inc., a Delaware corporation, or any of its direct or
indirect subsidiaries.
Hi/fn Common Stock: the common stock, par value $.001 per share, of
Hi/fn.
Hi/fn Employee: any individual who is or becomes an employee of Hi/fn on
or after the Distribution Date. It also includes any director of Stac who
resigns from the Stac Board of Directors before the Distribution and
concurrently or within 90 days thereof is elected to the Hi/fn Board of
Directors.
Hi/fn Equity Plan: the Hi/fn, Inc. 1996 Equity Incentive Plan.
Hi/fn Individual: any individual who (i) is a Hi/fn Employee, (ii) is a
Hi/fn Terminee, or (iii) is a dependent or beneficiary of any individual
described in clause (i) or (ii).
Hi/fn Medical/Dental Plans: any Medical/Dental Plans maintained by Hi/fn
for or providing benefits to Hi/fn Individuals.
Hi/fn Profit Sharing Plan: the Profit Sharing Plan to be established by
Hi/fn in accordance with Section 2.02(b).
Hi/fn Qualified Beneficiary: any Hi/fn Individual (or dependent thereof)
who, on or before the Distribution Date, was a Qualified Beneficiary under any
Hi/fn Medical/Dental Plan.
Hi/fn Stock Option: an option to purchase Hi/fn Common Stock pursuant to
the Hi/fn Equity Plan.
Hi/fn Stock Value: the last sales price per share of Hi/fn Common Stock
(traded on a "when-issued" basis) on the Distribution Date.
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Hi/fn Terminee: any individual who was formerly employed by Hi/fn who
terminated employment prior to the Distribution Date.
HMO: any health maintenance organization organized under 42 U.S.C. Sec.
300e-9, or a state health maintenance organization statute that provides medical
services for Stac Individuals or Hi/fn Individuals under any Plan.
IRS: the Internal Revenue Service.
Medical/Dental Plan: a Welfare Plan providing health benefits to
Employees and their dependents.
Nasdaq National Market: The Nasdaq Stock Market's Nasdaq National
Market.
Plan: any plan, policy, arrangement, contract or agreement providing
compensation benefits for any group of Employees or former Employees or
individual Employee or former Employee, or the dependents or beneficiaries of
any such Employee or former Employee, whether formal or informal or written or
unwritten, and including, without limitation, any means, whether or not legally
required, pursuant to which any benefit is provided by an Employer to any
Employee or former Employee or the beneficiaries of any such Employee or former
Employee, adopted or entered into by a Party prior to, or upon the Distribution.
The term "Plan" as used in this Agreement does not include any contract,
agreement or understanding entered into by Stac or Hi/fn relating to settlement
of actual or potential Employee related litigation claims.
Qualified Beneficiary: an individual (or dependent thereof) who either
(1) experiences a "qualifying event" (as that term is defined in Code Section
4980B(f)(3) and ERISA Section 603) while a participant in any Medical/Dental
Plan, or (2) becomes a "qualified beneficiary" (as that term is defined in Code
Section 4980B(g)(1) and ERISA 607(3)) under any Medical/Dental Plan.
Record Date: December 1, 1998.
Service Credit: the period taken into account under any Plan for
purposes of determining length of service or plan participation to satisfy
eligibility, vesting, benefit accrual and similar requirements under such Plan.
Stac: Stac, Inc., a Delaware corporation, or any of its direct or
indirect subsidiaries.
Stac Common Stock: the common stock, par value $.001 per share, of Stac,
Inc., a Delaware corporation.
Stac Director Option: an option to purchase Stac Common Stock pursuant
to the Stac Director Option Plan.
Stac Director Option Plan: The Stac, Inc. 1992 Non-Employee Directors'
Stock Option Plan to be continued by Stac following the Distribution pursuant to
Section 2.03(b).
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Stac Employee: any individual who immediately prior to the Distribution
was a Stac Employee and who is an employee or director of Stac immediately
following the Distribution.
Stac Individual: any individual who is (i) a Stac Employee, (ii) a Stac
Terminee, or (iii) a dependent or beneficiary of any individual specified in
clause (i) or (ii).
Stac Medical/Dental Plans: any Medical/Dental Plans maintained for or
providing benefits to Stac Individuals.
