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EXHIBIT 10.26
February 17, 1995
Xxxxxx X. Xxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Dear Xxxxxx
This letter (the "Agreement") sets forth the terms and conditions of your
employment with Storage Technology Corporation (the "Company"). In consideration
of your employment by the Company on the terms and conditions set forth below,
and the mutual covenants and agreements contained herein, you and the Company
agree as follows:
1. Position: You will be employed full-time by the Company as
CORPORATE VICE PRESIDENT INTERNATIONAL MANUFACTURING. You will report to the
Chief Executive Officer of the Company, or such other officer as he or she may
designate from time to time, and perform such duties as may be assigned you from
time to time. During the Employment Term (as herein defined), you shall devote
your entire working time, attention and energies to the business of the Company.
Except for personal investments, which shall not conflict with the business of
the Company, you shall not engage in any other business activity or activities
that require personal services by you that may conflict with the proper
performance of your duties hereunder.
2. Employment. The term of your employment pursuant to this
agreement (the "Employment Term"), is effective as of November 16, 1994, and
shall thereafter continue on an "at will" basis at the salary and terms
contained herein unless otherwise modified by the chief executive officer
("CEO") or his or her designee.
3. Base Compensation. For your services during the Employment
Term, the Company will pay you an annual base salary, effective November 16,
1994, of $170,000 per year. Such salary shall be payable in installments in
accordance with the regular payroll policies of the Company in effect from time
to time during the Employment Term. The amount of your base salary may be
adjusted either upward or downward by the Company from time to time during the
Employment Term.
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4. Bonuses.
(a) MBO Bonus Program. The Company currently maintains a
Management By Objective Bonus Program (the "MBO Program"). During the Employment
Term, you shall be eligible for such bonuses as may be established from time to
time in accordance with the MBO Program by the Company's Board of Directors (the
"Board"). For 1994, the Board has established for you an On Plan Bonus potential
percentage of 35%. Such percentage may be adjusted either upward or downward for
subsequent years during the Employment Term. Any payments under the MBO Program
shall be made in accordance with the provisions of, and under the conditions
contained in, the MBO Program and the terms of any bonus award authorized for
you by the Board.
5. Stock Options. Subject to: (i) approval by the Board, (ii) the
terms of the Company's employee stock option plan, and (iii) the standard
employee stock option agreement ("Option Agreement"), which will be separately
executed following Board approval, the Company proposes to grant you an option
to purchase 1500 Shares of the Company's common stock at a price per share equal
to the closing price of the stock on the New York Stock Exchange on the day
prior to approval by the Board. The vesting and other terms of those options
will be set out in the Option Agreement.
6. Termination of Employment.
(a) Termination Without Cause. If, during the Employment
Term, the Company elects to terminate your employment without "Cause" (as that
term is defined in paragraph 6(d)), except for terminations covered by the
provisions of 6(b), or if you should die without Cause existing at such time,
you shall be entitled to receive, as a severance payment, a payment equal to the
sum of (i) your then current rate of annual base salary and (ii) 100% of your On
Plan Bonus potential percentage under the MBO Program for the year of
termination (whether or not such bonus would be otherwise payable). Such amount
shall be paid to you in a cash lump sum within thirty days after your
termination of employment pursuant to this paragraph 6(a). In addition, you
shall be entitled to exercise any vested stock options then held to acquire
shares of Common Stock in accordance with the Option Agreement.
(b) Termination in the Event of Sale, Merger or Change of
Control. If, during the Employment Term, the Company is sold, or merged with or
into another company (in a transaction in which the Company is not the surviving
entity), or in which the stockholders of the Company immediately prior to the
merger own 50% or less of the Company after the merger, or all or substantially
all of the assets of the Company
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are sold, or more than 25% of the outstanding voting capital stock of the
Company is acquired by another person or persons (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) acting as a
group, (any of which events is referred to hereinafter as a "Change in
Control"), and your employment is terminated either by you for any reason or by
the Company without Cause and such termination occurs within 24 months after the
date of any such Change in Control, then, upon such termination, and subject to
the provisions of 6(c) below, (i) the Company will pay you an amount equal to
two times your annual base salary then in effect, plus two times 100% of your On
Plan Bonus under the MBO Program based on your annual salary and On Plan Bonus
potential percentage in effect immediately prior to the Change in Control (which
shall be calculated as if the Company meets its plan for such year and which
shall be payable whether or not the Company does in fact meet its plan), (ii)
all outstanding stock options shall fully vest and become exercisable in full,
and (iii) the Company's right to repurchase shall terminate with respect to any
stock earlier purchased by you under the Company's 1987 Equity Participation
Plan, and all such stock shall become fully vested. In addition, after such
termination of employment, you shall be entitled to exercise all stock options
in accordance with the terms of the Option Agreements. To the extent you would
be entitled to payments or your rights to restricted stock or stock options
would vest not only pursuant to the terms of this section 6(b), but also
pursuant to the provisions of other section(s) of this agreement, or other
agreements with the Company, then such payments shall be deemed made and such
vesting shall be deemed to occur pursuant to the terms of such other section(s)
or other agreements, and not under the terms of this section 6(b).
