EXHIBIT 10.6
SEAGATE TECHNOLOGY HDD HOLDINGS
DEFERRED COMPENSATION PLAN
PURPOSE
The purpose of this Seagate Technology HDD Holdings Deferred Compensation
Plan (the "Plan") is to create a deferred compensation account for those
employees or consultants who, in connection with the transaction contemplated by
the Stock Purchase Agreement by and among Suez Acquisition Company (Cayman)
Limited, Seagate Technology, Inc. ("Seagate") and Seagate Software Holdings,
Inc. (the "Transaction"), have elected, pursuant to the Rollover Agreements, to
rollover equity-based awards in Seagate into deferred compensation accounts and
restricted shares of SAC (as defined below).
SECTION I
DEFINITIONS
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Whenever used in the Plan, the following terms shall have the
following meanings:
1.1 "Account" - means the account created by the Company pursuant to
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Section II of this Plan.
1.2 "Act" - means The Securities Exchange Act of 1934, as amended, or
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any successor thereto.
1.3 "Affiliate" - means, with respect to the Company, any entity
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directly or indirectly controlling, controlled by, or under common control
with, the Company or any other entity designated by the Board in which the
Company or an Affiliate has an interest.
1.4 "Administrator" - means the Committee or such entity or person to
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whom the Committee may delegate responsibility for administration of the
Plan.
1.5 "Beneficial Owner" - means a "beneficial owner", as such term is
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defined in Rule 13d-3 under the Act (or any successor rule thereto).
1.6 "Beneficiary" - means one or more persons or entities (including
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a trust or estate) designated by a Participant, at any time or from time to
time, to receive any payment under the Plan at or after such Participant's
death.
1.7 "Board" - means the Board of Directors of the Company.
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1.8 "Cause" - means (i) the Participant's continued failure
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substantially to perform the material duties of his office (other than as a
result of total or partial incapacity due to physical or mental illness),
(ii) the embezzlement or theft by the Participant of the Company's
property, (iii) the commission of any act or acts on the Participant's part
resulting in the conviction of such Participant of a felony under the laws
of the United States or any state, (iv) the Participant's willful
malfeasance or willful misconduct in connection with the Participant's
duties to the Company or any other act or omission which is materially
injurious to the financial condition or business reputation of the Company
or any of its subsidiaries or affiliates, or (v) a material breach by the
Participant of the material terms of his employment agreement, any
stockholders' agreement or any non-compete, non-solicitation or
confidentiality provisions to which the Participant is subject. However, no
termination shall be deemed for Cause under clause (i), (iv) or (v) unless
the Participant is first given written notice by the Company of the
specific acts or omissions which the Company deems constitute grounds for a
termination for Cause and is provided with at least 30 days after such
notice to cure the specified deficiency.
1.9 "Change of Control" - means (i) (A) the sale or disposition, in
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one or a series of related transactions, of all or substantially all of the
assets of SAC to any Person or "group" (as such term is defined in Sections
13(d)(3) and 14(d)(2) of the Act) other than the Investors or their
Affiliates or (B) any person or group, other than the Investors or their
Affiliates, is or becomes the Beneficial Owner, directly or indirectly, of
more than 50% of the total voting power of the voting stock of SAC,
including by way of merger, consolidation or otherwise, and (ii) the
representatives of the Investors or their Affiliates (individually or in
the aggregate) cease to comprise a majority of the Board of Directors of
SAC.
1.10 "Closing Date" - means the "Closing Date" as defined in the Stock
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Purchase Agreement, dated March 29, 2000, by and among Suez Acquisition
Company (Cayman) Limited, Seagate and Seagate Software Holdings, Inc., as
amended.
1.11 "Code" - means the Internal Revenue Code of 1986, as amended from
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time to time.
1.12 "Committee" - means the Compensation Committee of the Board, or
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such other committee designated by the Board.
1.13 "Company" - means Seagate Technology HDD Holdings.
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1.14 "Company Change of Control" - means (i) (A) the sale or
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disposition, in one or a series of related transactions, of all or
substantially all of the assets of the Company to any Person or "group" (as
such term is defined in Sections 13(d)(3) and 14(d)(2) of the Act) other
than the Investors or their Affiliates or (B) any person or group, other
than the Investors or their Affiliates, is or becomes the Beneficial Owner,
directly or indirectly, of more than 50% of the total voting power of the
voting stock of Company including by way of merger, consolidation or
otherwise, and (ii) the representatives of the Investors or their
Affiliates (individually or in the aggregate) cease to comprise a majority
of the Board.