Stac Profit Sharing Plan: the Stac Profit Sharing and 401(k) Plan.
Stac Qualified Beneficiary: a Qualified Beneficiary who, immediately
following the Distribution, is not a Hi/fn Qualified Beneficiary and who,
immediately prior to the Distribution, was a Qualified Beneficiary under any
Stac Medical/Dental Plan.
Stac Stock Option: an option to purchase Stac Common Stock pursuant to
the Stac Stock Option Plan.
Stac Stock Option Plan: The Stac Electronics 1992 Stock Option Plan and
Stock Option Plan to be continued by Stac following the Distribution pursuant to
Section 2.03(a).
Stac Stock Post-Distribution Value: the last sales price per share of
Stac Common Stock on the Nasdaq National Market on the Distribution Date, less
the Hi/fn Stock Value divided by the Distribution Ratio.
Stac Stock Value: the last sales price per share of Stac Common Stock on
the Nasdaq National Market on the Distribution Date.
Stac Terminee: any individual who was formerly employed by Stac who
terminated such employment prior to the Distribution Date.
Stock Option: a nonqualified or incentive option to purchase Employer
Common Stock under an Employer Stock Option Plan.
Welfare Plan: any Plan which provides medical, health, disability,
accident, life insurance, death, dental or any other welfare benefit, including,
without limitation, any post-employment benefit, but excluding vacation benefits
covered under Section 2.05.
Section 1.02. Other Terms. Any capitalized terms used herein but not
defined herein shall have the meaning set forth in the Distribution Agreement.
Section 1.03. Certain Constructions. References to the singular in this
Agreement shall refer to the plural and vice-versa and references to the
masculine shall refer to the feminine and vice-versa.
Section 1.04. Sections. References to a "Section" are, unless otherwise
specified, to one of the Sections of this Agreement.
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Section 1.05. Survival. Obligations described in this Agreement shall
remain in full force and effect and shall survive the Distribution Date.
ARTICLE II.
EMPLOYEE BENEFITS
Section 2.01. Employment.
(a) Allocation of Responsibilities on Distribution Date. On
the Distribution Date, except to the extent retained or assumed by Stac under
this Agreement or any other agreement relating to the Distribution, Hi/fn shall
retain or assume, as the case may be, responsibility as employer for the Hi/fn
Employees. On the Distribution Date, except to the extent retained or assumed by
Hi/fn under this Agreement or any other agreement relating to the Distribution,
Stac shall retain or assume, as the case may be, responsibility as employer for
the Stac Employees. The assumption or retention of responsibility as employer by
Stac or Hi/fn described in this Section 2.01 shall not, of itself, constitute a
severance or a termination of employment under any Plan which provides for
severance benefits nor shall it constitute a change of control of Stac or Hi/fn
for purposes of any Plan.
(b) Assumption of Liabilities on Distribution Date: Except
as specifically provided in this Agreement, or as otherwise agreed by the
Parties:
(i) Immediately following the Distribution, Hi/fn
shall assume or retain, as the case may be, all benefit obligations and all
related rights in connection with any Plan with respect to the Hi/fn Employees
and Hi/fn Terminees and Stac shall have no further liability with respect
thereto.
(ii) Stac shall assume or retain, as the case may be,
all benefit obligations and all related rights in connection with any Plan and
with respect to the Stac Employees and Stac Terminees, and Hi/fn shall have no
further liability with respect thereto.
(c) Service Credits. In connection with the Distribution and
for purposes of determining Service Credits under any Plans, Stac shall credit
each Stac Employee and Hi/fn shall credit each Hi/fn Employee with such
Employee's Service Credits and original hire date as reflected in the Stac
records or Hi/fn records, as applicable, as of the Distribution Date. Such
Service Credits and hire date shall continue to be maintained as described
herein for as long as the Employee does not terminate employment or as otherwise
may be required by applicable law or any applicable Plan.
Section 2.02. Profit Sharing and 401(k) Plans.
(a) Stac Profit Sharing Plan. Effective as of the
Distribution Date, Stac and Hi/fn shall take, or cause to be taken, all action
necessary and appropriate to terminate the participation of the Hi/fn Employees
in the Stac Profit Sharing Plan.
