EXHIBIT 10.8
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
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 Section II of this Plan.
1.2 "Act" - means The Securities Exchange Act of 1934, as
amended, or any successor thereto.
1.3 "Affiliate" - means, with respect to the Company, any
entity 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 whom the Committee may delegate responsibility for
administration of the Plan.
1.5 "Beneficial Owner" - means a "beneficial owner", as such
term is defined in Rule 13d-3 under the Act (or any successor rule
thereto).
1.6 "Beneficiary" - means one or more persons or entities
(including 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.
1.8 "Cause" - means (i) the Participant's continued failure
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 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 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 time to time.
1.12 "Committee" - means the Compensation Committee of the
Board, or such other committee designated by the Board.
1.13 "Company" - means Seagate Technology HDD Holdings.
1.14 "Company Change of Control" - means (i) (A) the sale or
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 defined in the Rollover Agreement).
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1.16 "Deferral Percentage" - means the percentage represented
by a 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.
1.18 "Fair Market Value" - means (i) if there is a public
market for 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 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, 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 into a Rollover Agreement.
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1.22 "Person" - means a "person", as such term is used for
purposes of Section 13(d) or 14(d) of the Act.
1.23 "Plan" - means this Seagate Technology HDD Holdings
Deferred 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 share of SAC.
1.25 "Rollover Agreement" - means an agreement, in the form
attached 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 Cayman Islands.
SECTION II
DEFERRED COMPENSATION ACCOUNTS
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 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
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 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
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 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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