1.15 "Deferral Amount" - means the Participant's Deferred Value (as
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defined in the Rollover Agreement).
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1.16 "Deferral Percentage" - means the percentage represented by a
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fraction, where the numerator equals the Deferral Amount and the
denominator equals the sum of (i) the total equity investment in the
Company by the Investors as of the Closing Date and (ii) the aggregate
Deferral Amount of all Participants as of the Closing Date.
1.17 "Effective Date" - means the Closing Date.
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1.18 "Fair Market Value" - means (i) if there is a public market for
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the shares on such date, the average of the high and low closing bid prices
of the shares on such stock exchange on which the shares are principally
trading on the date in question, or, if there were no sales on such date,
on the closest preceding date on which there were sales of shares or (ii)
if there is no public market for the shares on such date, the fair market
value of the shares as determined in good faith by the Board.
1.19 "Good Reason" - shall mean a Participant's resignation of his or
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her employment with the Company as a result of the following actions, which
actions remain uncured for at least 30 days following written notice from
the Participant to the Company describing the occurrence of such events and
asserting that such events constitute grounds for a Good Reason
resignation, provided notice of such resignation is given to the Company
within sixty (60) days after the expiration of such cure period: (i)
without the Participant's express written consent, any material reduction
in the Participant's authority or responsibilities from those set forth in
an employment agreement between the Company and the Participant (an
"Employment Agreement") (or if such Participant is not a party to an
Employment Agreement, from the authority and responsibilities initially
assigned to such Participant by the Company after the Closing Date), (ii)
without the Participant's express written consent, a reduction of 10% or
more in the level of the base salary, target annual bonus or employee
benefits to be provided to the Participant under an Employment Agreement
(or if such Participant is not a party to an Employment Agreement, a
reduction of 10% or more in the level of base salary, target annual bonus
or employee benefits provided to such Participant immediately prior to the
Closing Date), other than a reduction implemented with the consent of the
Participant or a reduction that is equivalent to reduction in base
salaries, bonus opportunities and/or employee benefits, as applicable,
imposed on all other senior executives of the Company at a similar level
within the Company (provided that the use of private aircraft shall not be
deemed an employee benefit for theses purposes); or (iii) the relocation of
the Participant to a principal place of employment more than 50 miles from
the Participant's current principal place of employment, without the
Participant's express written consent.
1.20 "Investors" - means Silver Lake Partners, L.P., SAC Investments,
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L.P. and the other investors that invested in SAC as of the Closing Date
(or an affiliate or affiliates thereof) (other than pursuant to the
conversion of equity-based awards in Seagate).
1.21 "Participant" - means each employee or consultant who has entered
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into a Rollover Agreement.
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1.22 "Person" - means a "person", as such term is used for purposes of
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Section 13(d) or 14(d) of the Act.
1.23 "Plan" - means this Seagate Technology HDD Holdings Deferred
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Compensation Plan, as set forth herein and as it may be amended and/or
restated from time to time.
1.24 "Preferred Shares" - means preferred shares, par value $.0001 per
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share of SAC.
1.25 "Rollover Agreement" - means an agreement, in the form attached
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hereto as Exhibit A, between an employee of the Company or one of its
Affiliates and SAC whereby the employee has elected to rollover
equity-based compensation in Seagate into (i) deferred compensation and
(ii) restricted Preferred Shares.
1.26 "SAC" - means New SAC, a limited company incorporated in the
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Cayman Islands.
SECTION II
DEFERRED COMPENSATION ACCOUNTS
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2.1 The Company shall maintain a separate book entry account (an "Account")
initially equal to the Deferral Amount of each Participant. The balance of
each Participant's Account shall be reduced by any distributions made to
such Participant or his or her Beneficiary pursuant to this Plan.
2.2 Nothing contained herein shall be deemed to create a trust of any kind or
any fiduciary relationship; provided, however, that the Company or any of
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its subsidiaries reserves the right to establish one or more trusts to
provide alternate sources of benefit payments under this Plan. To the
extent that any person acquires a right to receive payments from the
Company under the Plan, such right shall be (a) subordinated as set forth
in Section 4.6 and (b) in any event, no greater than the right of any
unsecured general creditor of the Company or its subsidiaries.
SECTION III
VESTING
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3.1 Subject to the Participant's employment with, or continued service to, the
Company or any affiliate, the Account of each Participant shall vest with
respect to one-third of the initial balance of such Participant's Account
on the first anniversary of the Closing Date, with respect to one-third of
the initial balance of such Participant's Account ratably each month over
the 18 months following the first anniversary of the Closing Date and with
respect to the remaining one-third of the initial balance of such
Participant's Account on the date which is 30 months following the Closing
Date; provided, however, that the
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Company, in its sole discretion, may accelerate the vesting of all or a
portion of a Participant's Account at any time.
