UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 1, 2011
QUANTUM CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number: 1-13449
Delaware |
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94-2665054 |
(State or other jurisdiction of |
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(IRS Employer |
incorporation) |
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Identification No.) |
1650 Technology Drive
Suite 800
San Jose, CA 95110
(Address of principal executive offices, including zip code)
408-944-4000
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02. Departures of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Appointment of Mr. Gacek as Chief Executive Officer and Member of the Board
Effective April 1, 2011, the board of directors of Quantum Corporation (the "Company") appointed Jon W. Gacek, 49, the Company's current President and Chief Operating Officer, to be the Company's President and Chief Executive Officer. In addition, the Board increased its size to nine (9) members, and elected Mr. Gacek as a director of the Board.
Mr. Gacek joined the Company as Executive Vice President and Chief Financial Officer in August 2006, upon the Company's acquisition of Advanced Digital Information Corp. ("ADIC") and assumed the role of Chief Operating Officer in June 2009 and President in January 2011. Previously, he served as the Chief Financial Officer at ADIC from 1999 to 2006 and also led Operations during his last three years there. Prior to ADIC, Mr. Gacek was an audit partner at PricewaterhouseCoopers LLP.
Mr. Gacek does not have any family relationships with any director, executive officer, or person nominated or chosen by the Company to become a director or executive officer of the Company.
Compensatory Arrangements for Mr. Gacek
In connection with Mr. Gacek's appointment, the Company entered into an offer letter with Mr. Gacek, the material terms of which are as follows:
The full text of Mr. Gacek's employment offer letter is attached to this Form 8-K as Exhibit 10.1. This description is qualified by reference to the actual text of the agreement
Appointment of Mr. Belluzzo as Executive Chairman
Effective April 1, 2011, the board of directors of Quantum Corporation (the "Company") appointed Richard E. Belluzzo, 57, the Company's current Chief Executive Officer, to be the Executive Chairman of the Board to serve in that capacity until August 15, 2012.
Mr. Belluzzo joined the Company as Chief Executive Officer in September 2002. He has been Chairman of the Board since July 2003. Before joining Quantum, from September 1999 to May 2002, Mr. Belluzzo held senior management positions with Microsoft Corp., most recently President and Chief Operating Officer. Prior to Microsoft, from January 1998 to September 1999, Mr. Belluzzo was Chief Executive Officer of Silicon Graphics, Inc. Before his tenure at Silicon Graphics, from 1975 to January 1998, Mr. Belluzzo was with Hewlett-Packard, most recently as Executive Vice President of the computer organization.
Mr. Belluzzo does not have any family relationships with any director, executive officer, or person nominated or chosen by the Company to become a director or executive officer of the Company.
Compensatory Arrangements for Mr. Belluzzo
In connection with Mr. Belluzzo's appointment, the Company entered into an offer letter with Mr. Belluzzo, the material terms of which are as follows:
The full text of Mr. Belluzzo's offer letter is attached to this Form 8-K as Exhibit 10.2. This description is qualified by reference to the actual text of the agreement
Change of Control Agreements
Effective April 1, 2011, the board of directors of the Company approved Change of Control Agreements (each, an "Agreement") for Messrs. Belluzzo and Gacek; Linda M. Breard, Chief Financial Officer; William C. Britts, Executive Vice President, Sales, Marketing and Service; and Shawn D. Hall, Senior Vice President, General Counsel and Secretary. The Agreements replace prior change of control agreements (the "Old Agreements") that expired by their terms on April 1, 2011.
Under the Agreement for Mr. Gacek, if a "change in control" of the Company occurs and within 12 months following the change in control, Mr. Gacek's employment with the Company ends as a result of an "involuntary termination" (as each such term is defined in the Agreement), Mr. Gacek will be entitled to a lump sum payment equal to 200% of the sum of his base salary and target bonus, 100% accelerated vesting of his then-outstanding equity awards, and reimbursement for monthly premiums for COBRA continuation health coverage for one year.
