SEPARATION AND GENERAL RELEASE AGREEMENT
Exhibit 10.3
This Separation and General Release Agreement (this “Agreement”) is entered by and between
Xxxxxx Xxxxxxxxxx (“Executive”) on the one hand, and Western Digital Corporation (“WDC”), on behalf
of itself and all other corporations or other entities a majority of whose outstanding voting stock
or voting power is beneficially owned directly or indirectly by WDC (each, a “WDC Subsidiary”), on
the other hand. WDC and all WDC Subsidiaries are referred to collectively herein as “Western
Digital.”
WHEREAS, Executive has been employed by Western Digital as an Executive Vice President;
WHEREAS, Executive’s employment with Western Digital will terminate on December 1, 2010; and
WHEREAS, Executive’s execution and non-revocation of this Agreement is a condition of
eligibility for Executive to receive severance benefits under the Western Digital Corporation
Executive Severance Plan (the “Plan”).
NOW, THEREFORE, in consideration of the covenants undertaken and the releases contained in
this Agreement, Executive and Western Digital agree as follows:
I. Separation. Executive and Western Digital hereby agree that Executive’s employment
with Western Digital and his service as Executive Vice President, an officer, employee, and in any
other capacity with Western Digital, shall terminate on December 1, 2010 (“Termination Date”). All
payments due to Executive from Western Digital after the Termination Date shall be determined under
this Agreement.
II. Final Compensation. On or before December 1, 2010, Executive shall receive
payment for his accrued but unused vacation. Executive will continue to vest in outstanding equity
grants through December 1, 2010. Executive shall submit his final expense report, if any, by
December 1, 2010, which Western Digital shall reimburse in the ordinary business course. Executive
is not required to sign this Agreement in order to receive the compensation, vesting and expense
reimbursement described in this Section II.
III. Consideration. In the event that Executive executes (and does not revoke) this
Agreement and complies with all of the terms herein, Executive shall be entitled to receive the
benefits set forth below.
A. Lump Sum Payment. Western Digital shall pay to Executive the amount of One
Hundred Fourteen Thousand Two Hundred Thirty Dollars and Seventy-Six Cents ($114,230.76),
less standard withholding and authorized deductions. This payment shall be paid in one
lump-sum payment within twenty-one (21) days following the expiration of the revocation
period set forth in Section VI below.
B. Salary Continuation. Subject to the terms and conditions of this Agreement,
for a period of twenty-four (24) consecutive months commencing on December 2, 2010 (the
“Salary Continuation Period”), Western Digital shall pay Executive a salary continuation of
Thirty-Seven Thousand Five Hundred Dollars and No Cents ($37,500.00) per month, less standard
withholding and authorized deductions; provided, however, that such salary continuation
obligation shall continue only for so long as Executive is in compliance with all provisions
of this Agreement. Said salary continuation payments will be paid to Executive bi-weekly on
Western Digital’s regular payroll cycle. All salary continuation payments due hereunder
shall be paid by direct deposit to an account determined by Executive. Western Digital shall
cease making any such salary continuation payments and shall have no further obligation to
pay salary continuation to Executive at such time as (i) Executive is in material violation
of any of the terms of this Agreement, or (ii) upon expiration of the twenty-four (24) month
period, whichever occurs first. In addition, Western Digital will cease making any such
salary continuation payments and shall have no further obligation to pay salary continuation
to Executive on and after the date Executive is or becomes any of the following after the
Termination Date: self-employed, or a partner or officer of, joint venturer with, employee
of, or otherwise provides services (whether as a consultant, contractor, director or
otherwise) for compensation (whether current, deferred, contingent or otherwise) to, any
person or entity. Executive agrees to immediately notify Western Digital if he is or becomes
so employed, provides such services, or otherwise has such a position or relationship. In
the event Western Digital ceases salary continuation payments for any of the reasons
specified herein, all other covenants undertaken and the releases contained herein shall
remain in full force and effect. Notwithstanding the foregoing, in the event that a Change
in Control occurs prior to the end of the Salary Continuation Period and Executive would be
entitled to receive any salary continuation payments after the Change in Control date, such
salary continuation payments will be paid to Executive in a single sum within ten (10)
business days following the date of such Change in Control. For these purposes, “Change in
Control” shall have the meaning ascribed to such term in Western Digital Corporation Amended
and Restated Change of Control Severance Plan; provided, however, that a transaction shall
not constitute a Change in Control unless it is a “change in the ownership or effective
control” of WDC, or a change “in the ownership of a substantial portion of the assets” of WDC
within the meaning of Section 409A of the Internal Revenue Code and the regulations
promulgated thereunder.
