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)
December 23, 1999 (December 15, 1999)
STORAGE TECHNOLOGY CORPORATION
(Exact Name of Registrant As Specified In Its Charter)
Delaware 1-7534 84-0593263
(State or other Jurisdiction of(Commission File Number) (IRS Employer
Incorporation) Identification No.)
One StorageTek Drive, Louisville, Colorado 80028-4309
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (303) 673-5151
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Page 2
Item 5. Other Events
All assumptions, anticipations, expectations and forecasts contained in the
following discussion regarding the proposed settlement of certain litigation to
which the Registrant is a party are forward-looking statements within the
meaning of the Private Securities Reform Act of 1995. The actual results of the
proposed settlement may differ materially because of a number of risks and
uncertainties. The Registrant discusses some of these risks below in this
Current Report on Form 8-K. The forward-looking statements made herein represent
a good-faith assessment by the Registrant of the success of the proposed
settlement, based upon, among other things, the Registrant's reasonable beliefs
and opinions regarding: (i) the fairness and reasonableness of the proposed
settlement; (ii) the statements of the judge involved; (iii) the statements of
counsel for the plaintiffs; and (iv) the relative merits of the claim and the
Registrant's defenses.
Proposed Settlement of Certain Legal Proceedings
On October 3, 1995, certain former employees of the Registrant filed suit
in the United States District Court for the District of Colorado (the "Court"),
Civil Action No. 95-B-2525, against the Registrant, alleging in the amended
complaint that the Registrant violated the Age Discrimination in Employment Act
of 1967, as amended ("ADEA") and the Employee Retirement Income Security Act of
1974 ("ERISA"), between the period of April 13, 1993 and December 31, 1996. The
plaintiffs sought, among other things, compensatory damages in an unspecified
amount, including the value of back pay and benefits; reinstatement as employees
of the Registrant, or, alternatively the value of future earnings and benefits;
and exemplary damages. On November 26, 1997 and November 9, 1988, respectively,
the Court granted the plaintiffs' request to proceed as a class action on the
ADEA claims and the ERISA claims. Approximately 1,300 persons were eligible
members of the ERISA class, including approximately 400 persons who were also
eligible members of the ADEA class. The Registrant filed an answer denying all
claims and filed motions for summary judgment and decertification of the
classes.
On December 15, 1999, at a preliminary fairness hearing (the "Preliminary
Hearing"), the Registrant and the plaintiffs presented the Court with a Proposed
Settlement Agreement (the "Agreement"), which would result in the Registrant
paying $5 million into an escrow account (the "Escrow Account") to fund the
settlement. The Registrant and the plaintiffs also presented to the Court the
reasons why the Agreement was "fair and reasonable" to all members of the
plaintiffs' classes. At the Preliminary Hearing, the Court preliminarily
determined that the Agreement met the standard of "fairness and reasonableness."
The Agreement states that it shall not be construed as an admission by the
Registrant that it violated any law. The Registrant has already fully funded the
Escrow Account, from which all sums due pursuant to the Agreement will be paid.
The Company will recognize a pre-tax expense of $5.0 million during the fourth
quarter of 1999 in connection with this Agreement.
<PAGE>
Page 3
Based upon the results of the Preliminary Hearing, the Registrant
reasonably anticipates that on or about March 8, 2000, the Court will hold its
"final fairness hearing," at which time each plaintiff will be given an
opportunity to state his or her objections to the Agreement. Assuming that the
Court issues a final order that the Agreement is fair and reasonable, the Escrow
Account will be distributed to the plaintiffs and their attorneys. The
Registrant anticipates that such funds will be distributed in the first half of
2000.
<PAGE>
Page 4
Item 7. Financial Statements and Exhibits
The following financial statements, pro forma financial information and
exhibits, if any, are filed as part of this report:
(A) Financial statements of businesses acquired.
Not applicable
(B) Pro forma financial information.
