Separation and Mutual Release - Storage Technology Corp. and David E. Weiss
SEPARATION AND MUTUAL RELEASE
David E. Weiss
It is acknowledged that on January 28, 2000 you, David E. Weiss (hereafter "you"
or "your" as the case may be) recommended to the Board of Directors (the
"Board") of Storage Technology Corporation (the "Company") that the Board ask
you to resign from your positions as Chairman of the Board, President and Chief
Executive Officer of the Company (the "Positions") and that the Board at that
time accepted your proposal and agreed that you would be asked to submit your
resignation from the Positions at such time as the Board should have identified
and appointed your successor or successors, or such other date as the Board and
you should deem appropriate. The Board further agreed that your separation from
the Company would be in accord with the provisions of Section 5 (a) of your
Employment Agreement with the Company which was entered into on May 19, 2000
(the "Employment Agreement").
This Separation and Mutual Release (the "Release") will confirm the agreement
between you and the Company concerning the termination of your employment with
the Company. This Release will supersede all discussions and/or oral or written
understandings between you and the Company which relate in any way to the
subject matter of this Release. Except as specifically set forth in this
Release, this Release supersedes the terms and conditions of your Employment
1. Termination Date. It has been agreed that you will resign from the Positions,
at the request of the Board, effective on midnight July 10, 2000 (the
"Resignation Date") and that you will resign from your employment with the
Company in on September 30, 2000 (the "Termination Date"). Your resignation
from the Positions and your termination from the Company shall be confirmed
in a letter dated as of the date hereof in form and content substantially
similar to that contained in Exhibit A, attached hereto. During the period
between your Resignation Date and your Termination Date (the "Employment
Period"), you will report directly to the Company's Lead Independent Director
and will assist the Board and/or the Company in such ways as the Lead
Independent Director may direct, including assisting your successor in
transitioning into the Positions. During the Employment Period, you will
continue to receive your current base salary and participate in such health
and dental benefits and retirement programs as are generally available to
United States employees of the Company, provided that you understand that you
will not be entitled to receive executive benefits or participate in the MBO
Program during the Employment Period.
2. Severance Payment. Pursuant to the terms of Section 5 (a) of the Employment
Agreement, contingent upon your signing this Release and the expiration of
the seven day revocation period described below, the Company will pay to you,
within 30 days of the Resignation Date, a separation payment equal to the
amounts set forth in Section 5(a) of the Employment Agreement, which amount
will be equal to (i) two times your current annual base salary (2 X
$750,000.00 = $1,5000,000.00), plus (ii) two times your current target 2000
MBO bonus which is currently equal to ninety-five percent (95%) of your base
salary (2 X .95 X $750,000.00 = $1,425,000.00) for a total payment of
$2,925,000.00, less required withholding. Payment of the amounts provided in
this Section 2 of the Release is acknowledged by you as full satisfaction of
all of the Company's obligations under Section 5(a) of the Employment
3. Other Benefits. Pursuant to the terms of Section 5 (e) of the Employment
Agreement, for a period of twenty-four months from the Termination Date, you
shall continue to receive at the Company's expense (i) long-term disability
insurance benefits as in effect at the Termination Date or such comparable
benefits as the Company may, in its discretion, determine to be sufficient to
satisfy its obligations to you regarding long-term disability coverage; (ii)
life insurance coverage in the amount of $5,000,000.00; and (iii) an annual
allowance for financial, tax and estate planning services in amount up to one
percent of your annual salary, or $7,500.00, per year, which allowance shall
be paid against invoices submitted within thirty (30) days of the receipt
thereof. Per Section 5 (e) of the Employment Agreement, there will be a
reduction of life and disability insurance coverage if coverage becomes
available from subsequent employer within twenty-four (24) months of the
4. Medical Insurance Coverage. Pursuant to the original terms set forth in
Section 5 (d) of the Employment Agreement, you were, to receive a lump sum
payment to represent the estimated cost for you to extend coverage for a
twenty-four month period under the COBRA continuation laws the medical
coverage for you and your dependents in effect on the Termination Date. It
has now been agreed that the provisions of this Section 4 of this Release,
including in particular the terms and conditions set forth in this Section 4
and Exhibit B, attached hereto, will supersede and replace in its entirety
Section 5 (d) of the Employment Agreement. Further, it is agreed that in
consideration of the enhanced medical benefits that you will receive as
described in Exhibit B, you hereby waive all rights to receive the lump sum
COBRA payment benefits under Section 5 (d) of the Employment Agreement.