In order to receive these severance benefits, Mr. Gacek must sign and not revoke a release of claims in favor of the Company and agree to not solicit the Company's employees for other employment for a period of 12 months following Mr. Gacek's termination of employment. The cash severance benefits would be payable 61 days following termination of employment assuming the release of claims has been signed and not revoked. If Mr. Gacek's severance benefits otherwise would be subject to the golden parachute excise tax under section 280G of the Internal Revenue Code, his benefits will be either paid in full (with Mr. Gacek paying the excise tax) or reduced so that no excise tax applies, whichever results in the better after-tax result for Mr. Gacek. Mr. Gacek will not be entitled to a gross-up from the Company for any such excise tax.
The Agreement for each of the executive officers named above is similar to the Agreement for Mr. Gacek except that the percentage of base salary and target bonus payable for an involuntary termination is 150% rather than 200%.
The Agreement for Mr. Belluzzo is similar to the Agreement for Mr. Gacek except that the lump sum payment payable for an involuntary termination is equal to the base compensation he would have earned if he remained employed through August 15, 2012.
A copy of the Agreement for Mr. Gacek and Mr. Belluzzo, and a copy of the form of Agreement for each of the executive officers are filed with this Current Report on Form 8-K as Exhibits 10.3 - 10.5, respectively.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
The following exhibits are filed herewith:
Exhibit No. |
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Description |
10.1 |
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Employment offer letter, dated March 31, 2011, between Registrant and Jon W. Gacek. |
10.2 |
Offer letter, dated March 31, 2011, between Registrant and Richard E. Belluzzo. |
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10.3 |
Chief Executive Change of Control Agreement between Registrant and Jon W. Gacek. |
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10.4 |
Executive Chairman Change of Control Agreement between Registrant and Richard E. Belluzzo. |
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10.5 |
Form of Officer Change of Control Agreement between Registrant and each of Registrant's Executive Officers (other than the Chief Executive Officer). |
Signature(s)
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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QUANTUM CORPORATION |
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April 5, 2011 |
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/s/ Shawn D. Hall |
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Shawn D. Hall |
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Senior Vice President, General Counsel and Secretary |
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Exhibit Index
Exhibit No. |
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Description |
10.1 |
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Employment offer letter, dated March 31, 2011, between Registrant and Jon W. Gacek. |
10.2 |
Offer letter, dated March 31, 2011, between Registrant and Richard E. Belluzzo. |
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10.3 |
Chief Executive Change of Control Agreement between Registrant and Jon W. Gacek. |
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10.4 |
Executive Chairman Change of Control Agreement between Registrant and Richard E. Belluzzo. |
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10.5 |
Form of Officer Change of Control Agreement between Registrant and each of Registrant's Executive Officers (other than the Chief Executive Officer). |
Exhibit 10.1
[QUANTUM LETTERHEAD]
March 31, 2011
Mr. Jon Gacek
[address]
Dear Jon,
I am pleased to offer you the position of Chief Executive Officer and Board member for Quantum Corporation. This is an officer position reporting to the Board of Directors.
In conjunction with this promotion, your base salary will be $585,000 annually ($48,750 monthly). You will also be eligible to participate in Quantum's Chief Executive Officer Annual Incentive plan. Your bonus target opportunity will be 100% of your base salary although the actual amount of any payout will be determined as described in the Plan based on the achievement of specific performance criteria.
The Company will recommend to the Board of Directors that a grant of 1,300,000 stock options be made available to you. These options will be priced at fair market value on the day that they are approved by the Leadership & Compensation Committee of the BOD which occurs at the beginning of April. Your stock options will vest over four years as follows: 25% will cliff vest one year from the date of grant and the remainder will vest monthly thereafter at the rate of 1/48th of the original grant amount over the following three years. In addition to these options, you will also be granted 300,000 Restricted Stock Units (RSU). These RSUs will vest annually over a three-year period in 1/3 increments. This grant is intended to cover a two year period. You will be eligible for another annual grant in 2013.
