1
EXHIBIT 10.58
RETENTION AGREEMENT
This Retention Agreement (the "Agreement") is made and entered into as
of May 29, 1998 (the "Effective Date"), by and between Maxtor Corporation, a
Delaware corporation (the "Company") and _________________________________
("Executive").
RECITALS
The Company recognizes that the possibility of a change of control or
other event which may change the nature and structure of the Company and that
uncertainty regarding the consequences of such events may adversely affect the
Company's ability to retain its key employees. The Company also recognizes that
the Executive possesses an intimate and essential knowledge of the Company upon
which the Company may need to draw for objective advice and continued services
in connection with any acquisition of the Company or other change of control
that is potentially advantageous to the Company's stockholders. The Company
believes that the existence of this Agreement will serve as an incentive to
Executive to remain in the employ of the Company and will enhance its ability to
call on and rely upon the Executive in connection with a change of control.
The Company and the Executive desire to enter into this Agreement in
order to provide additional compensation and benefits to the Executive and to
encourage Executive to continue to devote his full attention and dedication to
the Company and to continue his employment with the Company.
1. Definitions. As used in this Agreement, unless the context
requires a different meaning, the following terms shall have the meanings set
forth herein:
(a) "Cause" means:
(i) theft, a material act of dishonesty, fraud,
the intentional falsification of any employment or Company records or the
commission of any criminal act which impairs Executive's ability to perform
his/her duties under this Agreement;
(ii) improper disclosure of the Company's
confidential, business or proprietary information by Executive; or
(iii) the Executive's conviction (including any
plea of guilty or nolo contendere) for a felony causing material harm to the
reputation and standing of the Company, as determined by the Company in good
faith.
1
2
(b) "Change of Control" means:
(i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than a trustee or other fiduciary holding securities of
the Company under an employee benefit plan of the Company, or HEA, becomes the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of the Company representing 50% or
more of (A) the outstanding shares of common stock of the Company or (B) the
combined voting power of the Company's then-outstanding securities;
(ii) the Company is party to a merger or
consolidation which results in the holders of voting securities of the Company
outstanding immediately prior thereto failing to continue to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation;
(iii) There occurs a change in the Board of
Directors of the Company within a two-year period, as a result of which fewer
than a majority of the Directors are Incumbent Directors. For purposes of this
Agreement, an Incumbent Director is any director who is either:
(A) a director of the Company as of
the Effective Date of this Agreement; or
(B) a director who is elected or
nominated for election to the Board of Directors of the Company with the
affirmative votes of at least a majority of the Incumbent Directors at the time
of such election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company).
(C) changes in the composition of the
Board resulting from a reduction in the percentage of the Company's outstanding
stock owned by HEA which occur pursuant to a written agreement between HEA and
the Company shall not be deemed a change in the Incumbent Directors for purposes
of this subparagraph 1(b)(iii).
(iv) The sale or disposition of all or
substantially all of the Company's assets (or any transaction having similar
effect is consummated);
(v) The dissolution or liquidation of the
Company; or
(vi) The sale or disposition by HEA of shares of
the Company representing at least 50% of the number of shares owned by HEA at
the time of such sale, and at least 10% of the Company's then outstanding stock
to a manufacturer of hard disk drives.
2
3
Notwithstanding any other provision herein to the contrary, for purposes of this
Agreement no Change of Control shall be deemed to have occurred as a result of
any ownership change which may occur as a result of an underwritten public
offering of the Company's stock.
(c) "Good Reason" means the occurrence of any of the
following conditions, without Executive's written consent, which condition(s)
remain(s) in effect 20 days after written notice to the Board from Executive of
such condition(s):
(i) a material decrease in Executive's Total
Annual Earnings or employee benefits following a Change of Control;
(ii) a demotion, a material reduction in
Executive's position, responsibilities or duties or a material, adverse change
in Executive's substantive functional responsibilities or duties;
(iii) the relocation of Executive's work place
for the Company to a location more than one hundred (100) miles from the
location of Executive's work place following a Change of Control; or
(iv) any material breach of this Agreement by the
Company.
(d) "Effective Date" means the day and year first set forth
above.
(e) "HEA" means Hyundai Electronics America, and any
parent, subsidiary or affiliate thereof or successor thereto.
(f) "Permanent Disability" means that:
(i) the Employee has been incapacitated by bodily
injury or disease so as to be prevented thereby from engaging in the performance
of the Employee's duties;
(ii) such total incapacity shall have continued
for a period of six consecutive months; and
(iii) such incapacity will, in the opinion of a
qualified physician, be permanent and continuous during the remainder of the
Employee's life.
(g) "Termination Upon Change of Control" means:
(i) any termination of the employment of the
Executive by the Company without Cause within thirty (30) days before or within
twelve (12) months after the date of the Company's first public announcement
that the Company has entered into a definitive agreement that would result in a
Change of Control (even though still subject to approval by the Company's
stockholders and other conditions and contingencies); or
(ii) any resignation by the Executive for Good
Reason within twelve (12) months after the occurrence of any Change of Control.
3
4
"Termination Upon Change of Control" shall not include any
termination of the employment of the Executive (a) by the Company for Cause; (b)
by the Company as a result of the Permanent Disability of the Executive; (c) as
a result of the death of the Executive; or (d) as a result of the voluntary
termination of employment by the Executive for reasons other than Good Reason.
(g) "Total Annual Earnings" means the sum of the
Executive's annual salary and targeted annual incentive bonus.
