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EXHIBIT 10.77
EXECUTIVE RETENTION INCENTIVE AGREEMENT
This Executive Retention Agreement (the "Agreement") is made and entered
into as of October 18, 1999 (the "Effective Date"), by and between Maxtor
Corporation, a Delaware corporation (the "Company") and Xxxxxx X. Xxxxxx
("Executive").
R E C I T A L S
A. Executive is the Senior Vice President, Engineering, of the Company and
possesses valuable knowledge of the Company, its business and operations,
and the markets in which the Company competes.
B. The Company draws upon the knowledge, experience and advice of Executive in
order to manage its business for the benefit of the Company's stockholders.
C. Executive and the Company have entered into a Retention Agreement dated May
29, 1998 setting forth certain incentives for Executive to remain employed
with the Company (the "May 1998 Retention Agreement").
D. The Compensation Committee of the Board of Directors desires to supplement
Executive's retention arrangements so as to provide additional compensation
and benefits to the Executive to encourage Executive to continue to devote
his full attention and dedication to the Company and to create additional
incentives to continue his employment with the Company.
1. Loan.
(a) As of the Effective Date of this Agreement, the Company will loan
Executive the sum of Seven Hundred Fifty Thousand Dollars ($750,000.00) (the
"Loan"). Except as otherwise provided in this Agreement, the Loan shall be
subject to the terms and conditions of the promissory note, attached hereto as
Exhibit 1 (the "Promissory Note").
(b) Notwithstanding any other provisions in the Promissory Note to
the contrary:
(i) In consideration of Executive's future services, on October
17, 2002, Executive's obligation to pay the then outstanding balance of the Loan
(including unpaid principal and accrued interest thereon) shall be forgiven and
the Promissory Note shall be canceled, provided Executive remains continuously
employed through such date;
(ii) Upon the occurrence of a termination of Executive's
employment by the Company for other than Cause, as that term is defined in the
May 1998 Retention Agreement, Executive's obligation to pay the then outstanding
balance of the Loan
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(including unpaid principal and accrued interest thereon) shall be forgiven and
the Promissory Note shall be canceled;
(iii) Upon the occurrence of a Termination Upon a Change of
Control, as that term is defined in the May 1998 Retention Agreement,
Executive's obligation to pay the then outstanding balance of the Loan
(including unpaid principal and accrued interest thereon) shall be forgiven and
the Promissory Note shall be canceled;
(iv) In the event Executive becomes Permanently Disabled, as that
term is defined in the May 1998 Retention Agreement, or dies, Executive's
obligation to pay the then outstanding balance of the loan (including unpaid
principal and accrued interest thereon) shall be forgiven and the Promissory
Note shall be canceled.
2. Payment of Taxes. All payments made to Executive under this Agreement
shall be subject to all applicable federal and state income, employment and
payroll taxes. At the time the Promissory Note is canceled or any payment
thereunder is forgiven, in whole or in part, or at any time thereafter as
requested by the Company, Executive hereby authorizes withholding from payroll
and any other amounts payable to him, and otherwise agrees to make adequate
provision for any sums required to satisfy the federal, state, local and foreign
tax withholding obligations of the Company, which may arise in connection with
such forgiveness or cancellation. Executive acknowledges that, notwithstanding
any other provision of the Agreement, no obligations under the Promissory Note
shall be forgiven or canceled unless the tax withholding obligations of the
Company are satisfied.
3. Parachute Payment. If due to the benefits provided under this
Agreement, Executive is subject to any excise tax due to characterization of any
amounts payable hereunder as excess parachute payments pursuant to Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), the Company
agrees to offer the Executive the option of (i) receiving the full parachute
payment subject to the excise tax, or (ii) receiving a reduced parachute payment
that would not be subject to the excise tax (which in some circumstances may
maximize the net benefit to Executive). Unless the Company and Executive
otherwise agree in writing, any calculation required under this Section 3 shall
be made in writing by independent public accountants agreed to by the Company
and Executive (the "Accountants"), whose calculation shall be conclusive and
binding upon Executive and the Company for all purposes. For purposes of
calculating the Executive's options under this Section 3 the Accountants may
rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Company and Executive shall furnish to
the Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section 3 The Company shall
bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 3
4. Arbitration. Any claim, dispute or controversy arising out of this
Agreement, the interpretation, validity or enforceability of this Agreement or
the alleged breach thereof shall be submitted by the parties to binding
arbitration by the American Arbitration Association in Boulder County, Colorado
or elsewhere by mutual agreement. The selection of the arbitrator and the
arbitration procedure shall be governed by the Commercial Arbitration Rules of
the American Arbitration Association. All costs and expenses of arbitration or
litigation, including
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but not limited to attorneys fees and other costs reasonably incurred by the
Executive, shall be paid by the Company. Judgment may be entered on the award of
the arbitration in any court having jurisdiction.
5. Interpretation. Executive and the Company agree that this Agreement
shall be interpreted in accordance with and governed by the laws of the State of
Colorado, without regard to such state's conflict of laws rules.