Not applicable
(C) Exhibits.
99.1 Proposed Settlement Agreement, by and among the
Registrant and the parties named therein.
<PAGE>
Page 5
SIGNATURE
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.
Storage Technology Corporation
By: /s/ Thomas G. Arnold
------------------------
Thomas G. Arnold
Vice President and
Corporate Controller
Date: December 22, 1999
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 95-B-2525
JOHN VASZLAVIK, et al.,
Plaintiffs,
v.
STORAGE TECHNOLOGY CORPORATION, a Delaware Corporation,
Defendant.
- ------------------------------------------------------------------------------
PROPOSED SETTLEMENT AGREEMENT
- ------------------------------------------------------------------------------
I. INTRODUCTION
A. Plaintiffs, Bob Cotton, Patrick L. Ellis, Arthur J. Gercken, Carol
Hill, Mike McCoy, Walter Perdue, Bill Stevens, Lanette Stewart, Howard
Valentine, John Vaszlavik and David Wee (the "Named Plaintiffs"), commenced this
action alleging violation of the Age Discrimination in Employment Act of 1967,
as amended ("ADEA"), 29 U.S.C. ss. 621, et seq. and violation of the Employee
Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. ss. 1140. The Named
Plaintiffs allege that the defendant Storage Technology Corporation
("StorageTek") discriminated against employees age 40 and above by targeting
them for layoff because of their ages and benefits usage in reductions-in-force
that occurred between April 13, 1993 and December 31, 1996. The Named Plaintiffs
also alleged that their reductions-in-force constituted a wrongful discharge in
violation of public policy.
-1-
<PAGE>
B. In addition to the Named Plaintiffs, there are two sets of class
members. In March 1998, another approximately 414 people became "opt-in"
plaintiffs by virtue of responding to a Notice of Collective Action pursuant to
which they stated their desire to participate in this action as ADEA class
members. Subsequently, two individuals were permitted by the Court to opt in
after the March 16, 1998 deadline. They are identified in Attachment A. Five
more individuals submitted opt-in notices after the deadline. While the Court
has not ruled on whether they should be allowed to participate, the parties
agree that they are included in the ADEA settlement. They are identified in
Attachment B. Additionally, 15 individuals filed a timely notice to opt in to
the ADEA class, but subsequently submitted written statements to the Court
requesting that they be removed from this lawsuit or were dismissed pursuant to
a stipulation for dismissal entered by Court Order on July 9, 1999. They are
identified in Attachment C. Attachment D identifies all individuals eligible to
participate in the ADEA collective action and settlement.
This list is hereafter referred to as the ADEA Plaintiffs.
C. In November 1998, the ADEA Plaintiffs and an additional approximately
851 people became members of an ERISA class as a result of the Court's order
certifying an ERISA class. Subsequently, ten ERISA class members were dismissed
by the stipulation for dismissal entered by Court Order on July 9, 1999. The
ERISA Plaintiffs are listed in Attachment E. The ADEA Plaintiffs and the ERISA
Plaintiffs (collectively the "Plaintiffs") through their undersigned counsel,
and StorageTek (the "Parties")wish to avoid the expense, delay and uncertainties
of further protracted litigation in this matter, and therefore agree to settle
this action by this Settlement Agreement ("Agreement").
-2-
<PAGE>
D. The Parties agree that this Court has jurisdiction over the subject
matter of and the Parties to this lawsuit.
E. The Parties agree that this Agreement is voluntarily entered into by
the Parties, that it shall not constitute an adjudication and findings on the
merits of the case and shall not be construed as an admission by StorageTek that
it violated either ADEA or ERISA or wrongfully discharged employees in violation
of public policy. StorageTek denies that its actions as alleged in the Sixth
Amended Complaint constitute any violation of ADEA, ERISA, public policy or of
any other applicable law or regulation. StorageTek has asserted that business
conditions required StorageTek to reduce its work-force, which StorageTek
asserts it did using appropriate work related criteria.
