SEAGATE TECHNOLOGY, INC.
MANAGEMENT RETENTION AGREEMENT
This Management Retention Agreement (the "AGREEMENT") is made and
entered into by and between Xxxxxxx X. Xxxxx (the "EMPLOYEE") and Seagate
Technology, Inc. (the "COMPANY"), effective as of November 12, 1998, (the
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "BOARD") recognizes that such
consideration can be a distraction to the Employee and can cause the Employee to
consider alternative employment opportunities. The Board has determined that it
is in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.
B. The Board believes that it is in the best interests of the Company
and its stock-holders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee with
certain severance benefits upon Employee's termination of employment following a
Change of Control which provides the Employee with enhanced financial security
and provides incentive and encouragement to the Employee to remain with the
Company notwithstanding the possibility of a Change of Control.
D. Certain capitalized terms used in the Agreement are defined in
Section 6 below.
The parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate upon the date that
all obligations of the parties hereto with respect to this Agreement have been
2. At-Will Employment. The Company and the Employee acknowledge that the
Employee's employment is and shall continue to be at-will, as defined under
applicable law. If the Employee's employment terminates for any reason,
including (without limitation) any termination prior to a Change of Control, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans and
practices or pursuant to other agreements with the Company.
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3. Severance Benefits.
(a) Involuntary Termination Other than for Cause; Voluntary
Termination for Good Reason; Disability; Death. If the Employee's employment is
(i) involuntarily terminated by the Company other than for Cause (as defined
herein), (ii) voluntarily terminated by Employee for Good Reason (as defined
herein), (iii) terminated due to Employee's Disability (as defined herein) or
death, in any case within twenty-four (24) months following a Change of Control
(as defined herein), then, subject to the Employee's obligations pursuant to
Section 9 below, the Employee shall receive the following severance benefits
from the Company:
(1) Lump-Sum Severance Payment. A cash payment in
an amount equal to three hundred percent (300%) of the Employee's Annual
Compensation (as defined herein);
(2) Option Accelerated Vesting. One hundred
percent (100 %) of the unvested portion of any stock option covering Company
shares or shares of any subsidiary of the Company held by the Employee shall
automatically become vested in full upon the employment termination date.
(3) Restricted Stock Accelerated Vesting.
Employee's unvested shares granted under the Company's Executive Stock Plan (or
any similar successor plan) shall vest (i.e., be released from the Company's
repurchase option) as to that percentage of the unvested shares determined by
dividing (i) the number of months that have elapsed from the restricted stock
grant date to the date of employment termination, by (ii) the number of months
between the grant date and the date when all shares would otherwise have vested
based on Employee's continued employment with the Company.
(4) Continued Employee Benefits. One hundred
percent (100%) Company-paid health, dental and life insurance coverage at the
same level of coverage as was provided to such employee immediately prior to the
Change of Control (the "COMPANY-PAID COVERAGE"). If such coverage included the
Employee's dependents immediately prior to the Change of Control, such
dependents shall also be covered at Company expense. Company-Paid Coverage shall
continue until the earlier of (i) three (3) years from the date of termination
or (ii) the date that the Employee and his dependents become covered under
another employer's group health, dental or life insurance plans that provide
Employee and his dependents comparable benefits and levels of coverage. For
purposes of Title X of the Consolidated Budget Reconciliation Act of 1985
("COBRA"), the date of the "qualifying event" for Employee and his dependents
shall be the date upon which the Company-Paid Coverage terminates.
(5) Bonus Proration. A lump sum dollar amount
equal to a pro rata portion (based on the number of days elapsed during the
fiscal year in which the termination occurs) of Employee's targeted bonus under
the Company's executive bonus plan for the fiscal year in which the termination
(6) Company Automobile. The purchase by Employee
of the Company-owned automobile in Employee's possession at the wholesale Xxxxx
Blue Book value.
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(b) Timing of Severance Payments. Any severance payment to which
Employee is entitled under Sections 3(a)(1 and 5) shall be paid by the Company
to the Employee (or to the Employee's successors in interest, pursuant to
Section 7(b)) in cash and in full, not later than thirty (30) calendar days
following the employment termination date.
