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EXHIBIT 2.4
EMPLOYEE MATTERS AGREEMENT
BETWEEN
QUANTUM CORPORATION
AND
SNAP APPLIANCES, INC.
EFFECTIVE AS OF
OCTOBER____, 2000
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS..........................................................1
1.1 Quantum.........................................................3
1.2 Quantum Business................................................3
1.3 Quantum Group...................................................3
1.4 Quantum Employee................................................3
1.5 Quantum Stock Value.............................................4
1.6 Affiliate.......................................................1
1.7 Agreement.......................................................1
1.8 Ancillary Agreements............................................1
1.9 California State Disability Insurance...........................1
1.10 COBRA...........................................................2
1.11 Code............................................................2
1.12 Distribution....................................................2
1.13 Distribution Date...............................................2
1.14 Employee Agreement..............................................2
1.15 ERISA...........................................................2
1.16 FMLA............................................................2
1.17 Health and Welfare Plans........................................2
1.18 Health Plans....................................................2
1.19 IPO.............................................................2
1.20 Leave of Absence Plans..........................................2
1.21 Liabilities.....................................................3
1.22 Nasdaq..........................................................3
1.23 Option..........................................................3
1.24 Participating Company...........................................3
1.25 Person..........................................................3
1.26 Plan............................................................3
1.27 Ratio...........................................................4
1.28 Registration Date...............................................4
1.29 Snap............................................................4
1.30 Snap Business...................................................4
1.31 Snap Group......................................................4
1.32 Snap Employee...................................................4
1.33 Snap Stock Value................................................4
1.34 Separation......................................................4
1.35 Separation Agreement............................................4
1.36 Separation Date.................................................5
1.37 Stock Plan......................................................5
1.38 Stock Purchase Plan.............................................5
1.39 Subsidiary......................................................5
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TABLE OF CONTENTS
(CONTINUED)
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1.40 Supplemental Short-Term Disability Plan.........................5
1.41 Voluntary Short-Term Disability Plan............................5
1.42 401(k) Plan.....................................................5
ARTICLE II GENERAL PRINCIPLES..................................................5
2.1 Liabilities.....................................................5
2.2 Establishment of Snap Plans.....................................5
2.3 Snap Under No Obligation to Maintain Plans......................6
2.4 Snap's Participation in Quantum Plans...........................6
2.5 Terms of Participation by Snap Employees in Snap Plans..........7
2.6 Foreign Plans...................................................7
ARTICLE III DEFINED CONTRIBUTION PLAN..........................................7
3.1 401(k) Plan.....................................................7
ARTICLE IV NON-QUALIFIED PLAN..................................................8
4.1 Deferred Compensation Plan......................................8
ARTICLE V HEALTH AND WELFARE PLANS.............................................8
5.1 Health Plans as of the Distribution Date........................8
5.2 Health Plans from the Separation Date through the Distribution .9
5.3 Group Life Plan.................................................9
5.4 Accidental Death & Dismemberment Plan...........................9
5.5 Disability Plans................................................9
5.6 Business Travel Accident Insurance.............................10
5.7 Section 125 Plans..............................................10
5.8 COBRA..........................................................10
5.9 Workers' Compensation Plan.....................................10
5.10 Leave of Absence Plans.........................................10
ARTICLE VI EQUITY AND OTHER COMPENSATION......................................11
6.1 Bonus Plans....................................................11
6.2 Quantum Options................................................11
6.3 Stock Purchase Plan............................................12
6.4 Stock Plan.....................................................12
ARTICLE VII ADMINISTRATIVE PROVISIONS.........................................13
7.1 Sharing of Participant Information.............................13
7.2 Costs and Expenses.............................................13
ARTICLE VIII EMPLOYMENT-RELATED MATTERS.......................................13
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TABLE OF CONTENTS
(CONTINUED)
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8.1 Employee Agreements............................................13
8.2 Terms of Snap Employment.......................................14
8.3 Non-Solicitation of Employees..................................15
8.4 Employment of Employees with United States Work Visas..........15
8.5 Non-Termination of Employment; No Third-Party Beneficiaries....15
8.6 Employment Litigation..........................................15
ARTICLE IX GENERAL PROVISIONS.................................................16
9.1 Effect if Separation, IPO and/or Distribution Does Not Occur...16
9.2 Relationship of Parties........................................16
9.3 Governing Law..................................................16
9.4 Assignment.....................................................16
9.5 Severability...................................................16
9.6 Interpretation.................................................16
9.7 Amendment......................................................17
9.8 Termination....................................................17
9.9 Conflict.......................................................17
9.10 Counterparts...................................................17
9.11 Dispute Resolution.............................................17
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EMPLOYEE MATTERS AGREEMENT
This EMPLOYEE MATTERS AGREEMENT (the "Agreement") is entered into on
October___, 2000, between Quantum Corporation, a Delaware corporation, and Snap
Appliances, Inc., a Delaware corporation. Capitalized terms used herein (other
than the formal names of Quantum Plans (as defined below) and related trusts of
Quantum) and not otherwise defined, shall have the respective meanings assigned
to them in Article I or as they may be defined elsewhere in this Agreement.
WHEREAS, the Board of Directors of Quantum has determined that it is in
the best interests of Quantum and its shareholders to separate Quantum's
existing businesses into two (2) independent businesses, Quantum and Snap; and
WHEREAS, in furtherance of the foregoing, Quantum and Snap have agreed to
enter into this Agreement to allocate between them Assets, Liabilities and
responsibilities with respect to certain employee compensation, benefit plans,
programs and arrangements, and certain employment matters;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Wherever used in this Agreement, the following terms shall have the
meanings indicated below or as such term may be defined elsewhere in this
Agreement, unless a different meaning is plainly required by the context. The
singular shall include the plural, unless the context indicates otherwise.