F. Upon Court approval, this Agreement shall be binding upon StorageTek,
the Plaintiffs, and their heirs, successors and assigns.
G. The Parties agree that this Agreement fairly resolves the issues
alleged in this lawsuit, and constitutes a complete resolution of all claims of
discriminatory layoff or termination under ADEA, ERISA, or wrongful discharge
that were made or could have been made by the plaintiffs in this action based on
acts or omissions of StorageTek through and including December 3, 1999.
H. The Parties have undertaken discovery sufficient to permit them to
assess the desirability of this resolution.
I. The Parties desire that the Court preliminarily approve this Settlement
Agreement on the 15th day of December 1999, at 4:00 p.m., pending final approval
pursuant to notice to interested parties and a Fairness Hearing (the "Fairness
Hearing") as provided in Section VI of this Agreement. Upon final approval and
the expiration of the time for appeal following final approval, the Parties will
take the actions set forth in this Agreement.
-3-
<PAGE>
II. SCOPE OF AGREEMENT
A. This Agreement resolves all claims for both monetary and non-monetary
relief on the basis that StorageTek laid off or otherwise terminated, because of
their age or benefits usage, employees who meet the following criteria:
1. They were age 40 or over at the time of their layoff or termination;
and
2. Their layoff or termination date took effect between April 13, 1993
and December 31, 1996.
It also resolves all other claims for wrongful termination that were made
or that could have been made by any of the Parties, except as expressly provided
herein with respect to Lupita DeHerrara.
B. Attachments D and E identify all individuals that the Parties agree
come within the scope of this Agreement, subject to a Court order dismissing,
with prejudice, the claims of any person listed on Exhibit C whose claims have
not yet been dismissed. The gross amount of the settlement proceeds each
individual Plaintiff is to receive will be determined solely by the Plaintiffs
pursuant to a formula devised solely by the Plaintiffs and Plaintiffs' counsel,
and will be communicated in the notice sent to each ADEA Plaintiff. The Parties
agree that StorageTek played no role whatsoever in devising the formula for
distribution of settlement proceeds or in the determination that only the ADEA
Plaintiffs would share in these proceeds. The parties further agree that
individuals who initially chose to opt in, but subsequently expressed their
intention to be removed from the lawsuit are not eligible to participate in the
settlement proceeds, so long as the Court enters an order dismissing any and
all claims of these individuals, with prejudice.
-4-
<PAGE>
III. DISMISSAL OF THE LAWSUIT
A. Upon final approval of this Agreement, the Court shall dismiss all
claims by all of the Named Plaintiffs, ADEA Plaintiffs, and ERISA Plaintiffs in
this action with prejudice, EXCEPT the claim brought by opt-in plaintiff Lupita
DeHerrera under the Americans with Disabilities Act in Case No. 97-N-192 and her
currently pending workers' compensation claim, neither of which are before this
Court.
B. The dismissal of this action in accordance with the provisions of
subparagraph A. of Section III shall bar the Plaintiffs from bringing any
administrative proceeding or suit under the ADEA, ERISA, or wrongful discharge
against StorageTek based in whole or in part on any acts or omissions occurring
on or before December 3, 1999 that either (1) were or could have been alleged in
this lawsuit as amended; or (2) involved class, systemic or pattern and practice
allegations concerning employees of StorageTek.
-5-
<PAGE>
IV. SETTLEMENT FUND
A. StorageTek shall pay the gross sum of $5,000,000 ("Settlement Fund")
for the benefit of the plaintiffs listed in Attachment D. This amount shall be
paid to an escrow agent no later than December 3, 1999, or as soon thereafter as
practicable. The Settlement Fund shall earn interest, with the interest to inure
to the benefit of StorageTek. This fund shall remain with the escrow agent until
expiration of the time for appeal following entry of an order giving final
approval of this Agreement by this Court. In the event the Court fails to
approve the settlement as stated herein, or if any of the terms of this
Settlement fail to be honored for whatever reason, StorageTek shall be entitled
to retain the entire Settlement Fund, together with all interest accrued.