Additionally, it is understood that the benefits to be provided in Exhibit B
will remain subject to the terms, conditions and limitations of the Company's
then applicable United States medical insurance benefits policies and
programs, as they may be in effect from time-to-time. Therefore, it is
understood that the medical benefits set forth in this Section 4 of this
Release, Exhibit B, and the applicable medical insurance benefits policies
and programs, as they may be in effect from time to time, will constitute the
Company's entire agreement regarding the provision of post-termination
medical benefits to you and your spouse, Linda Weiss.
5. Stock Options.
5.1. Pursuant the provisions of Section 5(c) of the Employment Agreement,
all of your unvested stock options granted to you under the
Company's stock option plans on or after May 19, 1999, were to
become fully vested and exercisable upon the Termination Date and
any stock options granted to you on or after May 19, 1999 and the
stock options granted to you by the Company prior to May 19, 1999
and specified in Schedule 1 to the Employment Agreement were to
remain exercisable for a period of twelve (12) months following the
Termination Date. You and the Company have agreed the provisions of
Section 5 (c) of the Employment Agreement will be modified and that
the provisions of this Section 5 of this Release, including in
particular the accelerated vesting and extensions of time to
exercise stock options and termination of restrictions on restricted
stock set forth herein, will supersede and replace in their entirety
Section 5 (c) of the Employment Agreement.
5.2. In that regard, it is now agreed that on the Termination Date the
following events shall occur: (A) with respect to stock options
granted to you under the Company's 1995 Equity Participation Plan
(i) all such options which are unvested on the Termination Date will
immediately vest and become exercisable by you will remain
exercisable by you for a period of twelve (12) months from the
Termination Date, and (ii) all such options that were already vested
as of the Termination Date will remain exercisable by you for the
remaining term of the respective option agreements; and (B) with
respect to stock options granted to you under the Company's 1987
Equity Participation Plan, (i) all such options which are unvested
on the Termination Date will immediately vest and become exercisable
by you, and (ii) all options granted under the 1987 plan, including
those with accelerated vesting and those which were already vested
as of the Termination Date, will remain exercisable for a period of
ninety (90) days from the Termination Date, in accordance with the
provisions of that plan and the respective stock option agreements
entered into thereunder; and (C) with respect to options granted to
you under the Company's 1981 Equity Participation Plan, all options
granted under that plan have already vested as of the Termination
Date and will remain exercisable by you for a period of ninety (90)
days from the Termination Date, in accordance with the provisions of
that plan and the respective stock option agreement entered into
with you thereunder. Attached as Exhibit C is a list of all
options granted to you under each of these plans, indicating those
options as to which vesting has been accelerated or time to exercise
has been extended beyond ninety (90) days from the Termination Date
under this Section 5.
6. Restricted Stock. Pursuant the provisions of Section 5 (c) of the Employment
Agreement, the Company's right to repurchase any shares of restricted stock
purchased by you under any of the Company's stock option plans on or after
May 19, 1999 were to terminate and all such shares were to become fully
vested. Addtitionally, the Company has agreed that on the Termination Date,
the Company=s right of repurchase of any of your previously granted
restricted stock, including restricted stock granted under the Company's 1987
Equity Participation Plan and the Company's 1995 Equity Participation Plan,
will be void and the Company's right and option to repurchase said restricted
shares will terminate. All the shares of restricted stock previously granted
to you under the Company's plans are listed on Exhibit D.
7. Non-Compete Provisions. Pursuant to Section 8 (b) of the Employment
Agreement, the non-compete provisions set forth in the Employment Agreement
shall remain in full force and effect for a period of two years from the
Termination Date. For the purposes of the clause in Section 8 (b) restricting
you from accepting employment with or serving as a consultant or advisor or
director to any employer that is in competition with the Company or acting
against the interests of the Company, those companies deemed to be in
competition with the Company are: Advanced Digital Information Corporation,
ATL/Quantum, Compaq Computers, Exabyte, EMC, Hewlett-Packard, IBM,
ManagedStorage International, Sun Microsystems and Storage Networks, Inc.