6. Conflict in Benefits. This Agreement and the Promissory Note shall
supersede all prior arrangements, whether written or oral, and understandings
regarding the Loan. This Agreement is not intended to and shall not affect,
limit or terminate the May 1998 Retention Agreement which is supplemented hereby
and which shall remain in full force and effect as supplemented hereby.
Notwithstanding any other provision in the May 1998 Retention Agreement to the
contrary, the benefits payable under the May 1998 Retention Agreement upon a
Termination Upon Change of Control shall NOT be reduced by any amount of the
Loan which may be forgiven upon a Termination Upon Change of Control. Moreover,
this Agreement is not intended to and shall not limit (i) any plans, programs,
or arrangements of the Company that are regularly made available to a
significant number of employees of the Company, (ii) the Company's 1998
Restricted Stock Plan, (iii) any agreement or arrangement with the Executive
that has been reduced to writing and which does not relate to the subject matter
hereof, (iv) any agreements or arrangements hereafter entered into by the
parties in writing, all of which shall remain in full force and effect in
accordance with the terms thereof. With respect to the Loan, this Agreement and
the Note are the entire agreement and no other documents, understanding or
discussion has been relied upon in entering this Agreement or the Note or
contain any term or condition of this Agreement or Note.
7. Successors and Assigns.
(a) Successors of the Company. The Company will require any successor
or assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or assignment had
taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession transaction constitutes a material breach
of this Agreement by the Company. As used in this Agreement, "Company" shall
mean the Company as defined above and any successor or assign to its business
and/or assets as aforesaid which executes and delivers the agreement provided
for in this Section 7 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(b) Heirs of Executive. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
8. Notices. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given
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when delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, as follows:
if to the Company: Maxtor Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
and if to the Executive at the address specified at the end of this Agreement.
Notice may also be given at such other address as either party may have
furnished to the other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
9. Validity. If any one or more of the provisions (or any part thereof)
of this Agreement shall be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
(or any part thereof) shall not in any way be affected or impaired thereby.
10. Modification. This Agreement may only be modified or amended by a
supplemental written agreement signed by Executive and the Company. Executive
has had the opportunity to consult counsel of Executive's own choosing prior to
entering into this Agreement and Note.
11. Ratification. The parties hereto ratify and reaffirm the May 1998
Retention Agreement and the Promissory Note dated October 18, 1999, both of
which are incorporated herein by reference.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year written below.
MAXTOR CORPORATION
Date: October 18, 1999 By: /s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx
Title: V.P., General Counsel
and Secretary
EXECUTIVE:
Date: October 18, 1999 /s/ XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx
Address for Notice:
0000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
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PROMISSORY NOTE
$750,000.00 Longmont, Colorado
October 18, 1999
The undersigned, Xxxxxx X. Xxxxxx ("Borrower"), hereby unconditionally
promises to pay to the order of Maxtor Corporation, a Delaware corporation (the
"Lender"), the sum of Seven Hundred Fifty Thousand Dollars ($750,000.00) plus
interest, in accordance with the terms of the Executive Retention Agreement by
and between Lender and Borrower effective October 18, 1999 (the "October 1999
Retention Agreement").
The outstanding principal balance of this Note, together with all accrued
and unpaid interest hereon, shall be due and payable on October 17, 2002, or
upon termination for "Cause" or voluntary termination of employment for reasons
other than "Good Reason" as those terms are defined in the October 1999
Retention Agreement. Interest shall accrue on unpaid principal from the date
hereof until maturity at a rate of 5.54% compounded annually.
This Note may be prepaid, in whole or in part, at any time or from time to
time, without penalty or premium. Any prepayment of principal must be
accompanied by then accrued but unpaid interest. Interest shall cease to accrue
on amounts of principal so prepaid. Any prepayment of interest shall include all
interest accrued to the date of payment, but need not include any payment of
principal.
All payments of principal or interest shall be made in lawful money of the
United States of America to the Lender at the offices of the Lender, or at such
other address as the Lender shall specify to Borrower in writing. Any payment
shall be deemed made upon receipt by Lender.
Upon payment in full of all principal and interest payable hereunder, this
Note shall be surrendered to Borrower for cancellation.
Borrower waives its rights to impose any defense (other than payment),
set-off, counterclaim or cross-claim in any action brought on this Note.
Borrower waives presentment, demand for performance, notice of performance,
protest, notice of protest, and notice of dishonor.
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If the indebtedness represented by this Note or any part hereof is
collected at law or in equity or in bankruptcy, receivership or other judicial
proceedings, or if this Note is placed in the hands of attorneys for collection
after default, Borrower agrees to pay, in addition to the principal and interest
payable hereon, reasonable attorneys' and collection fees and costs.
This Note is being delivered in and shall be construed in accordance with
the laws of the State of Colorado.
IN WITNESS WHEREOF, Borrower has executed this Note as of the day and year
first above written.
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Xxxxxx X. Xxxxxx
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