Headings of sections are used for convenience of reference only, and in case of
conflict, the text of this Agreement, rather than such headings, shall control:
1.1 Affiliate. "Affiliate" means, with respect to any specified Person,
any entity that Controls, is Controlled by, or is under common Control with such
Person. For this purpose, "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such entity, whether through ownership of voting securities or other
interests, by control, or otherwise.
1.2 Agreement. "Agreement" means this Employee Matters Agreement,
including all the Schedules hereto, if any, and all amendments made hereto from
time to time.
1.3 Ancillary Agreements. "Ancillary Agreements" has the meaning set forth
in Section [ ] of the Separation Agreement.
1.4 California State Disability Insurance. "California State Disability
Insurance" means the disability insurance made available and administered by the
State of California to employers and employees.
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1.5 COBRA. "COBRA" means the continuation coverage requirements for "group
health plans" under Title X of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended from time to time, and as codified in Code Section 4980B
and ERISA Sections 601 through 608.
1.6 Code. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
1.7 Distribution. "Distribution" has the meaning set forth in the Recitals
of the Separation Agreement.
1.8 DSS. "DSS" means Quantum's DLT & Storage Systems Group.
1.9 Distribution Date. "Distribution Date" has the meaning set forth in
Section [__] of the Separation Agreement.
1.10 Employee Agreement. "Employee Agreement" has the meaning set forth in
Section 8.1 hereof.
1.11 ERISA. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
1.12 FMLA. "FMLA" means the Family and Medical Leave Act of 1993, as
amended from time to time.
1.13 Health and Welfare Plans. "Health and Welfare Plans," when
immediately preceded by "Quantum," means the Quantum Health Plans, the Quantum
Code Section 125/Flexible Spending Plan (the "Quantum 125 Plan"), established
and maintained by Quantum for the benefit of eligible employees of Quantum, and
such other welfare plans or programs as may apply to such employees through the
Distribution Date. When immediately preceded by "Snap," Health and Welfare Plans
means the Snap Health Plans, the Snap Code Section 125/Flexible Spending Plan
(if applicable) (the "Snap 125 Plan"), established and maintained by Snap for
the benefit of eligible employees of Snap, and such other welfare plans or
programs that Snap may establish.
1.14 Health Plans. "Health Plans," when immediately preceded by "Quantum,"
means the medical, HMO, vision, and dental plans and any similar or successor
Plans. When immediately preceded by "Snap," "Health Plans" means the medical,
HMO, vision and dental plans that may be established by Snap.
1.15 IPO. "IPO" has the meaning set forth in the Recitals of the
Separation Agreement.
1.16 Leave of Absence Plans. "Leave of Absence Plans," when immediately
preceded by "Quantum," means the personal, medical/disability, military, FMLA
and other leave of absence programs that are offered, or may in the future be
offered, from time to time under the personnel policies and practices of
Quantum. When immediately preceded by "Snap," "Leave of Absence Plans" means the
leave of absence programs that may be established by Snap.
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1.16 Liabilities. "Liabilities" means all debts, liabilities, guarantees,
assurances, commitments, and obligations, whether fixed, contingent or absolute,
asserted or unasserted, matured or unmatured, liquidated or unliquidated,
accrued or not accrued, known or unknown, due or to become due, whenever or
however arising (including, without limitation, whether arising out of any
Contract or tort based on negligence or strict liability) and whether or not the
same would be required by generally accepted accounting principles to be
reflected in financial statements or disclosed in the notes thereto. For this
purpose, "Contract" means any contract, agreement, lease, license, sales order,
purchase order, instrument or other commitment that is binding on any Person or
any part of its property under applicable law.
1.17 Nasdaq. "Nasdaq" means the Nasdaq National Market.
1.18 Option. "Option," when immediately preceded by "Quantum," means an
option to purchase Quantum's DLT & Storage Systems group common stock pursuant
to an Quantum Stock Plan. When immediately preceded by "Snap," "Option" means an
option to purchase Snap common stock pursuant to a Snap Stock Plan.
1.19 Participating Company. "Participating Company" means: (a) Quantum;
(b) any Person (other than an individual) that Quantum has approved for
participation in, has accepted participation in, and which is participating in,
a Plan sponsored by Quantum; and (c) any Person (other than an individual)
which, by the terms of such Plan, participates in such Plan or any employees of
which, by the terms of such Plan, participate in or are covered by such Plan.
1.20 Person. "Person" has the meaning as set forth in Section [___] of the
Separation Agreement.
1.21 Plan. "Plan" means any plan, policy, program, payroll practice,
arrangement, contract, trust, insurance policy, or any agreement or funding
vehicle providing compensation or benefits to employees, former employees,
directors or consultants of Quantum or Snap.
1.22 Quantum. "Quantum" means the Quantum Business and the Quantum Group.
1.23 Quantum Business. "Quantum" has the meaning set forth in Section [__]
of the Separation Agreement.
1.24 Quantum Group. "Quantum Group has the meaning set forth in Section
[__] of the Separation Agreement.
1.25 Quantum Employee. "Quantum Employee" means an individual who is: (a)
on the Separation Date actively employed by, or on leave of absence from,
Quantum (b) an employee or group of employees designated as Quantum Employees by
Quantum and Snap, by mutual agreement; or (c) an employee of Quantum or Snap
who, prior to the Distribution Date, is on, or begins, a disability leave of
absence until the earlier of (i) the employee's termination of employment, (ii)
the passage of [SIX] months as measured from the employee's last day of active
work, or (iii) the employee is medically released to return to work.
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1.26 Quantum Stock Value. "Quantum Stock Value" means the closing
per-share price of Quantum's DLT& Storage Systems group common stock as listed
on the New York Stock Exchange on the last trading day before the Distribution.