As a Quantum executive, you will be covered by Quantum's Change of Control Program. An individual CEO agreement will be executed upon your start date.
In the event your employment is involuntarily terminated by the Company other than for "cause" (as defined in Quantum's Change in Control Agreement), and in a context other than a Change in Control (in which case Quantum's Change in Control Agreement shall be the sole source of severance benefits), Quantum will provide to you the equivalent of twelve (12) months of base salary and twelve months (12) of benefits continuation through COBRA in exchange for your execution of a separation agreement and general release.
Notwithstanding anything to the contrary in this offer letter, if you are a "specified employee" within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the final regulations and any guidance promulgated thereunder ("Section 409A") at the time of your termination of employment (other than due to death), then the severance benefits payable to you under this offer letter, if any, and any other severance payments or separation benefits that may be considered deferred compensation under Section 409A (together, the "Deferred Compensation Separation Benefits") otherwise due to you on or within the six (6) month period following your termination of employment will accrue during such six (6) month period and will become payable in a lump sum payment (less applicable withholding taxes) on the date six (6) months and one (1) day following the date of your termination of employment. All subsequent payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if you die following your termination of employment but prior to the six (6) month anniversary of your date of termination, then any payments delayed in accordance with this paragraph will be payable in a lump sum (less applicable withholding taxes) to your estate as soon as administratively practicable after the date of your death and all other Deferred Compensation Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit.
It is the intent of this offer letter to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. You and the Company agree to work together in good faith to consider amendments to this offer letter and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition under Section 409A prior to actual payment to you.
To confirm your acceptance of this offer, please sign and return an original copy of this letter to me in the San Jose office. This offer letter, if accepted, supercedes and replaces your offer letter dated August 25, 2006, as amended.
Jon, on behalf of the Board members, I'd like to extend our congratulations on this new opportunity and express our confidence in your ability to lead the company as we move forward.
Sincerely,
/s/ Rick Belluzzo
Rick Belluzzo
Chairman
Quantum Corporation
I understand and accept the terms of this promotion.
Signed /s/ Jon Gacek Date March 31, 2011
Jon Gacek
Start Date: April 1, 2011
Exhibit 10.2
[QUANTUM LETTERHEAD]
March 31, 2011
Mr. Rick Belluzzo
[address]
Dear Rick,
I am pleased to offer you the position of Executive Chairman for Quantum Corporation. This position will be effective April 1, 2011 through August 15, 2012 which coincides with the annual shareholder meeting.
In conjunction with this position, your base salary will be $350,000 annually ($29,167 monthly). You will also receive a bonus of $450,000 on the effective date of this action in recognition of the many contributions you have made to Quantum during your tenure as Chief Executive Officer. You will be eligible to receive a stock grant in conjunction with the annual Board of Directors stock grant program in August 2011.
In addition, the Board of Directors has approved the acceleration of 183,334 unvested Restricted Stock Units which were scheduled to vest in July 2013. Those shares will vest monthly beginning in June 2011 through July 1, 2012.
In the event your employment is terminated involuntarily in a context other than for "cause" (as defined in the Change of Control document) or a Change of Control (in which case Quantum's Change of Control Agreement shall be the sole source of severance benefits) Quantum will:
You will be covered by Quantum's Change of Control Program through August 15, 2012. An individual agreement will be executed upon your start date.
Notwithstanding anything to the contrary in this offer letter, if you are a "specified employee" within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the final regulations and any guidance promulgated thereunder ("Section 409A") at the time of your termination of employment (other than due to death), then the severance benefits payable to you under this offer letter, if any, and any other severance payments or separation benefits that may be considered deferred compensation under Section 409A (together, the "Deferred Compensation Separation Benefits") otherwise due to you on or within the six (6) month period following your termination of employment will accrue during such six (6) month period and will become payable in a lump sum payment (less applicable withholding taxes) on the date six (6) months and one (1) day following the date of your termination of employment. All subsequent payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if you die following your termination of employment but prior to the six (6) month anniversary of your date of termination, then any payments delayed in accordance with this paragraph will be payable in a lump sum (less applicable withholding taxes) to your estate as soon as administratively practicable after the date of your death and all other Deferred Compensation Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit.