(b) Establishment of Hi/fn Profit Sharing Plan. On or prior
to January 1, 1999, Hi/fn shall take, or cause to be taken, all action necessary
and appropriate to establish and
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administer a Profit Sharing Plan, hereafter referred to as the Hi/fn Profit
Sharing Plan, which shall contain such terms and conditions as Hi/fn may
determine, provided, however, that all Hi/fn Employees who were participating in
the Stac Profit Sharing Plan shall be eligible to participate in the Hi/fn
Profit Sharing Plan and, the Hi/fn Profit Sharing Plan shall at a minimum
provide for the benefits protected under Section 411(d)(6) of the Code that were
provided under the Stac Profit Sharing Plan. The Hi/fn Profit Sharing Plan shall
be intended to qualify for tax-favored treatment under Sections 401(a) and
401(k) of the Code and to comply with the requirements of ERISA.
(c) Transfer and Acceptance of Account Balances. As soon as
practicable after January 1, 1999 but not later than January 29, 1999 (the
"Transfer Date"), and subject to Hi/fn's compliance with Section 2.02(e), Stac
shall cause the trustees of the Stac Profit Sharing Plan to transfer to the
trustees or other funding agent of the Hi/fn Profit Sharing Plan the amounts (in
cash, securities, other property or a combination thereof) representing the
account balances of all Hi/fn Individuals to be allocated to the account
balances of such individuals under the Hi/fn Profit Sharing Plan. Such transfer
shall comply with Section 414(1) of the Code and the requirements of ERISA and
the regulations promulgated thereunder. Hi/fn shall cause the trustees or other
funding agent of the Hi/fn Profit Sharing Plan to accept the plan-to-plan
transfer from the Stac Profit Sharing Plan trustees, and to credit the accounts
of such Hi/fn Employees under the Hi/fn Profit Sharing Plan with amounts
transferred on their behalf.
(d) Stac to Provide Information. Stac shall provide Hi/fn,
as soon as practicable after the Distribution Date (with the cooperation of
Hi/fn to the extent that relevant information is in the possession of Hi/fn, and
in accordance with Section 5.02), with a list of Hi/fn Individuals who, to the
best knowledge of Stac, were participants in or otherwise entitled to benefits
under the Stac Profit Sharing Plan on the Distribution Date, together with a
listing of each participant's Service Credits under such Plan and a listing of
each such Hi/fn Individual's account balance thereunder. Stac shall, as soon as
practicable prior to or on the Transfer Date and in accordance with Section
5.02, provide Hi/fn with such additional information in the possession of Stac
(and not already in the possession of Hi/fn) as may be reasonably requested by
Hi/fn and necessary for Hi/fn to receive the plan-to-plan transfer under Section
2.02(c) and to administer effectively the Hi/fn Profit Sharing Plan thereafter.
(e) Regulatory Filings. Hi/fn and Stac shall, in connection
with the plan-to-plan transfer described in Section 2.02(c), cooperate in making
any and all appropriate filings required by the Commission or the IRS, or
required under the Code or ERISA or any applicable securities laws and the
regulations thereunder, and take all such action as may be necessary and
appropriate to cause such plan-to-plan transfer to take place. Further, prior to
making the plan-to-plan transfer under Section 2.02(c) Hi/fn shall either
provide a favorable IRS determination letter that the Hi/fn Profit Sharing Plan,
as adopted, satisfies the requirements for qualification under Section 401(a) of
the Code, or an opinion letter satisfactory to Stac, from Hi/fn's legal counsel
that the Hi/fn Profit Sharing Plan, as adopted, satisfies in form the
requirements for qualification under Section 401(a) of the Code. Stac shall make
any amendment and take any actions necessary to ensure that the Stac Profit
Sharing Plan satisfies the requirements for qualification under Section 401(a)
of the Code at the time of the Transfer Date.
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(f) Account Balances of Stac Employees. Stac shall retain
sole responsibility for all liabilities and obligations under the Stac Profit
Sharing Plan with respect to Stac Individuals, and Hi/fn shall have no liability
or obligation with respect thereto. Hi/fn shall assume or retain, sole
responsibility for all liabilities and obligations under the Hi/fn Profit
Sharing Plan with respect to Hi/fn Individuals, and Stac shall have no liability
or obligation with respect thereto.