1.27 Ratio. "Ratio" means the ratio determined by dividing the Snap Stock
Value by the Quantum Stock Value.
1.28 Registration Date. "Registration Date" means the date on which the
IPO Registration Statement (as defined in the Separation Agreement) is declared
effective by the Securities and Exchange Commission.
1.29 Restricted Stock. "Restricted Stock" when immediately preceded by DSS
Stock subject to forfeiture pursuant to the terms of the Quantum Plan. When
immediately preceded by "Snap", "Restricted Stock" means Snap Stock subject to
forfeiture pursuant to the terms of the Snap Plan.
1.30 Separation. "Separation" has the meaning set forth in the Recitals of
the Separation Agreement.
1.31 Separation Agreement. "Separation Agreement" means the Master
Separation and Distribution Agreement, dated as of [OCTOBER ___, 2000], of which
this is Exhibit [__] thereto.
1.32 Separation Date. "Separation Date" has the meaning set forth in
Section [__] of the Separation Agreement.
1.33 Snap. "Snap" means the Snap Business and the Snap Group.
1.34 Snap Business. "Snap" Business" has the meaning as set forth in
Section [__] of the Separation Agreement.
1.35 Snap Group. "Snap" Group" has the meaning as set forth in Section
[___] of the Separation Agreement.
1.36 Snap Employee. "Snap Employee" means any individual who: (a) is
actively employed by Snap on the Separation Date; (b) moves to the employ of
Snap from the employ of Quantum; (c) an employee or group of employees
designated as Snap Employees by Quantum and Snap, by mutual agreement, or (d) an
individual hired by Snap on or after the Separation Date.
1.37 Snap Stock Value. "Snap Stock Value" means the opening per-share
price of Snap common stock as listed on Nasdaq, as applicable, on the first
trading day after the Distribution.
1.38 Separation. "Separation" has the meaning set forth in the Recitals of
the Separation Agreement.
1.39 Separation Agreement. "Separation Agreement" means the Master
Separation and Distribution Agreement, dated as of [OCTOBER ___, 2000], of which
this is Exhibit [___] thereto.
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1.39 Separation Date. "Separation Date" has the meaning set forth in
Section [__] of the Separation Agreement.
1.40 Stock Plan. "Stock Plan," when immediately preceded by "Quantum,"
means any plan, program, or arrangement, other than the Stock Purchase Plan,
pursuant to which employees, directors and consultants hold Options, Quantum
Restricted Stock, or other Quantum equity incentives. "Stock Plan," when
immediately preceded by "Snap," means any plan, program, or arrangement, other
than the Stock Purchase Plan, pursuant to which employees, directors and
consultants hold Options, Snap Restricted Stock, or other Snap equity
incentives.
1.41 Stock Purchase Plan. "Stock Purchase Plan," when immediately preceded
by "Quantum," means the Quantum Employee Stock Purchase Plan. When immediately
preceded by "Snap," "Stock Purchase Plan" means the employee stock purchase plan
to be established by Snap.
1.42 Subsidiary. "Subsidiary" has the meaning set forth in Section 7.33 of
the Separation Agreement.
1.43 Short-Term Disability Plan. Short Term Disability Plan means the
disability plan offered by Quantum that is offered to Quantum employees who are
not employed in California.
1.44 California Voluntary Disability Plan. The California Voluntary
Disability Plan means the disability plan offered by Quantum that is offered to
eligible individuals that covers Quantum Employees who are employed in
California and that is offered in lieu of California State Disability Insurance.
1.45 401(k) Plan. "401(k) Plan," when immediately preceded by Quantum
means the qualified retirement plan of Quantum. When immediately preceded by
Snap, "401(k) Plan" shall mean the qualified retirement plan that Snap shall
establish, sponsor, and maintain effective as of the Distribution Date or such
other date as Quantum and Snap may mutually agree.
ARTICLE II
GENERAL PRINCIPLES
2.1 Liabilities. Except as specified otherwise in this Agreement or as
mutually agreed upon by Snap and Quantum from time to time, effective as of the
Separation Date, Snap shall pay to Quantum an amount that equals [ percent
( %)] of Snap's adjusted payroll charges during the time from the Separation
Date up to the Distribution Date. Except as specified otherwise in this
Agreement or as mutually agreed upon by Snap and Quantum, any Liability incurred
with respect to Quantum Plans by Snap as a Participating Company up to the
Distribution Date shall be borne solely by Quantum, and any Liability incurred
with respect to Snap Plans, as then, or in the future, may be established, from
the Distribution Date forward will be borne solely by Snap.
2.2 Establishment of Snap Plans.
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(a) Health and Welfare Plans. Except as specified otherwise in this
Agreement, effective as of the Distribution Date (or such other date(s) as
Quantum and Snap may mutually agree), Snap shall adopt the Snap Health and
Welfare Plans.
(b) 401(k) Plan. Effective as of the Distribution Date (or such other
date as Quantum and Snap may mutually agree), Snap shall establish, or cause to
be established, a separate trust, which is intended to be tax-qualified under
Code Section 401(a), to be exempt from taxation under Code Section 501(a)(1),
and to form the Snap 401(k) Plan.
(c) Equity and Other Compensation. Except as specified otherwise in
this Agreement, effective on or before the IPO (or such other date(s) as Quantum
and Snap may mutually agree), Snap shall adopt the Snap Stock Plans. Effective
on or before the Registration Date (or such other date as Quantum and Snap may
mutually agree), Snap shall adopt the Snap Stock Purchase Plan.
(d) Other Plans. Except as otherwise specified in this Agreement,
effective as of the Distribution Date Snap shall adopt certain Snap Plans that
are specifically tied to its payroll practices, including, without limitation,
such Plans that Snap deems appropriate.