It is the intent of this offer letter to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. You and the Company agree to work together in good faith to consider amendments to this offer letter and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition under Section 409A prior to actual payment to you.
This offer letter, if accepted, supercedes and replaces your offer letter dated July 12, 2002, as amended.
To confirm your acceptance of this offer, please sign and return an original copy of this letter to Shawn Hall in the San Jose office.
Sincerely,
/s/ Tom Buchsbaum
Tom Buchsbaum
Lead Independent Director
Quantum Corporation
I understand and accept the terms of this promotion.
Signed /s/ Richard Belluzzo Date April 1, 2011
Richard Belluzzo
Start Date: April 1, 2011
CHIEF EXECUTIVE CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT ("Agreement") is effective as of April 1, 2011, by and between Jon W. Gacek (the "Employee") and QUANTUM CORPORATION, a Delaware corporation (the "Corporation").
A. Whereas, the Employee is the chief executive officer of the Corporation.
B. The board of directors of the Corporation has determined that it is in the best interests of the Corporation and its stockholders to assure that the Corporation 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 Corporation.
C. The board of directors believes that it is important to provide the Employee with compensation arrangements and stock benefits upon a Change of Control, provided the Employee executes and does not revoke a release of claims in favor of the Corporation in the event of his Involuntary Termination (as defined below) following such Change of Control, which provide the Employee with enhanced financial security, are competitive with those of other corporations, and provide sufficient incentive to the Employee to remain with the Corporation following a Change of Control.
D. Certain capitalized terms used in the Agreement are defined in Section 4 below.
In consideration of the mutual covenants herein contained, and in consideration of the continuing employment of the Employee by the Corporation, the parties agree as follows:
(i) delivered in full, or
(ii) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to the Excise Tax,
whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by the Employee on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code. Unless the Corporation and the Employee otherwise agree in writing, any determination required under this Section 5 shall be made in writing in good faith by the accounting firm serving as the Corporation's independent public accountants immediately prior to the Change of Control (the "Accountants"). In the event of a reduction in benefits hereunder, the reduction will occur in the following order: the vesting acceleration of stock options, then cash severance benefits, then vesting acceleration of restricted stock awards, and then Corporation-paid COBRA coverage. In the event that acceleration of vesting of stock options or restricted stock awards is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant (that is, the latest first) for the Employee's stock options or restricted stock awards, as applicable. If two or more stock options or restricted stock awards are granted on the same day, the stock options or restricted stock awards, as applicable, will be reduced on a pro-rata basis. 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 Sections 280G and 4999 of the Code. The Corporation and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Corporation shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 5.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Corporation by its duly authorized officer, as of the day and year first above written.
EMPLOYEE |
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By /s/ Shawn D. Hall |
/s/ Jon W. Gacek |
Shawn D. Hall |
Jon W. Gacek |
Senior Vice President, General Counsel |
President and Chief Executive Officer |
SIGNATURE PAGE OF CHIEF EXECUTIVE CHANGE OF CONTROL AGREEMENT
EXECUTIVE CHAIRMAN CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT ("Agreement") is effective as of April 1, 2011, by and between Richard E. Belluzzo (the "Employee") and QUANTUM CORPORATION, a Delaware corporation (the "Corporation").
A. Whereas, the Employee is the executive chairman of the Corporation.
B. The board of directors of the Corporation has determined that it is in the best interests of the Corporation and its stockholders to assure that the Corporation 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 Corporation.
C. The board of directors believes that it is important to provide the Employee with compensation arrangements and stock benefits upon a Change of Control, provided the Employee executes and does not revoke a release of claims in favor of the Corporation in the event of his Involuntary Termination (as defined below) following such Change of Control, which provide the Employee with enhanced financial security, are competitive with those of other corporations, and provide sufficient incentive to the Employee to remain with the Corporation following a Change of Control.