(c) Limitation on Payments. In the event that the severance
and other benefits provided for in this Agreement or otherwise payable to you
(i) would constitute "parachute payments" within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for this
section (c), would be subject to the excise tax imposed by Section 4999 of the
Code, then such severance benefits shall be either (i) delivered in full, or
(ii) delivered as to such lesser extent which would result in no portion of such
severance benefits being subject to excise tax under Section 4999 of the Code,
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by you on an after-tax basis, of the greatest amount of severance
benefits, notwithstanding that all or some portion of such severance benefits
may be taxable under Section 4999 of the Code. Unless you and
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the Company agree otherwise in writing, any determination required under this
section 6(c) shall be made in writing by the Company's independent public
accountants immediately prior to Change of Control (the "Accountants"), whose
determination shall be conclusive and binding upon you and the Company for all
purposes. For purposes of making the calculations required by this section 6(c),
the Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. You and the
Company shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this
section. The Company shall bear all costs the Accountants may reasonably incur
in connection with any calculations contemplated by this section 6(c).
(d) Termination for Cause. If the Company, during the
Employment Term, elects to terminate your employment for Cause, your employment
will terminate on the date fixed for termination by the Company (provided,
however, that if the Company so elects during the 24-month period following a
Change in Control, you shall be given prior notice and shall be permitted to
voluntarily terminate your employment pursuant to section 6(b) hereof, in which
case this section 6(d) shall be inapplicable). Following a Termination for Cause
under this section, the Company will not be obligated to pay you any additional
compensation, whether in the way of base compensation, bonus or otherwise, other
than the compensation due and owing through the date of termination. "Cause,"
for purposes of this Agreement, shall mean any of the following: (i) willful
breach by you of any provision of this Agreement or any other written agreement
between you and the Company; (ii) gross negligence or dishonesty in the
performance of your duties hereunder; (iii) engaging in conduct or activities or
holding any position that materially conflicts with the interest of, or
materially interferes with your duties owed to, the Company; (iv) engaging in
conduct that is materially detrimental to the business of the Company; or (v)
any intentional violation of Company policies applicable to employees of your
position with the Company.
7. Benefit Programs. You shall also be entitled to such benefits
and benefit programs that apply to you and your position as the Company and the
Board may adopt from time to time, in accordance with the provisions of such
programs then in effect. Certain presently existing benefit programs (which may
or may not remain in effect) are outlined below:
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a. Life Insurance: Your life insurance coverage will
increase to three times your base salary.
b. Medical Coverage: You will have executive medical
coverage. This insurance covers 100% of your family's medical expenses up to
$5,000 over our group insurance coverage annually. Qualified retirees will be
eligible to participate in the Officer Post-Retirement Medical Program at a
per-person cost equivalent to prevailing COBRA premiums.
c. Vacation: You will receive cash for unused vacation days,
since you will be participating in the corporate officer vacation program, which
allows vacation as business conditions dictate. There is no defined limit, and
therefore no vacation accrual.
8. Compensation Deferral: You will be able to defer your
compensation in accordance with the terms of our Executive Deferred Compensation
Plan.
9. Automobile: You will receive up to $550 Auto allowance per
month reimbursement on leased automobile payments and reimbursement for regular
maintenance and automobile insurance on your leased automobile. Contact Xxxxx
Xxxxxx (x33977) for more information on this program.
10. Miscellaneous Executive Perquisites: During your Employment
Term, you shall be eligible for the following:
First class air travel as long as StorageTek is profitable.
Membership in an airline VIP club.
Financial and tax counseling up to 1% of annual base
salary.
11. Miscellaneous Provisions.
(a) Withholding. All payments to you pursuant to this
Agreement shall be subject to withholding of all amounts required to be withheld
by applicable Internal Revenue Service and State tax authorities by the Company
and shall be conditioned upon your submission of all information or execution of
all instruments necessary to enable the Company to comply with such withholding
requirements.
(b) Confidentiality Agreement. As a condition of your
employment, you have executed the Company's standard form of confidential
inventions and trade secrets agreement. You reaffirm that during the Employment
Term you will comply with all provisions of said agreement and agree that you
will enter into such modifications or amendments thereof as the Company may
reasonably request from time to time.
(c) Notice. Any notice required to be given in accordance
with the provisions of this Agreement shall be given in writing, either by
personal delivery or by
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causing such written notice to be mailed, first class postage prepaid, in the
United States mail to you at the address set forth above or to the Company at
its principal business address, or at such other address for a party as shall be
specified by like notice, provided that notices of change of address shall be
effective only upon receipt thereof.
(d) Governing Law. This Agreement is entered into in
accordance with, and shall be interpreted pursuant to the provisions of, the
laws of the State of Colorado.
(e) Severability. If any provision of this Agreement shall
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not affect or impair the validity or enforceability of the remaining
provisions of this Agreement, which shall remain in full force and effect in
accordance with their terms.
(f) Entire Agreement. This Agreement, together with the
other agreements referenced herein, embody the entire agreement between the
parties relating to the subject matter hereof, and supersede all previous
agreements or understandings, whether oral or written.
(g) Amendment of Agreement. This Agreement may not be
modified or amended, and no provision of this Agreement may be waived, except by
a writing signed by the parties hereto.
If this letter accurately sets forth the terms of our agreement
relating to your employment, please sign the enclosed copy of this letter in the
space provided below and return it to the Company.
Very truly yours,
/s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
Chairman and Chief Executive
Officer
/s/ Xxxxxx X. Xxxxx
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Name
/s/ February 28, 1995
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Date