Provided however, you may at any time request prior permission from the
Company, in writing, to accept employment with any of these designated
competitor companies. If the product areas or business units with which you
seek to affiliate do not compete with StorageTek, and StorageTek at its sole
discretion determines that such employment would not be adverse to the
interest of StorageTek, the Company may then approve such employment, such
approval only to be effective when and if communicated in writing to you. Any
products or services offered or announced by the Company, including business
which the Company has announced its intent to enter as of the Termination
Date, will be deemed competing products, services and activities under the
first sentence of Section 8 (b).
8. Non-Solicitation Provisions. Per the terms of Section 8 (c) of the Employment
Agreement, the non-solicitation provisions set forth in the Employment
Agreement shall remain in full force and effect for a period of two years
from the Termination Date. In that regard, you re-confirm that during the
two-year period commencing with the Termination Date, you will not, directly,
or indirectly, solicit, or encourage any then-current Company employees to
apply for employment with any person or entity (a) with which you are (or
intend to be) employed, (b) by whom you or an entity in which you are
employed or have a financial interest is engaged as a consultant, recruited,
independent contractor or otherwise, or (c) in which you further covenant and
agree that you will not provide to any other person or entity the names of
any person who is then employed by the Company.
9. Release of StorageTek by You. In exchange for the consideration set forth in
this Release and in the Employment Agreement and such other good and valuable
consideration as you may receive, you hereby irrevocably and unconditionally
release and discharge the Company, its past and present subsidiaries,
divisions, officers, directors, agents, employees, successors, and assigns
(separately and collectively, "Releasees") jointly and individually, from any
and all claims, known or unknown, which you, your heirs, successors or
assigns have or may have against releasees and any and all liability which
Releasees may have to him whether denominated claims, demands, causes of
action, obligations, damages, or liabilities arising from any and all bases,
however denominated, including but not limited to, any claims of
discrimination under the Age Discrimination in Employment Act ("ADEA"), the
Older Workers Benefit Protection Act, the Rehabilitation Act, the Family
Medical Leave Act, the Americans with Disabilities Act, Title VII of the
Civil Rights Act of 1964, the Civil Rights Act of 1991 or any federal or
state civil rights act, claims for wrongful discharge, breach of contract, or
for damages under any other federal, state or local law, rule or regulation,
or common law under any theory; provided, however, that this release does not
affect (1) any claims for benefits which have vested or shall vest on or
before the effective date of this Release under any of the Company's benefit
plans; (2) any claims for indemnification for acts which have occurred or may
occur in your capacity as an officer or employee of the Company; or (3) any
claims which may arise after the execution of this Release. This release
specifically excepts any claim you may wish to make for unemployment
compensation, and the Company agrees not to contest any claim made for
unemployment compensation. This release is for any relief, no matter how
denominated, including, but not limited to, back pay, front pay, compensatory
damages, punitive damages, or damages for pain and suffering. You further
agree that you will not file or permit to be filed on your behalf any such
claim, will not permit yourself to be a member of any class seeking relief
against the releasees and will not counsel or assist in the prosecution of
claims against the releasees, whether those claims are on behalf of yourself
or others, unless you are under a court order to do so.
10.Release of You by StorageTek. The Company hereby irrevocably and
unconditionally releases and discharges you and your heirs, successors, and
assigns (separately and collectively, "Your Releasees"), jointly and
individually, from any and all claims, known or unknown, which it, its past
and present subsidiaries, divisions, officers, directors, agents, employees,
successors, and assigns have or may have against Your Releasees and any and
all liability which Your Releasees may have to them, whether denominated
claims, demands, causes of action, obligations, damages or liabilities
arising in connection with your employment with the Company prior to the
Termination Date under any and all bases, however denominated, provided,
however, that this release does not affect any claims which are based on your
gross negligence or dishonesty in the performance of duties as an employee of
the Company, or any other acts or omissions which would constitute Cause
under Section 6 of the Employment Agreement, nor any claims which may arise
after the execution of this Agreement. The Company further agrees that it
will not file or permit to be filed on its behalf any claim against you which
is released hereby.