B. If no appeal from final Court approval of the Proposed Settlement
Agreement, and dismissal of the Plaintiffs' claims in this action is taken, then
within thirty (30) days after expiration of the last deadline within which to
appeal, the escrow agent will release the Settlement Funds, less interest and
attorneys' fees for class counsel in the amount approved by the Court, to a
distribution agent selected and designated by class counsel. Within ten days
after the date of final approval by the Court, class counsel will communicate to
Storage Tek the gross amounts each ADEA Plaintiff will receive under the
settlement. Within fifteen days after class counsel presents the individual
plaintiff's gross amounts to StorageTek, Storage Tek will deliver to the
distribution agent information regarding taxes to be withheld based upon the
amount each individual will receive under the class settlement formula.
Attorneys' fees and costs, in the amount determined by the Court, will be
disbursed by the escrow agent directly to Roman,
-6-
<PAGE>
Benezra & Culver, L.L.C., and accrued interest will be released directly to
StorageTek. The distribution agent will then prepare checks for each of the
individuals listed in Attachment D with a restrictive endorsement stating that
endorsement of the check constitutes an accord and satisfaction and a complete
release of any and all claims that were made or could have been made in Civil
Action No. 95-B-2525. The distribution agent will also prepare and deliver a
check to Storage Tek to reflect total tax withholdings. The distribution agent
will deliver the individual settlement checks to Roman, Benezra & Culver,
L.L.C., which will then disburse checks to the Plaintiffs. The distribution
agent will prepare a report regarding the individual disbursements for
StorageTek. If any checks are returned or are not cashed, the distribution agent
shall notify StorageTek and the Plaintiffs' attorneys promptly so that the
Plaintiffs' attorneys may take, at their expense, further steps to reach those
individual plaintiffs.
C. The Parties agree that the specific amounts to be paid to the ADEA
Plaintiffs were determined by the Plaintiffs in their sole discretion, with no
input whatsoever from StorageTek. The Parties further agree that StorageTek had
no input whatsoever into the portion of the Settlement Fund allocated to
attorneys' fees, into which groups of plaintiffs would receive settlement
proceeds, or into the selection of the distribution agent. Plaintiffs and
Plaintiff's counsel agree to hold StorageTek harmless and to indemnify
StorageTek from and against any claim made by any ADEA or ERISA Plaintiff
regarding the acts or omissions of the distribution agent.
D. If this Agreement does not receive final Court approval in total, or if
the Agreement is not completely upheld on appeal, then StorageTek shall be
relieved of its obligation to pay the money required by this Agreement and the
Settlement Fund plus accrued interest shall revert to StorageTek and both
StorageTek and the Plaintiffs shall be relieved of all further obligations under
this Agreement.
-7-
<PAGE>
V. NOTICE TO PLAINTIFFS
A. Not later than January 7, 2000 (assuming the Court's preliminary
approval of this Agreement on December 15, 1999), the Plaintiffs' attorneys
shall mail to each of the ADEA Plaintiffs a package containing a notice of this
Agreement, including the gross amount that each individual will receive, with a
statement that taxes and Social Security will be withheld as provided by law, a
description of the Fairness Hearing, and a procedure for stating an objection to
the terms of the Agreement. A copy of the notice to be sent to the ADEA
Plaintiffs is attached as Exhibit F.
B. Additionally, Plaintiffs' attorneys shall mail to each of the ERISA
class members a notice of the ERISA related rights secured under this agreement,
a description of the Fairness Hearing, and a procedure for stating an objection
to the terms of the agreement. A copy of the notice to be sent to the ERISA
class members is attached as Exhibit G.