3.2 A Participant's Account shall become 100% vested upon such Participant's
termination of employment or service for any reason (including, without
limitation, the Participant's death or disability); provided, however, that
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if the Participant's employment or service is terminated by the Company for
Cause or the Participant resigns without Good Reason the unvested portion
of the Account immediately prior to such termination shall be forfeited
without consideration.
SECTION IV
PAYMENT OF DEFERRED COMPENSATION
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4.1 Amounts contained in a Participant's Account shall, subject to Section 4.5
and 4.6, be paid to the Participant as and when distributions are made to
the Investors in respect of their Preferred Shares (excluding, any tax
distributions) (a "Distribution Event"). The amount of the payment shall
equal the product of the initial balance of such Account times the
Distribution Percentage (as defined below). For purposes of this Section
4.1, the "Distribution Percentage" with respect to a Distribution Event
shall equal (i) the fair market value of the distribution made by SAC to
the Investors with respect to their Preferred Shares in connection with
such Distribution Event, divided by (ii) the initial investment by the
Investors in the Preferred Shares as of the Closing Date.
4.2 Subject to Section 4.5 and 4.6, any amount payable to a Participant
pursuant to Section 4.1 shall be paid within 5 days following the date on
which such amount becomes payable. Such amounts shall be paid, in the
Company's discretion, in cash or the same securities or other property
(such securities or other property shall be referred to as "Distributed
Property") distributed to the Investors in connection with a Distribution
Event, such Distributed Property having a fair market value as of the
Distribution Event (as determined by the Administrator) equal to the cash
otherwise payable, provided that the amount of Distributed Property which
may be paid to the Participants in satisfaction of the Company's obligation
under Section 4.1 shall be limited to the extent necessary to assure that
the aggregate fair market value of such Distributed Property (measured as
of the Distribution Event) does not exceed the fair market value of the
Distributed Property distributed with respect to the Preferred Shares in
such Distribution Event.
4.3 Notwithstanding Section 4.1 and 4.2, the payment of amounts contained in a
Participant's Account that are otherwise payable upon a Distribution Event
but are not vested at the time of such Distribution Event (an "Unvested
Payable Amount") shall continue to be deferred until such Unvested Payable
Amount vests. Upon the vesting thereof, the vested portion of an Unvested
Payable Amount shall, subject to Section 4.6, be paid, in the Company's
discretion but consistent with Section 4.2, in cash or Distributed Property
which relates to the Unvested Payable Amount, with any such securities or
other property distributed in payment of the vested portion of the Unvested
Payable Amount to be valued based on the fair market value (as determined
by the Administrator) of such
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securities or other property as of the vesting date. In the case of
Unvested Payable Amount, the election described in Section 5.6 may be
delivered by the Company to SAC no later than 20 days prior to the date on
which such Unvested Payable Amount is expected to vest (and the
Participants shall be notified at such time) and SAC shall be, subject to
Sections 4.5 and 4.6, obligated to loan or to contribute to the capital of
the Company, no later than the date on which such Unvested Payable Amount
vests, the portion of the Unvested Payable Amount described in the
election. In such a case, the Net Worth Limitation described in Section 5.6
shall be applied on the date the Unvested Payable Amount vests.
4.4 Each Participant shall have the right to designate a Beneficiary. Any
designated Beneficiary shall receive payments in the same manner as the
Participant as if he or she had lived. In case of a failure of designation
or the death of a designated Beneficiary without a designated successor,
the balance of the amounts contained in the Participant's Account shall be
paid, in accordance with Section 4.1, 4.2 and 4.3, to the Participant's
estate. No designation of Beneficiary or change in Beneficiary shall be
valid unless it is in writing signed by the Participant and filed with the
Secretary of the Company (or his or her designated agent).
4.5 Notwithstanding anything contained herein to the contrary, no provision of
this Plan will entitle any Participant or Beneficiary to any distribution
or other payment from the Company or SAC (or entitle the Company to any
loan or capital contribution from SAC), or to any claim against the Company
or SAC for any such distribution or other payment (or loan or capital
contribution), except for distributions payable and claims arising upon the
occurrence of a Distribution Event, as and to the extent expressly provided
in Sections 4.1, 4.2 and 4.3 (and, in the case of a claim by the Company
for a loan or capital contribution from SAC, Section 5.6), subject to the
subordination provisions set forth in Section 4.6.