11.Nondisclosure. It is understood that this Release must be disclosed as
required by the Securities Act of 1933 and will therefore become an exhibit
to a future filed Form 10-Q or Form 10-K and may require further disclosure
in the Company's annual Proxy Statement, as the regulations may require.
However it is agreed that the circumstances of execution of this Release will
not be discussed with any person, other than your attorneys, accountants,
immediate family members, prospective employers, or authorized Company
personnel. As to matters related to an anticipated announcement via news
releases, internal electronic postings and other communications regarding
termination from the Company, the Company will work with you to insure that
suitable communications are drafted such that announcements are reasonably
acceptable to you.
12.Directors and Officers Insurance Coverage. The Company agrees that you shall
continue receive the same coverage under the Company's Directors and Officers
Insurance ("D&O") policy as is now in effect and as may be in effect from
time-to-time hereafter and that the amount of such coverage shall be no less
than that afforded to any director or executive officer of the Company, past
or present, under the Company's current D&O policy or under any commercially
reasonable successor D&O policy or professional liability coverage as the
Company may from time-to-time hereafter acquire.
You agree that by signing this Release, you are giving up the right to sue for
age discrimination, and that under this Release you shall receive consideration
to which you are not otherwise entitled, and would not receive but for your
release of rights under the ADEA. You understand that you have up to twenty-one
(21) days after delivery of this Release to consider whether to sign this
Release. You further understand that, after you have signed and delivered this
Release to the Company, this Release will not be effective or enforceable until
the end of a seven (7) day revocation period beginning the day after the you
sign this Release. You further understand that you will not receive the
severance payment due under the Employment Agreement until this seven-day period
has expired. During this seven-day period, you may revoke this Release, without
reason and in your sole judgment, but you may do so only by delivering a written
statement of revocation to the Company to the attention of the General Counsel.
If the Company does not receive a written statement of revocation from you by
the end of the revocation period, then this Release will become legally
enforceable and you may not thereafter revoke this Release.
You agree that this Release shall be governed by federal law and the internal
laws of the State of Colorado, irrespective of the choice of law rules of any
Your signature below acknowledges that you have read this document fully, that
you understand and agree to its contents, that you understand that this is a
legally binding document, and that you have been advised to consult a lawyer of
your choosing before signing this Release, and that your have had the
opportunity to do so, that you did in fact consult with a lawyer and that you
have been advised and represented by a lawyer of your choosing before signing
/s/ Dave E. Weiss
Date DAVE E. WEISS
This Release presented to Dave Weiss on July ___, 2000
On Behalf of Storage Technology Corporation:
/s/ Robert E. Lee
ROBERT E. LEE
Chairman, Human Resources & Compensation Committee
Of the Board of Directors
TO THE BOARD OF DIRECTORS
STORAGE TECHNOLOGY CORPORATION
One StorageTek Drive
Louisville, Colorado 80028
RE: Letter of Resignation
I, the undersigned, David E. Weiss, hereby resign:
(i) effective as of midnight July 10, 2000, as Chairman of the Board,
Director and President and Chief Executive Officer of Storage Technology
Corporation (the "Company");
(ii) effective as of midnight July 10, 2000, as a director and/or officer
or partner of each subsidiary, Affiliate (as that term is defined in the rules
under the Securities Act of 1933, as amended) of the Company, and any joint
venture, limited liability company, general partnership and limited partnership,
directly or indirectly owned, in whole or in part or controlled, by the Company;
(iii) effective as of September 30, 2000, as an employee of the Company.
IN WITNESS WHEREOF, I the undersigned have set my hand as of July __, 2000.
/s/ David E. Weiss
David E. Weiss
6900 Pawnee Way
Niwot, Colorado 80503
Confidential Page 1 08/11/00
Retiree Medical Benefits
Type of Coverage. After termination of your employment, the Company will provide
to you and to your spouse, Linda Weiss, continued medical insurance coverage
under the medical insurance programs generally provided by the Company to its
current United States employees and the supplemental medical expense
reimbursement ("MERP") described in this Exhibit B (collectively, the "Medical
Insurance Benefits"). These Medical Insurance Benefits will be subject to the
Release, including Section 4 thereof, this Exhibit B, and the terms, conditions
and limitations of the Company's then applicable United States medical insurance
benefits policies and programs. Type of coverage will be based on the plan or
coverage options chosen by you from the selection in effect from time to time
under the medical insurance program then made available by the Company to its
United States employees or reasonably comparable coverage then made available by
the Company for retirees .