VI. FAIRNESS HEARING
A. The Court shall conduct a hearing of the fairness of the Proposed
Settlement Agreement on ________, 2000 at _______ at the U.S. District Court,
1929 Stout Street, Room ____, Denver, Colorado.
B. If any plaintiff wishes to object to the entry of this decree, the
objector must:
-8-
<PAGE>
1. File with the Court a detailed, written statement of the objection
not later than __________, 2000;
2. Mail copies of the written statement of objection to counsel for the
Parties postmarked not later than ___________, 2000;
3. Appear at the Fairness Hearing either in person or through counsel
hired by the objector.
C. The Parties may file a written position statement on any objections at
least ten (10) days prior to the Fairness Hearing.
D. If the Court disapproves any provision of this Agreement, or finds that
any party listed in Attachments D and E cannot be bound by this Agreement, the
Parties shall not be bound by this Agreement in any way. In that event, this
Agreement, the Stipulation for Approval of Class Settlements and the underlying
negotiations shall not be admissible for any purpose, and the Parties shall be
free to re-negotiate any other settlement agreement or proceed with litigation.
VII. ERISA TRAINING
A. StorageTek has a policy prohibiting discrimination against any person
for any reason prohibited by law. StorageTek will modify that policy to add
language expressly prohibiting discrimination "because of usage of medical
benefits or other benefit plan."
B. StorageTek shall include in any training it offers regarding its policy
on non-discrimination to include as a component of that training the
prohibitions of ss. 510 of ERISA. Specifically, StorageTek will inform
participants in these training sessions that they are not to discipline,
discharge or otherwise adversely impact an employee in an effort to
avoid paying the expenses of that employee's benefits.
-9-
<PAGE>
VIII. COSTS AND ATTORNEYS' FEES
A. Each party shall be responsible for and shall pay its own attorneys'
fees and costs, except as provided by this Agreement.
-10-
<PAGE>
HOLME ROBERTS & OWEN LLP
Nancy J. Gegenheimer, Esq.
Katherine J. Peck, Esq.
/s/ Nancy J. Gegenheimer
- ---------------------------------------
1700 Lincoln, Suite 4100
Denver, Colorado 80203
(303) 861-7000
Attorneys for Storage Technology Corporation
STORAGE TECHNOLOGY CORPORATION
/s/ Dwight C. Seeley
- -----------------------------------
Dwight C. Seeley, Esq.
2270 South 88th Street
Louisville, Colorado 80028-4309
(303) 673-3128
/s/ Richard Bland
- -----------------------------------
Richard Bland, Esq.
10191 Arapahoe Road
Lafayette, Colorado 80026
(303) 926-1733
#567952 v1
-11-
<PAGE>
ROMAN, BENEZRA & CULVER, L.L.C. TODD J. McNAMARA, ESQ.
Seth J. Benezra, Esq.
John A. Culver, Esq.
Gilbert M. Roman, Esq.
/s/ Seth J. Benezra /s/ TODD J. McNAMARA
- ------------------------------ ------------------------------
141 Union Blvd., Suite 260 1700 Lincoln Street, Suite 3850
Lakewood, CO 80228 Denver, CO 80203
(303) 716-0254 (303) (303) 830-7924
ANDERSON, CAMPBELL PRESTON J. BRANAUGH, ESQ.
AND LAUGESEN, P.C.
/s/ Michael W. Sutherland /s/ PRESTON J. BRANAUGH
- ------------------------------ ----------------------------
Michael W. Sutherland, Esq. 7633 Owens Street
1660 South Albion Street, Suite 425 Arvada, CO 80005-3440
Denver, Colorado 80222-4043
(303) 571-0777
PRELIMINARILY APPROVED this 15 day of December, 1999.
/s/ Judge Lewis T. Babcock
--------------------------------------
District Court Judge
FINALLY APPROVED this ____ day of _____________, 2000, subject to the Court's
findings of fact and conclusions of law.
------------------------------------
District Court Judge
#567952 v1
-12-