4.6 (a) Each Participant, by entering into a Rollover Agreement, the Company
and SAC agrees that the obligations of the Company and SAC under this Plan
to make any distribution or other payment to the Participants and the
Beneficiaries (and the obligations of SAC to make any loan or capital
contribution to the Company) are expressly subordinated in right of
payment, to the extent and in the manner provided herein, to the prior
payment in full in cash of all (i) Obligations (as defined in the Credit
Agreement to be dated as of November 22, 2000 (as renewed, refinanced,
extended, modified, amended, restated, supplemented or waived from time to
time, the "Credit Agreement"), among SAC, Seagate Technology International,
Seagate Technology (US) Holdings, Inc., the Lenders party thereto and The
Chase Manhattan Bank, as Administrative Agent), whether as primary obligor
or as a guarantor, and (ii) Guaranteed Obligations (as defined in the
Indenture to be dated as of November 22, 2000 (as renewed, refinanced,
extended, modified, amended, restated, supplemented or waived from time to
time, the "Indenture") among SAC, Seagate Technology International, the
various subsidiaries of SAC from time to time party thereto and The Bank of
New York, as Trustee), including interest and other monetary obligations
incurred during the pendency of any insolvency, bankruptcy, receivership or
similar proceeding (the
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"Subordinated Note Obligations"), whether as primary obligor or as a
guarantor, in each case as increased, renewed, refinanced, extended,
modified, amended, restated, compromised, supplemented, terminated, waived
or released from time to time (all such obligations in clauses (i) and
(ii), as so increased, renewed, refinanced, extended, modified, amended,
restated, compromised, supplemented, terminated, waived or released,
collectively, the "Prior Obligations").
(b) Until the payment in full in cash of all Prior Obligations, the
termination of the Commitments (as defined in the Credit Agreement) and the
reduction of the LC Exposure (as defined in the Credit Agreement) to zero
(the "Time of Termination"), no Participant or Beneficiary shall be
entitled to receive, and neither the Company nor SAC shall be required or
permitted to make, any distribution or other payment under this Plan, and
any such distribution or other payment to which a Participant or
Beneficiary would be entitled but for the provisions of this sentence shall
be made to holders of Prior Obligations (in each case, whether or not the
Company is at the time a guarantor of Prior Obligations), subject to the
subordination provisions of the Prior Obligations (or, if made to a
Participant or Beneficiary, held by such Participant or Beneficiary in
trust for the holders of the Prior Obligations and paid over to the holders
of the Prior Obligations, subject to the subordination provisions of the
Prior Obligations) as their interests may appear; provided, however, that
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the Company or SAC may make any distribution required by Section 4.1, 4.2
or 4.3 of the Plan and no Participant or Beneficiary receiving any such
distribution would be under any obligation to hold that distribution in
trust for the holders of the Prior Obligations, if at the time when such
distribution will be made no Default or Event of Default under the Credit
Agreement or under the Indenture or other documentation governing the
Subordinated Note Obligations has occurred and is continuing or would
result from such distribution.
(c) If, at any time, all or part of any payment previously made by SAC or
any other Person with respect to Prior Obligations is rescinded for any
reason whatsoever (including the insolvency, bankruptcy or reorganization
of SAC or such other Person), the subordination provisions set forth in
this Section 4.6 shall continue to be effective or be reinstated, as the
case may be, all as though such payment had not been made.
(d) The subordination provisions of this Section 4.6 are for the benefit of
and enforceable by holders of the Prior Obligations (or any agent or
trustee for such holders), and may not be modified, rescinded or cancelled
in whole or in part prior to the Time of Termination.
SECTION V
ADMINISTRATION; MISCELLANEOUS
5.1 The Company shall administer the Plan at its expense. All decisions made by
the Company with respect to issues hereunder shall be final and binding on
all parties.
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5.2 Except to the extent required by law, the right of any Participant or any
Beneficiary to any benefit or to any payment hereunder shall not be subject
in any manner to attachment or other legal process for the debts of such
Participant or Beneficiary.
5.3 This Plan does not constitute an employment contract between the Company
and a Participant. Nothing in this Plan shall be construed to give a
Participant the right to be retained in the service of the Company, nor
interfere with the right of the Company to terminate a Participant at any
time and nothing in this Plan shall require uniformity of treatment with
respect to Participants and/or their Beneficiaries.