2. Position and Duties. Executive shall continue to be an at-will
employee of the Company employed in his/her current position at his/her then
current salary rate. Executive shall also be entitled to continue to participate
in and to receive benefits on the same basis as other executive or senior staff
members under any of the Company's employee benefit plans as in effect from time
to time. In addition, Executive shall be entitled to the benefits afforded to
other employees similarly situated under the Company's vacation, holiday and
business expense reimbursement policies. Executive agrees to devote his/her full
business time, energy and skill to his/her duties at the Company. These duties
shall include, but not be limited to, any duties consistent with his/her
position which may be assigned to Executive from time to time.
3. Termination Upon Change of Control.
(a) Severance Benefits. In the event of the Executive's
Termination Upon Change of Control, Executive shall be entitled to the following
separation benefits:
(i) all salary, accrued but unused vacation
earned through the date of Executive's termination and Executive's target bonus
for the year in which termination occurs, prorated through the date of
Executive's termination;
(ii) twelve (12) months of Executive's Total
Annual Earnings as in effect as of the date of such termination, all less
applicable withholding, paid in a lump sum within thirty (30) days of
termination of employment;
(iii) the vesting of all stock options granted by
the Company to the Executive prior to the Change of Control and outstanding
immediately prior to such Termination Upon Change of Control shall partially
accelerate so that Executive shall be credited with an additional two years of
continuous service for vesting purposes. In addition, the vesting of all stock
options outstanding immediately prior to the Change of Control shall accelerate
to the extent provided above (i.e., two additional years of vesting credit) if
the acquiring company does not assume the stock options or does not substitute
equivalent stock options upon a Change of Control;
(iv) the vesting of all unvested shares of
restricted stock shall accelerate and be the greater of: (I) fifty percent (50%)
of Executive's shares of restricted stock, or (II) that number of shares of
restricted stock determined by multiplying Executive's total shares of
restricted stock by a fraction, the numerator of which is the total number of
months which have elapsed from the restricted stock grant date to the date of
Executive's Termination Upon Change of Control and the numerator of which is
thirty-six (36).
4
5
(v) within fourteen (14) days of submission of
proper expense reports by the Executive, the Company shall reimburse the
Executive for all expenses reasonably and necessarily incurred by the Executive
in connection with the business of the Company prior to his/her termination of
employment;
(vi) if Executive elects continued medical
insurance coverage in accordance with the applicable provisions of federal law
(commonly referred to as "COBRA"), the Company shall pay Executive's COBRA
premiums for the duratin of such COBRA coverage, or twelve (12) months,
whichever is less. If Executive's medical coverage immediately prior to the date
of termination included the Executive's dependents, the Company paid COBRA
premiums shall include such dependents. Notwithstanding the above, in the event
Executive becomes covered under another employer's group health plan (other than
a plan which imposes a preexisting condition exclusion unless the preexisting
condition exclusion does not apply) during the period provided for herein, the
Company shall cease payment of the COBRA premiums; and
(vii) Executive shall receive the benefits, if
any, under the Company's 401(k) Plan and other Company benefit plans to which he
may be entitled pursuant to the terms of such plans.
4. 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.
5. 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 5 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 5, 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 5. The Company shall
bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 5.
6. Exclusive Remedy. The payments and benefits provided for in
Section 3 shall constitute the Executive's sole and exclusive remedy for any
alleged injury or other damages arising out of the cessation of the employment
relationship between the Executive and the Company in connection with a Change
of Control. To the extent Executive is entitled to severance or other benefits
upon termination of employment under this Agreement and any other agreement, the
benefits payable under this Agreement shall be reduced by the amounts paid to
Executive under any other such agreement.
5
6
7. Proprietary and Confidential Information. The Executive agrees to
continue to abide by the terms and conditions of any Company's confidentiality
and/or proprietary rights agreement between the Executive and the Company.
8. 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 Santa Xxxxx County,
California 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 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.
9. Interpretation. Executive and the Company agree that this
Agreement shall be interpreted in accordance with and governed by the laws of
the State of California, without regard to such state's conflict of laws rules.
10. Conflict in Benefits. This Agreement shall supersede all prior
arrangements, whether written or oral, and understandings regarding the subject
matter of this Agreement. To the extent Executive is entitled to severance or
other benefits upon termination of employment under this Agreement and any other
agreement, the benefits payable under this Agreement shall be reduced by the
amounts paid to Executive under any other such agreement. However, this
Agreement is not intended to and shall not affect, limit or terminate (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, or (iv) any agreements or arrangements hereafter entered
into by the parties in writing, except as otherwise expressly provided herein.
11. Release of Claims. No severance benefits shall be paid to
Executive under this Agreement unless and until the Executive shall, in
consideration of the payment of such severance benefit, execute a release of
claims in a form reasonably satisfactory to the Company; provided, however, that
such release shall not apply to any right of Executive may have to be
indemnified by the Company.
12. 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 shall be a breach of this
Agreement and shall entitle the Executive to terminate his or her employment
with the Company within three months thereafter and to receive the benefits
provided under Section 3 of this Agreement in the event of
6
7
Termination Upon Change of Control. 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 12 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.
13. 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 when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
if to the Company: Maxtor Corporation
000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 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.
15. 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.
16. Modification. This Agreement may only be modified or amended by a
supplemental written agreement signed by Executive and the Company.
7
8
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year written below.
MAXTOR CORPORATION
Date:__________________________ By:_____________________________
Title:__________________________
EXECUTIVE:
Date:__________________________ ________________________________
Executive's Signature
Address for Notice:
_________________________
_________________________
_________________________
8