Cost. The premium payable by you for Medical Insurance Benefits for each
calendar year will be the COBRA equivalent coverage rates that you would have
paid were you an elective COBRA participant at the time such coverage was
applied for. Such payments will be due and payable monthly, or at your election,
annually, provided such annual payment is both consistent with the plan
parameters then in effect and can be reasonably and easily implemented by the
Company, to the Company at such times and in such amounts as shall be consistent
with the processes and practices of the Company and the Company's coverage
provider. The COBRA equivalent payment will be adjusted annually in accordance
with (i) the Company's policies and practices then in effect, (ii) the cover
provider's applicable fee schedules, and (iii) the elected coverage applicable
to you and Linda Weiss at the time, provided that the monthly premium payable by
you shall not exceed the amount that would at the time of the adjustment have
been charged to any other United States employee of the Company under similar
circumstances with similar coverage selections. The Company's Board of Directors
or a Committee of the Board may also change the premium payable by you for
Medical Insurance Benefits, at its discretion, provided that the premium payable
by you shall not exceed the amount that would at the time of the change have
been charged to any other United States employee of the Company under similar
circumstances with similar coverage selections. The Company will pay the entire
cost of the Medical Insurance Benefits in excess of the premium payable by you.
Duration. Medical Insurance Benefits will be provided to you for your lifetime,
and to your spouse, Linda Weiss, for her lifetime, provided that spousal
coverage for Linda Weiss shall terminate in the event of a divorce and provided
further that coverage for you and your spouse shall terminate in the event the
Company terminates its medical insurance program and/or ceases to provide
medical insurance benefits to its United States employees.
Coordination of Benefits with Medicare and/or Third Party Coverage. After the
earlier of: 1) you or your spouse, Linda Weiss, reach the age 65, as the case
may be, or upon the individual attainment of whatever age is applicable to
qualify for Medicare coverage at the time such eligibility is established and
attained, 2) you become disabled, 3) you or your spouse, Linda Weiss, become
eligible for employer provided group insurance and/or other retiree medical
benefits or Medicare coverage, Medical Insurance Benefits must be coordinated
with Medicare (or any successor or substitute government-sponsored health
insurance program) or other employer provide benefits available to you or your
spouse, with Company coverage being secondary or supplemental to such other
Supplemental Coverage (MERP). As part of the Medical Insurance Benefits, the
Company shall reimburse you for uncovered medical expenses incurred by you and
your spouse, Linda Weiss, during the period retiree Medical Insurance Benefits
are provided, up to a total of $5,000 per calendar year of uncovered medical
expenses. This supplemental medical expense reimbursement will be subject to the
terms, conditions and limitations of the Company's then applicable United States
supplemental medical expense reimbursement policies and programs, as they may be
in effect from time-to-time. Claims shall be submitted and will be processed and
reimbursed in accordance with the Company's then current medical expense
reimbursement plan. Current MERP plan guidelines are attached hereto as Exhibit
Reservation of Rights. Medical Insurance Benefits provided under the Release
shall be subject to the terms, conditions and limitations of the medical
insurance benefits made generally available by the Company to it United States
employees and supplemental medical expense reimbursement policies and programs,
as in effect from time to time during the coverage period. The Company reserves
the right to change, amend or terminate its medical insurance benefit and
supplemental medical expense reimbursement programs and policies, but may
terminate your Medical Insurance Benefits only if and when medical insurance
benefits (i) are terminated for all United States employees generally and (ii)
are also terminated for other retirees participating in similar executive
benefits and may amend or change your Medical Insurance Benefits to the degree
that these changes or amendments generally affect all of the United States
employees of The Company.
Amendment to Retiree Medical Program. Provision of the Medical Insurance
Benefits is subject to approval by the Company's Board of Directors of an
amendment to the Company's current retiree medical program to change the
eligibility requirements from age 55 plus 10 years of service to age 55 plus
nine years of service. The Human Resources and Compensation Committee has
already approved such amendment and will recommend that the Board do the same at
the Board meeting scheduled to be held on July 14, 2000.