Section 2.03. Stock Plans.
(a) Stac Stock Option Plan. Stac shall continue the Stac
Stock Option Plan. All options granted under the Stac Stock Option Plan will
continue to be denominated in Stac Common Stock and except as provided in
Section 2.03(d)(iv), subject to the terms and conditions of the Stac Stock
Option Plan and any option agreement entered into in connection therewith. Stac
shall continue to reserve those shares already reserved under the Stac Stock
Option Plan. Additionally, Stac, after the Distribution Date, will cause to be
reserved any additional shares identified for reservation thereunder to the
extent authorized by the stockholders of Stac.
(b) Stac Director Option Plan. Stac shall continue the Stac
Director Option Plan. All options granted under the Stac Director Option Plan
will continue to be denominated in Stac Common Stock and except as provided in
Section 2.03(d)(iv), subject to the terms and conditions of the Stac Director
Option Plan and any option agreement entered into in connection therewith. Stac
shall continue to reserve those shares already reserved under the Stac Director
Option Plan. Additionally, Stac, after the Distribution, will cause to be
reserved any additional shares identified for reservation thereunder to the
extent authorized by the stockholders.
(c) Hi/fn Equity Plan. Hi/fn shall continue the Hi/fn Equity
Plan. All options granted under the Hi/fn Equity Plan will continue to be
denominated in Hi/fn Common Stock and subject to the terms and conditions of the
Hi/fn Equity Plan and any option agreement entered into in connection therewith.
Hi/fn shall continue to reserve those shares already reserved under the Hi/fn
Equity Plan. Additionally, Hi/fn, after the Distribution, will cause to be
reserved any additional shares identified for reservation thereunder to the
extent authorized by the stockholders.
(d) Effect of the Distribution on Awards Made Prior to the
Distribution Date.
(i) Treatment of Stac Options: Stac Stock Options
and Stac Director Options, whether vested or unvested, held by Stac Employees
shall remain in effect following the Distribution/ provided, however, that the
option exercise price shall be equitably adjusted in accordance with Section
2.03(d)(iii) to reflect the Distribution.
(ii) Treatment of Hi/fn Options: Hi/fn Stock Options
and Hi/fn Director Options, whether vested or unvested, held by Hi/fn Employees
shall remain in effect following the Distribution. The Hi/fn Options will not be
adjusted in connection with the Distribution.
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(iii) Adjustment of Stac Stock Options: The number of
options and the option exercise price of Stac Stock Options and Stac Director
Options, shall be adjusted to reflect the Distribution. After the Distribution
Date the Option exercise price of each Stac Stock Option and Stac Director
Option shall equal the product of (A) the Stac Stock Post-Distribution Value and
(B) the quotient obtained by dividing the per share exercise price of the Stac
Option by the Stac Stock Value, rounded to the nearest whole cent. After the
Distribution Date the number of shares of Stac Common Stock subject to each Stac
Stock Option and Stac Director Option shall equal the product of (x) the number
of shares Stac Common Stock subject to such Stac Stock Option or Stac Director
Option and (y) the quotient obtained by dividing the Stac Stock Value by the
Stac Stock Post Distribution Value.
(iv) Xxxxxxx Options: Subject to the terms of this
Agreement, on the Distribution Date, Hi/fn shall grant to Xxxxxxx X. Xxxxxxx (so
long as he is a director of both Stac and Hi/fn on such date), a Hi/fn Option,
with respect to the Stac Options held by him as set forth on Exhibit A, in
substantially the form attached hereto as Exhibit B (each, a "Xxxxxxx Option").