2.3 Snap Under No Obligation to Maintain Plans. Except as specified
otherwise in this Agreement, nothing in this Agreement shall preclude Snap, at
any time after the Distribution Date, from amending, merging, modifying,
terminating, eliminating, reducing, or otherwise altering in any respect any
Snap Plan, any benefit under any Snap Plan or any trust, insurance policy or
funding vehicle related to any Snap Plans, or any employment or other service
arrangement with Snap Employees, consultants or vendors (to the extent permitted
by law).
2.4 Snap's Participation in Quantum Plans.
(a) Participation in Quantum Plans. Except as specified otherwise in
this Agreement or as Quantum and Snap may mutually agree, Snap shall, until the
Distribution Date, continue to be a Participating Company in the Quantum Plans.
(b) Quantum's General Obligations as Plan Sponsor. To the extent that
Snap is a Participating Company in any Quantum Plan, Quantum shall continue to
administer, or cause to be administered, in accordance with its terms and
applicable law, such Quantum Plan, and shall have the sole and absolute
discretion and authority to interpret the Quantum Plan, as set forth therein.
(c) Snap's General Obligations as Participating Company. Snap shall
perform, with respect to its participation in the Quantum Plans, the duties of a
Participating Company as set forth in each such Plan or any procedures adopted
pursuant thereto, including (without limitation): (i) assistance in the
administration of claims, to the extent requested by the claims administrator of
the applicable Quantum Plan; (ii) full cooperation with Quantum Plan auditors,
benefit personnel and benefit vendors; (iii) preservation of the confidentiality
of all financial arrangements Quantum has or may have with any vendors, claims
administrators, trustees, service providers or any other entity or individual
with whom Quantum has entered into an agreement relating to the Quantum Plans;
and (iv) preservation of the confidentiality of
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participant information (including, without limitation, health information in
relation to leaves) to the extent not specified otherwise in this Agreement.
(d) Termination of Participating Company Status. Except as specified
otherwise in this Agreement or as mutually agreed upon by Snap and Quantum,
effective as of the Distribution Date, Snap shall automatically cease to be a
Participating Company in Quantum Plans.
2.5 Terms of Participation by Snap Employees in Snap Plans
(a) Non-Duplication of Benefits. Except as specified otherwise in this
Agreement or as mutually agreed upon by Snap and Quantum, effective as of the
Distribution Date, Quantum and Snap shall agree on methods and procedures,
including amending the respective Plan documents, to prevent Snap Employees from
receiving duplicate benefits from the Quantum Plans and the Snap Plans, except
as may be set forth in Section 6.3 and Section 6.4 of this Agreement.
(b) Service Credit. Except as specified otherwise in this Agreement,
with respect to Snap Employees, Snap shall make reasonable efforts to provide
that all service, all compensation and all other benefit-affecting
determinations that, as of the Distribution Date, were recognized under the
corresponding Quantum Plan shall, as of the Distribution Date, receive full
recognition and credit and be taken into account under such Snap Plan to the
same extent as if such items occurred under such Snap Plan, except to the extent
that duplication of benefits would result.
2.6 Foreign Plans. Snap and Quantum each intend that the matters, issues
or Liabilities relating to, arising out of, or resulting from foreign plans and
non-U.S.-related employment matters be handled in a manner that is in compliance
with the requirements of applicable local law.
ARTICLE III
DEFINED CONTRIBUTION PLAN
3.1 401(k) Plan.
(a) 401(k) Plan Trust. Effective as of the Distribution Date (or such
other date as Quantum and Snap may mutually agree), Snap shall establish, or
cause to be established, a separate trust, which is intended to be tax-qualified
under Code Section 401(a), to be exempt from taxation under Code Section
501(a)(1), and to form the Snap 401(k) Plan.
(b) 401(k) Plan: Assumption of Liabilities and Transfer of Assets.
Effective as of the Distribution Date (or such other date as Quantum and Snap
may mutually agree): (i) the Snap 401(k) Plan shall assume and be solely
responsible for all Liabilities relating to, arising out of, or resulting from
Snap Employees under the Quantum 401(k) Plan; and (ii) Quantum shall cause the
accounts of the Snap Employees under the Quantum 401(k) Plan that are held by
its
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related trust to be transferred to the Snap 401(k) Plan and its related trust,
and Snap shall cause such transferred accounts to be accepted by such Plan and
its related trust. Snap and Quantum each agree to use their reasonable best
efforts to accomplish this 401(k) Plan and related trust spin-off.
(c) No Distribution to Snap Employees. The Quantum 401(k) Plan and the
Snap 401(k) Plan shall provide that no distribution of account balances shall be
made to any Snap Employee on account of Snap ceasing to be an Affiliate of
Quantum as of the Distribution Date.
ARTICLE IV
NON-QUALIFIED PLAN
4.1 Deferred Compensation Plan.
Snap shall, until the Distribution Date (or such other date as Quantum
and Snap may mutually agree), continue to be a Participating Company in the
Quantum deferred compensation plan (the "Deferred Compensation Plan"). Before
the Separation Date, Quantum shall amend the Deferred Compensation Plan to
provide that participants under the Deferred Compensation Plan who become Snap
Employees will not be deemed to have a termination of employment until such time
as the participant's employment with Snap is terminated. Snap shall promptly
notify Quantum upon the termination of employment (or the occurrence of another
distributable event) of a Snap Employee who is a participant in the Deferred
Compensation Plan.