Taxes. You are responsible for payment of taxes, if any, due with respect to
the Medical Insurance Benefits received from and paid for by the Company
Lifetime Maximum Coverage. Medical Insurance Benefits provided hereunder shall
not exceed the lifetime limits established for all United States employees of
the Company, as they may be changed or amended from time-to-time, and as they
may be in effect at such time the then current limit is attained. Said lifetime
benefit limit shall be exclusive of supplemental coverage (MERP) payments, which
payments will not be counted against the lifetime benefit coverage limit.
Grant Summary Report
David Weiss - Termination date 09/30/00
Grant Date Plan Grant Option Options Vested
Type Price Granted Options
3/27/1991 81I ISO 16.81 "16,000" "16,000"
8/1/1991 87 NQ 24.5 "2,400" "2,400"
12/17/1991 87 NQ 20.13 "2,416" "2,416"
8/11/1992 87 NQ 13.63 "4,000" "4,000"
12/15/1992 87 NQ 11.44 "8,640" "8,640"
2/25/1993 87 NQ 9.38 "6,000" "6,000"
11/16/1993 87 NQ 14.94 "10,500" "10,500"
11/16/1993 87 NQ 14.94 "12,600" "12,600"
11/16/1993 87 NQ-Perf 14.94 "9,100" "9,100"
12/12/1994 87 NQ 14.56 "14,374" "14,374"
12/12/1994 87 NQ-Perf 14.56 "12,458" "8,305"
5/17/1995 87 NQ 11.13 "20,000" "20,000"
12/14/1995 1995 NQ-Perf 15 "79,542" "79,542"
12/14/1995 1995 NQ-Perf 15 "42,996" "28,664"
5/22/1996 1995 NQ 17.19 "200,000" "200,000"
5/22/1996 1995 NQ-Perf 17.19 "300,000" "200,000"
12/10/1996 1995 NQ 24.25 "70,830" "70,830"
12/10/1996 1995 NQ-Perf 24.25 "38,138" "12,712"
2/5/1998 95-A NQ 30.31 "80,402" "53,601"
2/5/1998 95-A NQ-Perf 30.31 "34,458" 0
2/5/1999 95-A NQ 37.06 "89,840" "29,946"
2/5/1999 95-A NQ-Perf 37.06 "38,503" 0
7/28/1999 95-A NQ 22.06 "105,000" "35,000"
7/28/1999 95-A NQ-Perf 22.06 "45,000" 0
Totals: "1,243,197" "824,630"
Vested Options Accelerated Total options
Exercisable Options options Exercisable
through Accelerated Exercisable through w/ Acceleration
12/29/2000 0 "16,000"
12/30/2000 0 "2,400"
12/30/2000 0 "2,416"
12/30/2000 0 "4,000"
12/30/2000 0 "8,640"
12/30/2000 0 "6,000"
12/30/2000 0 "10,500"
12/30/2000 0 "12,600"
12/30/2000 0 "9,100"
12/30/2000 0 "14,374"
12/30/2000 "4,153" 12/30/2000 "12,458"
12/30/2000 0 "20,000"
12/13/2005 0 "79,542"
12/13/2005 "14,332" 9/29/2001 "42,996"
5/21/2006 0 "200,000"
5/21/2006 "100,000" 9/29/2001 "300,000"
12/9/2006 0 "70,830"
12/9/2006 "25,426" 9/29/2001 "38,138"
2/4/2008 "26,801" 9/29/2001 "80,402"
"34,458" 9/29/2001 "34,458"
2/4/2009 "59,894" 9/29/2001 "89,840"
"38,503" 9/29/2001 "38,503"
7/27/2009 "70,000" 9/29/2001 "105,000"
"45,000" 09/29/2001 "45,000"
Totals: "418,567" "1,243,197"
Restricted Stock Summary Report
David Weiss - Termination date 09/30/00
Grant Purchase Restricted Stock Vested
Date Plan Price Granted (Shares) Shares (1)
12/17/1991 87 0.05 "1,380" 0
12/15/1992 87 0.05 "5,040" 0
12/14/1995 95 0.05 22884 "22,884"
TOTALS "29,304" "22,884"
Shares to be Restrictions
Accelerated Release Date
0 Already Released
"1. The 22,884 vested shares have already been released to Mr. Weiss."