Each Xxxxxxx Option shall provide for the purchase of a number of shares of
Hi/fn Common Stock equal to the quotient of the number of shares of Stac Common
Stock subject to a particular Stac Option held by him divided by the
Distribution Ratio, and then rounded down to the nearest whole share. The per
share exercise price of each Xxxxxxx Option shall equal the Hi/fn Stock Value
minus the Adjusted Hi/fn Per Share Spread. The Adjusted Hi/fn Per Share Spread
shall equal the Hi/fn Aggregate Spread divided by the number of shares subject
to the Xxxxxxx Option calculated above. The Hi/fn Aggregate Spread equals the
product of the Stac Spread and a fraction the numerator of which is the Hi/fn
Stock Value divided by the Distribution Ratio and the denominator of which is
the Stac Stock Value. The Stac Spread equals the number of shares subject to the
Stac Option listed on Exhibit A multiplied by the difference between the Stac
Stock Value and the Stac Exercise Price. The vesting provisions, term and other
provisions of each Xxxxxxx Option shall be the same as those in effect with
respect to the applicable corresponding Stac Option on the Distribution Date.
The per share exercise price of each Stac Option held by Xx. Xxxxxxx listed on
Exhibit A shall be adjusted as of the Distribution Date to equal the Stac Stock
Post-Distribution Value minus the Adjusted Stac Per Share Spread. The Adjusted
Stac Per Share Spread shall equal the Stac Aggregate Spread divided by the
number of shares subject to the Stac Option. The Stac Aggregate Spread equals
the product of the Stac Spread (as defined above) and a fraction the numerator
of which is the Stac Stock Post-Distribution Value and the denominator of which
is the Stac Stock Value. The vesting provisions, term and other provisions of
each Xxxxxxx Option shall be the same as those in effect with respect to the
applicable corresponding Stac Option on the Distribution Date. The vesting
provisions, term and other provisions of each such Stac Option shall be the same
as those in effect immediately prior to the Close of the Distribution Date.
(v) Limitation on Adjustments: To the extent that
any adjustment or limitation of this Section 2.03(d) is inconsistent with the
intended tax or accounting treatment of the Distribution or any option, it shall
not apply, and Stac and Hi/fn shall mutually agree on an alternative adjustment.
Section 2.04. Medical/Dental Plans.
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(a) Liability for Claims.
(i) Except as otherwise provided herein, as of the
Distribution Date, Stac shall assume or retain and shall be responsible for, or
cause its insurance carriers or HMOs to be responsible for, all liabilities and
obligations related to claims asserted or incurred or premiums owed with respect
to any Stac Individuals under any Stac Medical/Dental Plan, and Hi/fn shall have
no liability or obligation with respect thereto.
(ii) Except as otherwise provided herein, as of the
Distribution Date, Hi/fn shall assume or retain and shall be responsible for, or
cause its insurance carriers or HMOs to be responsible for, all liabilities and
obligations related to claims asserted or incurred or premiums owed with respect
to all Hi/fn Individuals under the Hi/fn Medical/Dental Plan, and Stac shall
have no liability or obligation with respect thereto.
(b) Continuation Coverage Administration. As of the
Distribution Date, Stac shall assume or retain and shall be solely responsible
for, or cause its insurance carriers or HMOs to be responsible for, providing
and administering the continuation coverage required by COBRA as it relates to
any Stac Qualified Beneficiary, and Hi/fn shall have no liability or obligation
with respect thereto.
(c) Continuation Coverage Claims. As of the Distribution
Date, Hi/fn shall assume or retain and shall be responsible for, or cause its
insurance carriers or HMOs to be responsible for, all liabilities and
obligations in connection with claims asserted or incurred or premiums owed
through the Distribution Date under any Stac Medical/Dental Plan in respect of
any Hi/fn Qualified Beneficiary and claims asserted or incurred or premiums owed
after the Distribution Date under any Stac Medical/Dental Plan in respect of any
Hi/fn Qualified Beneficiary, and Stac shall have no liability or obligation with
respect thereto.
Section 2.05. Vacation and Sick Pay Liabilities. Stac shall retain or
assume all accrued liabilities (whether vested or unvested, and whether funded
or unfunded) for vacation and sick leave in respect of all Stac Employees as of
the Distribution Date. Hi/fn shall retain or assume all accrued liabilities
(whether vested or unvested, and whether funded or unfunded) for vacation and
sick leave in respect of all Hi/fn Employees as of the Distribution Date. Hi/fn
shall be solely responsible for the payment to Hi/fn Employees of vacation or
sick leave accrued after the Distribution Date, and Stac shall be solely
responsible for the payment to Stac Employees of vacation or sick leave accrued
after the Distribution Date.