(c) Voluntary Resignation other than for Good Reason; Termination
for Cause. If the Employee's employment terminates by reason of the Employee's
voluntary resignation other than for Good Reason, or if the Employee is
terminated involuntarily by the Company for Cause, then the Employee shall not
be entitled to receive severance or other benefits except for those (if any) as
may then be established under the Company's then existing severance and benefits
plans and practices or pursuant to other agreements with the Company.
(d) Termination Apart from Change of Control. In the event the
Employee's employment is terminated for any reason, either prior to the
occurrence of a Change of Control or after the twenty-four (24) month period
following a Change of Control, then the Employee shall be entitled to receive
severance and any other benefits as may then be established under the Company's
existing severance and benefits plans and practices or pursuant to other written
agreements with the Company.
(e) Non-assumption by Successor Entity. Notwithstanding Sections
3(a)(2) and (3) above, if on the effective date of a Change of Control a
successor to the Company (whether direct or indirect and whether by purchase,
merger, consolidation, liquidation or otherwise) to all or substantially all of
the Company's business and/or assets fails to assume any stock option (granted
pursuant to the Company's option plans) or restricted stock (granted pursuant to
the Company's Executive Stock Plan), then (i) one hundred percent (100%) of the
unvested portion of any stock option covering Company shares or the shares of
any subsidiary of the Company held by the Employee shall automatically become
vested in full as of the Change of Control, and (ii) Employee's unvested shares
granted under the Company's Executive Stock Plan shall pro rata vest as outlined
in Section 3(a)(3) above as of the Change of Control.
4. Attorney Fees, Costs and Expenses. The Company shall promptly
reimburse Employee, on a monthly basis, for the reasonable attorney fees, costs
and expenses incurred by the Employee in connection with any action brought by
Employee to enforce his rights hereunder.
5. Golden Parachute Excise Tax Gross-Up. In the event that the benefits
provided for in this Agreement or otherwise payable to the Employee constitute
"parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "CODE") and will be subject to the excise tax
imposed by Section 4999 (as it may be amended or replaced) of the Code (the
"EXCISE TAX"), then the Employee shall receive (i) a payment from the Company
sufficient to pay such Excise Tax, and (ii) an additional payment from the
Company sufficient to pay the Excise Tax and federal and state income taxes
arising from the payments made by the Company to Employee pursuant to this
sentence. Unless the Company and the Employee otherwise agree in writing, the
determination of Employee's Excise Tax liability and the amount required to be
paid under this Section 5 shall be made in writing by the accounting firm
serving as the Company's independent public accountants immediately prior to the
Change of Control (the "ACCOUNTANTS"). For purposes of making the calculations
required by this Section 5, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of the Code. The Company and
the Employee shall furnish to the
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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 5.
6. Definition of Terms. The following terms referred to in this
Agreement shall have the following meanings:
(a) Annual Compensation. "Annual Compensation" means an amount
equal to the sum of Employee's (i) annual Company salary at the highest rate in
effect in the twelve months immediately preceding the Change of Control, and
(ii) Employee's highest annual bonus (includes cumulation of quarterly bonus
amounts and deferral amounts) awarded within the three fiscal years immediately
prior to the Change of Control.
(b) Cause. "Cause" means (i) any act of personal dishonesty taken
by the Employee in connection with his responsibilities as an employee and
intended to result in substantial personal enrichment of the Employee, (ii)
Employee's conviction of a felony, or (iii) a willful act by the Employee which
constitutes gross misconduct and which is injurious to the Company.
(c) Change of Control. "Change of Control" means the occurrence
of any of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act) ("BENEFICIAL
OWNER"), directly or indirectly, of securities of the Company representing forty
percent (40%) or more of the total voting power represented by the Company's
then outstanding voting securities; or
(ii) A change in the composition of the Board occurring
within a two-year period, as a result of which fewer than a majority of the
directors are Incumbent Directors. "Incumbent Directors" shall mean directors
who either (A) are directors of the Company as of the date hereof, or (B) are
elected, or nominated for election, to the Board with the affirmative vote 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); or
(iii) There occurs a reorganization, merger, consolidation or
other corporate transaction involving the Company (a "TRANSACTION"), in each
case with respect to which the stockholders of the Company immediately prior to
such Transaction do not, immediately after the Transaction, own more than 50% of
the combined voting power of the Company or other corporation resulting from
such Transaction; or
(iv) All or substantially all of the assets of the Company
are sold, liquidated or distributed.