ARTICLE V
HEALTH AND WELFARE PLANS
5.1 Health Plans as of the Distribution Date.
(a) Snap Health Plans. As of the Distribution Date (or such other
date(s) as Quantum and Snap may mutually agree), Snap shall have established
Snap Health Plans that will provide coverage for Snap Employees (and their
eligible dependents). Effective as of the Distribution Date, Snap shall cease to
be a Participating Company in the Quantum Health Plans, and Snap shall be solely
responsible for (i) all Liabilities incurred with respect to such Snap Health
Plans; and (ii) the administration of the Snap Health Plans, including, without
limitation, the payment of all employer-related costs in establishing and
maintaining the Snap Health Plans, and for the collection and remittance of
employee premiums.
(b) Pending Treatments. Notwithstanding Subsection 5.1(a) above, all
courses of treatment that have begun prior to the Distribution date with respect
to Snap Employees (or their eligible dependents) under the applicable Quantum
Health Plan shall be provided without interruption under the applicable Quantum
Health Plan until the earlier of: (i) such course of treatment is concluded or
discontinued or (ii) ninety (90) days from the date
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medical attention was last received with respect to such course of treatment
("Uninterrupted Treatment"). For purposes of this Section 5.1(b) only, courses
of treatment means that a Snap Employee, prior to the Distribution Date, has
received, and at the Distribution Date is still receiving, medical treatment for
a specific illness or injury and such Uninterrupted Treatment is applicable only
to that specific illness or injury.
(c) Vendor Arrangements. If requested by Snap, Quantum shall use
reasonable efforts in assisting Snap to procure, effective as of the
Distribution Date (or such other date(s) as Quantum and Snap may mutually
agree), Snap Health Plans.
(d) No Status Change. The transfer or other movement of employment
between Quantum to Snap at any time upon or before the Distribution Date shall
neither constitute nor be treated as a "status change" or termination of
employment under the Quantum Health Plans or the Snap Health Plans.
5.2 Health Plans from the Separation Date through the Distribution Date.
Except as otherwise agreed by Quantum and Snap, for the period beginning with
the Separation Date and ending on the Distribution Date (or such other period as
Quantum and Snap may mutually agree), Snap shall be a Participating Company in
the Quantum Health Plans. Quantum shall administer and be responsible for claims
incurred under the Quantum Health Plans by Snap Employees before the
Distribution Date, subject to the limitations as set forth in Section 5.1(b).
Any determination made or settlements entered into by Quantum with respect to
such claims shall be final and binding. Quantum shall retain financial and
administrative ("run-out") Liability and all related obligations and
responsibilities for all claims incurred by Snap Employees before the
Distribution Date, subject to the limitations as set forth in Section 5.1(b).
5.3 Group Life Plan. Snap shall, until the Distribution Date (or such
other date as Quantum and Snap may mutually agree), continue to be a
Participating Company in any Quantum group life insurance plan or arrangement.
5.4 Survivor Income Protection Plan. Snap shall, until the Distribution
Date (or such other date as Quantum and Snap may mutually agree), continue to be
a Participating Company in any Quantum survivor income protection plan.
5.5 Accidental Death & Dismemberment Plan. Snap shall, until the
Distribution Date (or such other date as Quantum and Snap may mutually agree),
continue to be a Participating Company in the Quantum accidental death &
dismemberment Plan.
5.6 Disability Plans.
(a) Short-Term Disability Plan. Snap shall, until the Distribution
Date (or such other date as Quantum and Snap may mutually agree), continue to be
a Participating Company in the Quantum Short-Term Disability Plan. With respect
to Snap Employees who are employed in California, said employees will be covered
by the California Voluntary Disability Plan.
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(b) Long-Term Disability Plan. Snap shall, until the Distribution Date
(or such other date as Snap and Quantum may mutually agree), continue to be a
Participating Company in the Quantum long-term disability plan.
5.7 Business Travel Accident Insurance. Snap shall, until the Distribution
Date (or such other date as Snap and Quantum may mutually agree), continue to be
a Participating Company in the Quantum business travel accident insurance Plan.
5.8 Section 125 Plans.
(a) Cafeteria Plan. Snap shall, until the Distribution Date (or such
other date as Snap and Quantum may mutually agree), continue to be a
Participating Company in the Quantum 125 Plan. Effective as of the Distribution
Date, Snap may establish, in its sole discretion, a Snap 125 Plan for the
benefit of Snap Employees.
(b) Flexible Spending Account Plan. Snap shall, through December 31,
2000, continue to be a Participating Company in the health care reimbursement
plan and dependent care reimbursement plan (the "Quantum Flexible Spending
Accounts") of the Quantum 125 Plan, and beginning January 1, 2001 Snap shall
cause to be implemented and shall sponsor a Snap health care spending account
and dependent care spending account (the "Snap Flexible Spending Accounts") for
the benefit of Snap Employees that is substantially similar to that of the
Quantum Flexible Spending Accounts. From January 1, 2001 to the Distribution
Date, or such other date as Quantum and Snap may mutually agree, Quantum will
provide administrative services to Snap in relation to the Snap Flexible
Spending Accounts.
5.9 COBRA. Quantum shall be responsible for providing COBRA continuation
coverage (for the applicable period of time as required by law, generally 18-36
months) to Snap Employees and their eligible dependents who become eligible for
such coverage prior to the Distribution Date. Effective as of the Distribution
Date, Snap shall be responsible for providing COBRA continuation coverage to
Snap Employees and their eligible dependents who become eligible for such
coverage on and following the Distribution Date.
5.10 Workers' Compensation Plan. Effective as of the Separation Date, or
such other date as Quantum and Snap may mutually agree, Quantum shall establish
a workers' compensation plan for the benefit of Snap Employees (the "Separation
Date Workers' Compensation Plan"). Effective as of the Distribution Date, Snap
shall establish, terminate or renegotiate the terms of the Separation Date
Workers' Compensation Plan. Any Liabilities that accrue under the Separation
Date Workers' Compensation Plan shall be Liabilities of Snap.