Section 2.06. Preservation of Right to Amend or Terminate Plans. Except
as otherwise expressly provided in this Article II, no provisions of this
Agreement, including, without limitation, the agreement of Stac or Hi/fn to make
a contribution or payment to or under any Plan herein referred to for any
period, shall be construed as a limitation on the right of Stac or Hi/fn to
amend such Plan or terminate its participation therein which Stac or Hi/fn would
otherwise have under the terms of such Plan or otherwise, and no provision of
this Agreement shall be construed to create a right in any employee or former
employee, or dependent or beneficiary of such employee or former employee under
a Plan which such person would not otherwise have under the terms of the Plan
itself; provided, however, that neither Party shall amend any Plan to the
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extent that such amendment would have the effect of increasing the liabilities
of the other Party under any Plan of the other Party, without such other Party's
consent.
Section 2.07. Payroll Reporting and Withholding.
(a) Form W-2 Reporting. Hi/fn and Stac may adopt the
"alternative procedure" for preparing and filing IRS Forms W-2 (Wage and Tax
Statements), as described in Section 5 of Revenue Procedure 84-77, 1984-2 IRS
Cumulative Bulletin 753 ("Rev. Proc. 84-77"). Under this procedure Hi/fn as the
successor employer shall provide all required Forms W-2 to all Hi/fn Employees
and Stac Employees who join Hi/fn on or after the Distribution Date reflecting
all wages paid and taxes withheld by both Stac as the predecessor and Hi/fn as
the successor employer for the entire year during which the Distribution takes
place. Stac shall provide all required Forms W-2 to all other Stac Employees
reflecting all wages and taxes paid and withheld by Stac before and after the
Distribution Date. Stac and Hi/fn shall be responsible for filing IRS Forms 941
for their respective Employees.
(b) Forms W-4 and W-5. Hi/fn and Stac may adopt the
alternative procedure of Rev. Proc. 84-77 for purposes of filing IRS Forms W-4
(Employee's Withholding Allowance Certificate) and W-5 (Earned Income Credit
Advance Payment Certificate). Under this procedure Stac shall provide to Hi/fn
as the successor employer all IRS Forms W-4 and W-5 on file with respect to each
Hi/fn Employee, and Hi/fn will honor these forms until such time, if any, that
such Hi/fn Employee submits a revised form.
(c) Garnishments, Tax Levies, Child Support Orders, and Wage
Assignments. With respect to Employees with garnishments, tax levies, child
support orders, and wage assignments in effect with Stac on the Distribution
Date, Hi/fn as the successor employer with respect to each Hi/fn Employee shall
honor such payroll deduction authorizations and will continue to make payroll
deductions and payments to the authorized payee, as specified by the court or
governmental order which was filed with Stac.
(d) Authorizations for Payroll Deductions. Unless otherwise
prohibited by this or another agreement entered into in connection with the
Distribution, or by a Plan document, with respect to all Stac Employees to be
transferred to Hi/fn on the Distribution Date who have authorizations for
payroll deductions in effect with Stac on the Distribution Date, Hi/fn as the
successor employer will honor such payroll deduction authorizations relating to
each Hi/fn Employee, and shall not require that such Hi/fn Employee submit a new
authorization to the extent that the type of deduction by Hi/fn does not differ
in amount or form from that made by Stac. Such deduction types include, without
limitation, contributions to any Plan; scheduled loan repayments to the relevant
Profit Sharing Plan or to an employee credit union; and direct deposit of
payroll, bonus advances, union dues, employee relocation loans, and other types
of authorized company receivables usually collectible through payroll
deductions.
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ARTICLE III.
EMPLOYMENT MATTERS
Notwithstanding any other provision of this Agreement or any other
Agreement between Hi/fn and Stac to the contrary, Hi/fn and Stac understand and
agree that:
Section 3.01. Separate Employers. On and after the Distribution Date and
the separation of Employees into their respective companies, Hi/fn and Stac will
be separate and independent employers.
Section 3.02. Employment Policies and Practices. Subject to the
provisions of ERISA and except as limited by applicable law or agreement, Hi/fn
and Stac may adopt, continue, modify or terminate such employment policies,
compensation practices, retirement plans, welfare benefit plans, and other
employee benefit plans of any kind or description, as each may determine, in its
sole discretion, are necessary or appropriate.