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(d) Disability. "Disability" means that Employee has been
determined disabled for purposes of the Seagate Long Term Disability Plan, and
has been so disabled for a period of at least six months.
(e) Good Reason. "Good Reason" means an Employee's resignation of
his or her employment with the Company within thirty (30) days of and as a
result of any of the following: (i) without the Employee's express written
consent, any material reduction of the Employee's duties, authority or
responsibilities, relative to the Employee's duties, authority or
responsibilities as in effect immediately prior to such reduction, or an
assignment to Employee of such reduced duties, authority or responsibilities;
(ii) without the Employee's express written consent, any material reduction of
the facilities and perquisites available to the Employee immediately prior to
such reduction provided, however, use of private aircraft shall not be deemed a
perquisite for purposes of the clause; (iii) a reduction by the Company in the
base salary of the Employee as in effect immediately prior to such reduction,
other than a reduction implemented with the consent of the Employee or a
reduction that is equivalent to salary reductions imposed on all executives of
the Company; (iv) any material reduction by the Company in the kind or level of
employee benefits, including bonuses, to which the Employee was entitled
immediately prior to such reduction; (v) the relocation of the Employee to a
facility or a location more than fifty (50) miles from the Employee's then
present location, without the Employee's express written consent; or (vi)
failure by the Company's Successors as outlined in Section 7 below to assume any
and all of the rights, duties and obligations under this Agreement.
(a) Company's Successors. Any successor to the Company (whether
direct or indirect and whether by purchase, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Agreement and agree expressly to
perform the obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this Section
7(a) or which becomes bound by the terms of this Agreement by operation of law.
(b) Employee's Successors. The terms of this Agreement and all
rights of the Employee hereunder shall inure to the benefit of, and be
enforceable by, the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
(a) General. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the Employee,
mailed notices shall be addressed to him at the home address which he most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all notices
shall be directed to the attention of its Secretary.
(b) Notice of Termination. Any termination by the Company for
Cause or by the Employee as a result of a voluntary resignation (whether or not
for Good Reason) shall be
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communicated by a notice of termination to the other party hereto given in
accordance with Section 8(a) of this Agreement. Such notice shall indicate the
specific termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the employment
termination date (which shall be not more than 30 days after the giving of such
notice). The failure by the Employee to include in the notice any fact or
circumstance which contributes to a showing of Good Reason shall not waive any
right of the Employee hereunder or preclude the Employee from asserting such
fact or circumstance in enforcing his rights hereunder.
9. Employee Covenants. As consideration for the severance and other
benefits the Employee is to receive herein, the Employee agrees that he will not
as an employee, agent, consultant, advisor, officer or director of any
corporation, partnership, person or other entity, directly or indirectly at any
time during his employment with the Company and continuing until twenty-four
(24) months after his termination of employment with the Company:
(a) Participate or engage in the development, production, sale,
marketing or servicing of any business enterprise that is in competition with
any of the Company's (or any of its subsidiaries') product lines or business
(b) Solicit, employ or interfere in any other manner with the
employment relationships existing between the Company (or any of its
subsidiaries) and its current or prospective employees.
10. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement, nor shall any
such payment be reduced by any earnings that the Employee may receive from any
(b) Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by the Employee and by an authorized officer of the
Company (other than the Employee). No waiver by either party of any breach of,
or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the
same condition or provision at another time.
(c) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof. This Agreement
represents the entire understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior arrangements and understandings
(d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
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(e) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
(f) Withholding. All payments made pursuant to this Agreement
will be subject to withholding of applicable income and employment taxes to the
extent required by law.
(g) Loans. Employee shall repay any outstanding Company loans
(principal and accrued interest) on Employee's termination date unless the
respective loan terms and conditions preclude repayment.
(h) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of the
day and year set forth below.
COMPANY: SEAGATE TECHNOLOGY, INC.
/s/ SEAGATE TECHNOLOGY, INC.
/s/ XXXXXXX X. XXXXX
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