5.11 Leave of Absence Plans. Effective as of the Separation Date, Snap
Employees shall continue to be eligible to participate in the Leave of Absence
Plans of Quantum, subject to Section 5.5 (a) of this Agreement. Effective as of
the Distribution Date, Snap Employees shall not be eligible to participate in
the Quantum Leave of Absence Plans.
5.12 Educational Assistance Program. Effective as of the Separation Date,
Snap Employees shall continue to be eligible to participate in the Educational
Assistance Program of Quantum, subject to Section 5.5 (a) of this Agreement.
Effective as of the Distribution Date,
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Snap Employees shall not be eligible to participate in the Educational
Assistance Program. Adoption Assistance Program.
5.13 Adoption Assistance Program. Effective as of the Separation Date,
Snap Employees shall continue to be eligible to participate in the Adoption
Assistance Program of Quantum, subject to Section 5.5 (a) of this Agreement.
Effective as of the Distribution Date, Snap Employees shall not be eligible to
participate in the Adoption Assistance Program.
5.14 Wellness Programs. Effective as of the Separation Date, Snap
Employees shall continue to be eligible to participate in the Quantum wellness
programs, subject to Section 5.5 (a) of this Agreement. Effective as of the
Distribution Date, Snap Employees shall not be eligible to participate in the
Quantum wellness programs.
ARTICLE VI
EQUITY AND OTHER COMPENSATION
6.1 Bonus Plans. Effective at the Separation Date (or such other date as
Snap and Quantum may mutually agree), Snap shall cease to continue to be a
Participating Company in applicable Quantum bonus plans that Snap Employees were
eligible to receive awards under prior to the Separation Date. In Snap's sole
and absolute discretion it may establish a Snap bonus plan on or after the
Separation Date, and any award earned or accrued (as is applicable) shall be the
sole responsibility of Snap.
6.2 Severance Plans. Snap shall, until the Distribution Date (or such
other date as Snap and Quantum may mutually agree), continue to be a
Participating Company in the Quantum Severance Plan. Snap shall cease to be a
Participating Company in the Quantum Severance Plan coincident with Snap's
establishment of the Snap Severance Plan (or if none, Snap's written notice to
Quantum of its withdrawal as a Participating Company in the Quantum Severance
Plan.)
6.3 Options and Restricted Stock.
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(a) Treatment of Options and Restricted Stock for Employees transferring to
Snap. At the Distribution Date (or such other date as Quantum and Snap may
mutually agree), each outstanding Quantum Option and DSS Restricted Stock held
by Snap Employees, whether vested or unvested, shall be, in connection with the
Distribution, assumed by Snap. Each Quantum Option or DSS Restricted Stock so
assumed by Snap shall continue to have, and be subject to, the same terms and
conditions set forth in the applicable Quantum Stock Plans and as provided in
the respective option agreements governing such assumed Quantum Option or DSS
Restricted Stock as of the Distribution Date (or such other date as Quantum and
Snap may mutually agree), except that (i) such assumed Quantum Option or DSS
Restricted Stock shall be exercisable for that number of whole shares of Snap
common stock equal to the quotient of the number of shares of Quantum common
stock that would be issuable upon exercise of such Quantum Option or DSS
Restricted Stock as of the Distribution Date (assuming that all vesting
conditions applicable to such option were then satisfied) divided by the Ratio,
rounded down to the nearest whole number of shares of Snap common stock, and
(ii) the per share exercise price for the shares of Snap common stock issuable
upon exercise of such assumed Quantum Option or DSS Restricted Stock shall be
equal to the product determined by multiplying the exercise price per share of
Quantum common stock at which such Quantum Option or DSS Restricted Stock was
exercisable as of the Distribution Date by the Ratio, rounded up to the nearest
whole cent.
(b) Treatment of Options and Restricted Stock for Employees Remaining
at Quantum. On the distribution date, Quantum employees holding DLT & Storage
Systems Group ("DSS") options will have the their options converted into options
to purchase DSS and Snap stock; provided, however, that no more than 6,500,000
Snap shares shall be reserved for issuance pursuant to the Quantum employees'
exercise of options to purchase Snap stock. The number of shares covered by the
options and the exercise price of the options will be determined using a
"blended approach" in which a certain percentage of the spread on a DSS option
on the distribution date is moved to Snap and the remaining portion of the
spread is preserved in the DSS option. The DSS option will be separately
exercisable from the Snap option. On the distribution date, holders of DSS
Restricted Stock shall receive a distribution of Snap stock as described in
Section 4.1(b) of the Master Separation and Distribution Agreement; provided,
however that to the extent a DSS stockholder is unvested in such restricted
stock, the Snap stock shall be held in escrow and shall be distributed to the
DSS stockholder as the DSS restricted stock vests.
Snap options held by Quantum employees will be governed pursuant to the
terms of the Snap Plan. Quantum employees who exercise Snap options will receive
stock from the Snap Plan. After Snap's initial public offering, but before the
distribution date, Snap will register the stock underlying Quantum employees'
Snap options on Form S-8.
(c) Certain Non-U.S. Optionees. Except as may otherwise be agreed upon
by Quantum and Snap this Section 6.2 shall govern the treatment of Quantum
Options held by non-U.S. Snap Employees.
6.4 Stock Purchase Plan. Through the Distribution Date, Snap Employees
shall continue to be eligible for participation in the Quantum Stock Purchase
Plan. On or before the Registration Date (or such other date as Quantum and Snap
may mutually agree), Snap shall establish a Stock Purchase Plan for the benefit
of Snap Employees. The Plan shall become effective at a time determined by the
Snap Plan's administrator. Effective as of the Registration Date, Snap Employees
shall cease to be eligible to participate in and to have any further payroll
deductions withheld pursuant to the Quantum Stock Purchase Plan; provided,
however, that payroll deductions withheld for Snap Employees prior to the
Registration Date may be used to purchase shares at the next scheduled purchase
date under the Quantum Stock Purchase Plan.