Section 3.03. Special Matters.
(a) Reimbursement. Stac and Hi/fn acknowledge that Stac, on
the one hand, and Hi/fn, on the other hand, may incur costs and expenses,
including, but not limited to, contributions to Plans, administrative costs
associated with the plan-to-plan transfer under Section 2.02(c) and the payment
of insurance premiums arising from or related to any of the Plans which are, as
set forth in this Agreement, the responsibility of the other Party hereto.
Accordingly, Stac and Hi/fn shall reimburse each other, as soon as practicable,
but in any event within thirty (30) days of receipt from the other Party of
appropriate verification, for all such costs and expenses.
(b) Payments to Stac. To the extent that Stac makes any
payment for, or takes responsibility for future payment of, any liability or
obligation which exists as of the Distribution Date and is assumed by Hi/fn
pursuant to this Agreement (any such payment, a "Liability Payment"), not later
than thirty (30) days after receipt of an invoice from Stac of such Liability
Payment, Hi/fn shall make a payment to Stac equal to the amount of such
Liability Payment.
Section 3.04. Notice of Claims. Without limitation to the scope and
application to each Party in the performance of its duties under Sections 3.03,
each Party will notify in writing and consult with the other Party prior to
making any settlement of an employee claim in such settlement reasonably could
result in any prejudice to such other Party arising from the settlement.
Section 3.05. Assumption of Unemployment Tax Rates. Changes in state
unemployment tax experience from that of Stac as of the Distribution Date shall
be handled as follows. In the event an option exists to allocate to Hi/fn state
unemployment tax experience of Stac, the Stac experience shall be transferred to
Hi/fn if this results in the lowest aggregate unemployment tax costs for both
Stac and Hi/fn combined, and the Stac experience shall be retained by Stac if
this results in the lowest aggregate unemployment tax costs for Stac and Hi/fn
combined.
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Section 3.06. Employees on Leave of Absence. After the Distribution
Date, Hi/fn shall assume responsibility, if any, as employer for all Hi/fn
Employees returning from an approved leave of absence. After the Distribution
Date, Stac shall assume responsibility, if any, as employer for all Stac
Employees returning from an approved leave of absence.
Section 3.07. No Third Party Beneficiary Rights.
(a) Neither this Agreement nor any other intercompany
agreement between Hi/fn and Stac is intended to nor does it create any third
party contractual or other common law rights. No person shall be deemed a
third-party beneficiary of the agreements between Hi/fn and Stac.
(b) Nothing contained in this Agreement shall confer upon
any Employee any right with respect to continuance of employment by either
Party, nor shall anything herein interfere with the right of either party to
terminate the employment of any Employee at any time, with or without cause, or
restrict a Party in the exercise of its independent business judgment in
modifying any of the terms and conditions of the employment of an Employee,
except as provided by applicable law.
(c) No provision of this Agreement shall create any third
party beneficiary rights in any Employee or any beneficiary or dependent thereof
with respect to the compensation, terms and conditions of employment and
benefits that may be provided to any Employee by either Party or under any
benefit plan which a Party may maintain.
Section 3.08. Attorney/Client Privilege. The provisions herein requiring
either Party to this Agreement to cooperate shall not be deemed to be a waiver
of the attorney/client privilege for either Party nor shall it require either
Party to waive its attorney/client privilege.
ARTICLE IV.
DEFAULT
Section 4.01. Default. If either Party materially defaults hereunder,
the non-defaulting Party shall be entitled to all remedies provided by law or
equity (including reasonable attorneys' fees and costs of suit incurred).
Section 4.02. Force Majeure. Hi/fn and Stac shall incur no liability to
each other due to a default under the terms and conditions of this Agreement
resulting from fire, flood, war, strike, lock-out, work stoppage or slow-down,
labor disturbances, power failure, major equipment breakdowns, construction
delays, accident, riots, acts of God, acts of United States' enemies, laws,
orders or at the insistence or result of any governmental authority or any other
delay beyond each other's reasonable control.
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ARTICLE V.