D. Certain capitalized terms used in the Agreement are defined in Section 4 below.
In consideration of the mutual covenants herein contained, and in consideration of the continuing employment of the Employee by the Corporation, the parties agree as follows:
(i) delivered in full, or
(ii) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to the Excise Tax,
whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by the Employee on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code. Unless the Corporation and the Employee otherwise agree in writing, any determination required under this Section 5 shall be made in writing in good faith by the accounting firm serving as the Corporation's independent public accountants immediately prior to the Change of Control (the "Accountants"). In the event of a reduction in benefits hereunder, the reduction will occur in the following order: the vesting acceleration of stock options, then cash severance benefits, then vesting acceleration of restricted stock awards, and then Corporation-paid COBRA coverage. In the event that acceleration of vesting of stock options or restricted stock awards is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant (that is, the latest first) for the Employee's stock options or restricted stock awards, as applicable. If two or more stock options or restricted stock awards are granted on the same day, the stock options or restricted stock awards, as applicable, will be reduced on a pro-rata basis. 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 Sections 280G and 4999 of the Code. The Corporation and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Corporation shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 5.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Corporation by its duly authorized officer, as of the day and year first above written.
EMPLOYEE |
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By /s/ Shawn D. Hall |
/s/ Richard E. Belluzzo |
Shawn D. Hall |
Richard E. Belluzzo |
Senior Vice President, General Counsel |
Executive Chairman of the Board |
SIGNATURE PAGE OF CHIEF EXECUTIVE CHANGE OF CONTROL AGREEMENT
Exhibit 10.5
QUANTUM CORPORATION
OFFICER CHANGE OF CONTROL AGREEMENT
THIS OFFICER CHANGE OF CONTROL AGREEMENT ("Agreement") is effective as of April 1, 2011, by and between _______________ (the "Employee") and QUANTUM CORPORATION, a Delaware corporation (the "Corporation").
A. Whereas, the Employee is a Section 16 Officer of the Corporation.
B. The board of directors of the Corporation has determined that it is in the best interests of the Corporation and its stockholders to assure that the Corporation 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 Corporation.
C. The board of directors believes that it is important to provide the Employee with compensation arrangements and stock benefits upon a Change of Control, provided the Employee executes and does not revoke a release of claims in favor of the Corporation in the event of his or her Involuntary Termination (as defined below) following such Change of Control, which provide the Employee with enhanced financial security, are competitive with those of other corporations, and provide sufficient incentive to the Employee to remain with the Corporation following a Change of Control.
D. Certain capitalized terms used in the Agreement are defined in Section 4 below.
In consideration of the mutual covenants herein contained, and in consideration of the continuing employment of the Employee by the Corporation, the parties agree as follows:
whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by the Employee on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code. Unless the Corporation and the Employee otherwise agree in writing, any determination required under this Section 5 shall be made in writing in good faith by the accounting firm serving as the Corporation's independent public accountants immediately prior to the Change of Control (the "Accountants"). In the event of a reduction in benefits hereunder, the reduction will occur in the following order: the vesting acceleration of stock options, then cash severance benefits, then vesting acceleration of restricted stock awards, and then Corporation-paid COBRA coverage. In the event that acceleration of vesting of stock options or restricted stock awards is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant (that is, the latest first) for the Employee's stock options or restricted stock awards, as applicable. If two or more stock options or restricted stock awards are granted on the same day, the stock options or restricted stock awards, as applicable, will be reduced on a pro-rata basis. 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 Sections 280G and 4999 of the Code. The Corporation and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Corporation shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 5.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Corporation by its duly authorized officer, as of the day and year first above written.
QUANTUM CORPORATION |
EMPLOYEE |
By: ______________________________ |
By: ______________________________ |
Name: |
Name: |
Title: |
Title: |
SIGNATURE PAGE OF OFFICER CHANGE OF CONTROL AGREEMENT