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6.5 Stock Plan. Through the Registration Date, Snap Employees shall
continue to be eligible for participation in the Quantum Stock Plan.
Notwithstanding the foregoing, effective as of the Separation Date, Snap
Employees shall not be eligible to receive any additional option grants that may
be made pursuant to the Quantum Stock Plan. Effective on or before the
Registration Date (or such other date as Quantum and Snap may mutually agree),
Snap shall establish and sponsor a Stock Plan for the benefit of Snap Employees,
directors and consultants.
ARTICLE VII
ADMINISTRATIVE PROVISIONS
7.1 Sharing of Participant Information. Quantum and Snap shall share, or
cause to be shared, all participant information that is necessary or appropriate
for the efficient and accurate administration of each of the Quantum Plans and
the Snap Plans during the respective periods applicable to such Plans as Snap
and Quantum may mutually agree. Quantum and Snap and their respective authorized
agents shall, subject to applicable laws of confidentiality and data protection,
be given reasonable and timely access to, and may make copies of, all
information relating to the subjects of this Agreement in the custody of the
other party or its agents, to the extent necessary or appropriate for such
administration.
7.2 Costs and Expenses. Snap shall bear all costs and expenses, including
but not limited to legal and actuarial fees, incurred from and after the
Distribution Date in the design, drafting and implementation of any and all
plans and compensation structures which it establishes or creates and the
amendment of its existing plans or compensation structures.
ARTICLE VIII
EMPLOYMENT-RELATED MATTERS
8.1 Employee Agreements. Definition. As used in this Section 8.1,
"Employee Agreement" means Quantum's Employee Information Agreements and
corresponding agreements in foreign countries executed by each Quantum employee.
(a) Survival of Quantum Employee Agreement Obligations and Quantum's
Common Law Rights. All former Quantum employees transferred to Snap as of the
Separation Date shall remain bound by the Quantum Employee Agreements as if such
employees had been terminated by Quantum as of the Separation Date; provided,
however, that none of the following acts committed by former Quantum employees
within the scope of their Snap employment shall constitute a breach of such
Quantum Employee Agreements: (i) the use or disclosure of Confidential
Information (as that term is defined in the former Quantum employee's Quantum
Employee Agreement) for or on behalf of Snap, if such disclosure is consistent
with the license rights granted to Snap and restrictions imposed on Snap under
this Agreement, any other Ancillary Agreement or any other agreement between the
parties and (ii) solicitation of the employees of one party by the other party
prior to the Distribution Date. Further, Quantum
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retains any rights it has under statute or common law with respect to actions by
its former employees to the extent such actions are inconsistent with the rights
granted to Snap and restrictions imposed on Snap under this Agreement, any other
Ancillary Agreement or any other agreement between the parties.
(b) Assignment, Cooperation for Compliance and Enforcement.
(i) Quantum retains all rights under the Quantum Employee
Agreements of all former Quantum employees necessary to permit Quantum to
protect the rights and interests of Quantum, but hereby transfers and assigns to
Snap its rights under the Quantum Employee Agreements of all former Quantum
employees to the extent required to permit Snap to enjoin, restrain, recover
damages from or obtain specific performance of the Quantum Employee Agreements
or obtain other remedies against any employee who breaches his/her Quantum
Employee Agreement, and to the extent necessary to permit Snap to protect the
rights and interests of the Snap Business on the Separation Date.
(ii) Quantum and Snap agree, at their own respective cost and
expense, to use their reasonable efforts to cooperate as follows: (A) Snap shall
advise Quantum of: (1) any violation(s) of the Quantum Employee Agreement by
former Quantum employees, and (2) any violation(s) of the Snap Employee
Agreement which affect Quantum's rights; and (B) Quantum shall advise Snap of
any violations of the Quantum Employee Agreement by current or former Quantum
employees which affect Snap's rights; provided, however, that the foregoing
obligations shall only apply to violations which become known to an attorney
within the legal department of the party obligated to provide notice thereof.
(iii) Quantum and Snap each may separately enforce the Quantum
Employee Agreements of former Quantum employees to the extent necessary to
reasonably protect their respective interests, provided, however, that (i) Snap
shall not commence any litigation relating thereto without first consulting with
Quantum's General Counsel or his/her designee and (ii) Quantum shall not
commence any litigation relating thereto against any former Quantum employee who
is at the time an Snap employee without first consulting with Snap's Chief
Executive Officer or his/her designee.
(iv) Quantum and Snap understand and acknowledge that matters
relating to the making, performance, enforcement, assignment and termination of
employee agreements are typically governed by the laws and regulations of the
national, federal, state or local governmental unit where an employee resides,
or where an employee's services are rendered, and that such laws and regulations
may supersede or limit the applicability or enforceability of this Section 8.1.
In such circumstances, Quantum and Snap agree to take action with respect to the
employee agreements that best accomplishes the parties' objectives as set forth
in this Section 8.1 and that is consistent with applicable law.
8.2 Terms of Snap Employment. At or before the Separation Date, Snap
Employees shall be required to execute a new agreement regarding confidential
information and proprietary developments, if such form is required at the sole
and absolute discretion of Snap. In
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addition, nothing in this Agreement shall be construed to change the at-will
status of the employment of any of the employees of Quantum or Snap.