5.4 Notwithstanding any other provision of the Plan, in the event of a Company
Change of Control, (i) the successor entity (which, in the case of a sale
or disposition of assets, shall mean the acquiror of such assets) shall
assume the Company's obligations under the Plan, (ii) the Account of each
Participant shall be recalculated to equal the lesser of (A) the Deferral
Amount less distributions made to such Participant or his or her
Beneficiary pursuant to the Plan and (B) the fair market value of SAC
immediately prior to the Company Change of Control (excluding the aggregate
Deferral Amount of all Participants), as determined by the Administrator in
its sole discretion, multiplied by the Deferral Percentage, (iii) the
Account of each Participant shall, subject to Section 4.6, be paid if and
when such Account vests in accordance with the provisions of Section 3 and
(iv) the payment of each Account shall be made in cash.
5.5 Notwithstanding any other provision of this Plan, in the event of a sale of
substantially all the assets of SAC or a liquidation of SAC, (i) the
Account of each Participant shall become 100% vested and (ii) following the
distributions to the Investors and a payment to the Participants pursuant
to such distributions as provided in the Plan, subject to Section 4.5 and
4.6, the Plan shall terminate and all remaining balances in each
Participant's Account shall be forfeited without consideration.
5.6 Subject to Sections 4.3, 4.5 and 4.6, at such time as an amount first
becomes payable to the Participants pursuant to Section 4.1 or 4.3, in the
event the Company determines that it has insufficient available assets with
which to pay to Participants all or any portion of such amount, and the
Company elects, in its discretion, not to borrow such assets or to cause
such assets to be distributed to the Company by its Affiliates, the Company
shall demand that SAC loan to the Company or make a contribution to the
capital of the Company (at the election of SAC) all or any portion of such
amount. In such event, the Company shall deliver a written demand to SAC on
or before the date an amount first becomes payable to Participants pursuant
to Section 4.1 or 4.3, and the Company shall notify such Participants at
such time. SAC shall, subject to Sections 4.5 and 4.6, be obligated to loan
or to contribute to the capital of the Company (i) within 5 days following
the date on which any such amount becomes payable under 4.1 or (ii) on the
date any such amount becomes payable under Section 4.3, the amount that is
described in such demand, provided, however, that SAC may satisfy its
obligation in cash and/or with Distributed Property (except that the amount
of Distributed Property transferred may not exceed the amount of such
Distributed Property that may be paid to the Participants in accordance
with Section 4.2), provided further, however, that the amount of SAC's
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obligation shall not exceed the Net Worth of the Company determined as of
the date such amount becomes payable to the Participants pursuant to
Section 4.1 (the "Net Worth Limitation"). Notwithstanding any other
provision of this Plan, this Section 5.6 shall not be applicable to (and
neither SAC nor any of its Affiliates (including, in the case of a Company
Change of Control that is a sale or disposition of assets, the Company)
shall have any liability in respect of) any payments or obligations of the
Company or otherwise under the Plan following a Company Change of Control
in which neither SAC nor any of the Borrowers or Subsidiaries are the
successor or acquiring entity. For this purpose, the term "Net Worth" shall
be equal to the difference between the Fair Market Value of the Company's
assets (determined without regard to the obligation of SAC described in
this Section 5.6), and the amount of the Company's liabilities (determined
by taking into account the obligation to the Participants determined under
Section 4.1). In the event amounts first become payable pursuant to Section
4.1 on more than one occasion, the Net Worth Limitation shall be applied
with respect to each such occasion.
5.7 This Plan shall be governed by, and construed in accordance with the laws
of the State of New York, without regard to the conflicts of laws
provisions thereof.
5.8 The Company may withhold from distributions made from the Plan any taxes
required to be withheld under federal, state, or local law.
5.9 Benefits payable under this Plan may not be anticipated, assigned (either
at law or equity), alienated, pledged, encumbered, or subjected to
attachment, garnishment, levy, execution, or other legal process, and any
attempt to effect such distribution shall be void.
5.10 The Plan may be amended, suspended or terminated in whole or in part from
time to time by the Board, subject to Section 4.6(d) and except that no
amendment, suspension, or termination shall diminish the rights, or
adversely affect the benefits, provided to the Participants hereunder.
5.11 Until such time as the Company is subject to the periodic reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Company shall deliver a balance sheet and an income statement at least
annually to each individual with an Account under the Plan, unless such
individual is a key employee of the Company or its Affiliates whose duties
in connection with the Company (or any Affiliate) assure such individual
access to equivalent information.
5.12 The Plan is an unfunded plan intended to provide deferred compensation to a
select group of management and highly compensated employees of the Company
and its subsidiaries.
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