MISCELLANEOUS
Section 5.01. Relationship of Parties. Nothing in this Agreement shall
be deemed or construed by the Parties or any third party as creating the
relationship of principal and agent, partnership or joint venture between the
Parties, it being understood and agreed that no provision contained herein, and
no act of the Parties, shall be deemed to create any relationship between the
Parties other than the relationship set forth herein.
Section 5.02. Access to Information, Cooperation. Stac and Hi/fn and
their authorized agents shall be given reasonable access to and may take copies
of all information relating to the subjects of this Agreement (to the extent
permitted by federal and state confidentiality laws) in the custody of the other
Party, including any agent, contractor, subcontractor, agent or any other person
or entity under the contract of such Party. The Parties shall provide one
another with such information within the scope of this Agreement as is
reasonably necessary to administer each Party's Plans. The Parties shall
cooperate with each other to minimize the disruption caused by any such access
and providing of information.
Section 5.03. Assignment. Neither Party shall, without the prior written
consent of the other, have the right to assign any rights or delegate any
obligations under this Agreement.
Section 5.04. Headings. The headings used in this Agreement are inserted
only for the purpose of convenience and reference, and in no way define or limit
the scope or intent of any provision or part hereof.
Section 5.05. Severability of Provisions. Neither Stac nor Hi/fn intend
to violate statutory or common law by executing this Agreement. If any section,
sentence, paragraph, clause or combination of provisions in this Agreement is in
violation of any law, such sections, sentences, paragraphs, clauses or
combinations shall be inoperative and the remainder of this Agreement shall
remain in full force and effect and shall be binding upon the Parties.
Section 5.06. Parties Bound. This Agreement shall inure to the benefit
of and be binding upon the Parties hereto and their respective successors and
permitted assigns. Nothing herein, expressed or implied, shall be construed to
give any other person any legal or equitable rights hereunder.
Section 5.07. Notices. All notices, consents, approvals and other
communications given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given when delivered personally or by overnight courier
or three days after being mailed by registered or certified mail (postage
prepaid, return receipt requested) to the named representatives of the Parties
at the following addresses for at such other address for a Party as shall be
specified by like notice, except that notices of changes of address shall be
effective upon receipt):
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(a) To Stac:
Stac, Inc.
00000 Xxxx Xxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
(b) To Hi/fn:
Hi/fn, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Hi/fn and Stac agree that, upon the request of either Party, the requested Party
will give copies of all of its notices, consents, approvals and other
communications hereunder to any lender to the requesting Party or other person
specified by such requesting Party.
Section 5.08. Further Action. Hi/fn and Stac each shall cooperate in
good faith and take such steps and execute such papers as may be reasonably
requested by the other Party to implement the terms and provisions of this
Agreement.
Section 5.09. Waiver. Hi/fn and Stac each agree that the waiver of any
default under any term or condition of this Agreement shall not constitute a
waiver of any subsequent default or nullify the effectiveness of that term or
condition.
Section 5.10. Governing Law. Unless otherwise preempted by Federal law,
all controversies and disputes arising out of or under this Agreement shall be
determined pursuant to the laws of the State of California, regardless of the
laws that might be applied under applicable principles of conflicts of laws.
Section 5.11. Entire Agreement. This Agreement and the Distribution
Agreement constitute the entire understanding between the Parties hereto, and
supersede all prior written or oral communications, relating to the subject
matter covered by said agreements. To the extent that the terms of this
Agreement and similar terms of the Distribution Agreement are in conflict, the
interpretation given to the conflicting terms of the Distribution Agreement
shall govern the interpretation and performance of this Agreement. No amendment,
modification, extension or failure to enforce any condition of this Agreement by
either Party shall be deemed a waiver of any of its rights herein. This
Agreement shall not be amended except by a writing executed by the Parties.
Section 5.12. Dispute Resolution. Any dispute arising under this
Agreement shall be resolved by binding arbitration in the manner contemplated by
Section 8.13 of the Distribution Agreement, including the attorneys fees
provisions referred to therein.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
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STAC, INC., a Delaware corporation
By: /s/ XXXX X. XXXXXX
------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------
Title: VP of Finance
---------------------------------
HI/FN, INC., a Delaware corporation
By: /s/ XXXXXXX X. XXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------------
Title: Secretary
----------------------------------
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