8.3 Non-Solicitation of Employees. Quantum and Snap each agree that,
effective as of the Distribution Date, Quantum and Snap shall not solicit or
recruit, without the other party's express written consent, the other party's
employees for a period of one (1) year following the Distribution Date. To the
extent this prohibition is waived, any recruitment efforts by either Quantum or
Snap during the period of one (1) year after the Distribution Date shall be
coordinated with appropriate management personnel, as Quantum and Snap shall
mutually agree, of Quantum or Snap. Notwithstanding the foregoing, this
prohibition on solicitation does not apply to actions taken by a party either:
(a) solely as a result of an employee's affirmative response to a general
recruitment effort carried out through a public solicitation or general
solicitation, or (b) as a result of an employee's initiative.
8.4 Employment of Employees with United States Work Visas. Snap Employees
with U.S. work visas authorizing them to work for Snap will continue to hold
work authorization for Snap after the Separation Date. Snap will request
amendments to the nonimmigrant visa status of Snap Employees with U.S. work
visas authorizing them to work for Quantum.
8.5 Non-Termination of Employment; No Third-Party Beneficiaries. No
provision of this Agreement shall be construed to create any right or accelerate
entitlement to any compensation or benefit whatsoever on the part of any Snap
Employee or other former, present or future employee of Quantum or Snap under
any Quantum Plan or Snap Plan or otherwise. Without limiting the generality of
the foregoing: (a) neither the Distribution or Separation, nor the termination
of the Participating Company status of Snap shall cause any employee to be
deemed to have incurred a termination of employment; and (b) no transfer of
employment between Quantum and Snap before the Distribution Date shall be deemed
a termination of employment for any purpose hereunder.
8.6 Employment Litigation.
(a) Claims to be Transferred to Snap and/or Jointly Defended by Quantum
and Snap. On or before the Distribution Date, Quantum and Snap will enter into a
written agreement that specifies the legal responsibility and accompanying
Liability for identified claims of Snap, if any.
(b) Unscheduled Claims. Snap shall have sole responsibility for all
employment-related claims regarding Snap Employees that arise out of facts, acts
or omissions occurring on or after the Distribution Date relating to, arising
out of, or resulting from their employment with Snap. Quantum shall have sole
responsibility for all employment-related claims by or regarding Quantum
employees and for all employment-related claims by or regarding Snap Employees
that arise out of facts, acts or omissions occurring prior to the Distribution
Date.
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ARTICLE IX
GENERAL PROVISIONS
9.1 Effect if Separation, IPO and/or Distribution Does Not Occur. If the
Separation, IPO and/or Distribution does not occur, then all actions and events
that are, under this Agreement, to be taken or occur effective as of the
Separation Date, IPO, Registration Date and/or Distribution Date, or otherwise
in connection with the Separation, IPO, Registration and/or Distribution, shall
not be taken or occur except to the extent specifically agreed by Snap and
Quantum.
9.2 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, the
understanding and agreement being 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.
9.3 Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the Law of the State of California without regard
to the principles of conflicts of Laws thereunder, to the extent not preempted
by the Employee Retirement Income Security Act of 1974.
9.4 Assignment. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective legal representatives and
successors, and nothing in this Agreement, express or implied, is intended to
confer upon any other Person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. This Agreement may be enforced separately
by Quantum and Snap. Neither party may assign this Agreement or any rights or
obligations hereunder, without the prior written consent of the other party, and
any such assignment shall be void; provided, however, either party may assign
this Agreement to a successor entity in conjunction with such party's
reincorporation.
9.5 Severability. If any term or other provision of this Agreement is
determined to be invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to either party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible and in an
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the fullest possible extent.
9.6 Interpretation. The headings contained in this Agreement and in the
table of contents to this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Any
capitalized term used in any Schedule but not otherwise defined therein shall
have the meaning assigned to such term in this Agreement.
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When a reference is made in this Agreement to an Article, Section or Schedule,
such reference shall be to an Article of, Section of, or Schedule to this
Agreement unless otherwise indicated.
9.7 Amendment. The Board of Directors of Snap and Quantum may mutually
agree to amend the provisions of this Agreement at any time or times, for any
reason, either prospectively or retroactively, to such extent and in such manner
as the Boards mutually deem advisable. Each Board may delegate its amendment
power, in whole or in part, to one or more Persons or committees as it deems
advisable. No change or amendment will be made to this Agreement, except by an
instrument in writing signed by authorized individuals.
9.8 Termination. This Agreement may be terminated and the Distribution
abandoned at any time prior to the Registration Date by and in the sole
discretion of Quantum without the approval of Snap. This Agreement may be
terminated at any time after the Registration Date and before the Distribution
Date by mutual consent of Quantum and Snap. In the event of termination pursuant
to this Section, no party shall have any liability of any kind to the other
party.
9.9 Conflict. This Agreement is not intended to address, and should not be
interpreted to address, the matters expressly covered by the Separation
Agreement and/or the other Ancillary Agreements.
9.10 Counterparts. This Agreement, including the Schedules hereto (if
applicable) and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
9.11 Dispute Resolution. Any and all controversies, disputes or claims
arising out of, relating to, in connection with or resulting from this Agreement
(or any amendment thereto or any transaction contemplated hereby or thereby),
including as to its existence, interpretation, performance, non-performance,
validity, breach or termination, including any claim based on contract, tort,
statute or constitution and any claim raising questions of law, whether arising
before or after termination of this Agreement, shall be deemed a Dispute as
defined in the Separation Agreement and shall be resolved exclusively by, in
accordance with, and subject to the limitations set forth in the Separation
Agreement.
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IN WITNESS WHEREOF, each of the parties have caused this Employee Matters
Agreement to be executed on its behalf by its officers thereunto duly authorized
on the day and year first above written.
QUANTUM, INC.
By:
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Name:
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Title:
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SNAP APPLIANCES, INC.
By:
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Name:
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Title:
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