C. ICP Bonus. Executive acknowledges and agrees that he has been paid all
bonuses he is owed by Western Digital through the Termination Date. For the bonus cycle
comprising the 1st Half of Fiscal Year 2011 (the period of July 1 — December 31, 2010),
Executive shall receive a pro-rated bonus under the ICP in the amount of $159,897.52, less
standard withholding and authorized deductions, which represents a payment equal to a
pro-rata portion of Executive’s bonus opportunity under the ICP for the bonus cycle in which
the Termination Date occurs, with such pro-rata portion based on the number of days in the
applicable bonus cycle during which Executive was employed (153) and assuming 100% of the
performance targets are met regardless of the actual funding by Western Digital. This
payment shall be paid in one lump-sum payment within twenty-one (21) days following the
expiration of the revocation period set forth in Section VI below.
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D. Options. On the Termination Date, Executive’s then outstanding stock options
will vest and become exercisable as if Executive had remained employed with Western Digital
through June 1, 2011. Notwithstanding anything to the contrary herein, the exercisability of
Executive’s outstanding stock options shall continue to be governed by the stock incentive
plan and stock option agreement applicable to such options. Notwithstanding anything to the
contrary herein, Executive shall not be entitled to any continued vesting under any stock
option award following the Termination Date, and the Termination Date shall be deemed to be
Executive’s “Severance Date” for purposes of any outstanding stock option award agreements.
E. Restricted Stock Units. On the Termination Date, Executive’s then
outstanding and unvested restricted stock units will vest and become payable as if Executive
had remained employed with Western Digital through June 1, 2011. Notwithstanding anything to
the contrary herein, Executive shall not be entitled to any continued vesting under any
restricted stock unit award following the Termination Date, and the Termination Date shall be
deemed to be Executive’s “Severance Date” for purposes of any outstanding restricted stock
unit award agreements.
F. Benefit Continuation. Provided Executive timely elects COBRA continuation of
his medical, dental, and/or vision coverage existing as of the Termination Date and Executive
complies fully with all terms of this Agreement, Western Digital shall make the applicable
COBRA premium payments for a period of eighteen months beyond the expiration of Executive’s
Company-provided medical, dental, and/or vision coverage existing as of the Termination Date
(“COBRA Continuation”). Notwithstanding the foregoing, in the event Executive becomes
eligible for equivalent coverage under another employer’s plan, Executive must immediately
notify Western Digital of such eligibility and Western Digital’s obligation to continue COBRA
premium payments pursuant to this Section III.F shall cease as of Executive’s benefit
eligibility date. Executive understands that Executive remains responsible for working with
Western Digital’s outside benefits administrator to elect COBRA benefits and must timely
elect in order to be eligible for COBRA benefits.
G. Executive Outplacement. Western Digital shall pay for Executive to receive
outplacement services provided by a vendor chosen by Western Digital for a period of up to
twelve (12) months following the Termination Date, subject to a maximum cost to Western
Digital of $25,000.
IV. General Releases. In consideration of the benefits set forth in this Agreement,
and other good and valuable consideration, Executive on behalf of himself, his descendants,
dependents, heirs, executors, administrators, assigns, and successors, and each of them, hereby
covenants not to xxx and fully releases and discharges Western Digital Corporation and each of its
parents, subsidiaries and affiliates, past and present, as well as its and their trustees,
directors, officers, members, managers, partners, agents, attorneys, insurers, employees,
stockholders, representatives, assigns, and successors, past and present, and each of them
(hereinafter together and collectively referred to as the “Releasees”), with respect to and from
any and all claims, wages, demands, rights, liens, agreements, contracts, covenants, actions,
suits, causes of action, obligations, debts, costs, expenses, attorneys’ fees, damages,
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judgments,
orders and liabilities of whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected
or unsuspected, and whether or not concealed or hidden, which he now owns or holds or he has at any
time heretofore owned or held or may in the future hold as against any of said Releasees, arising
out of or in any way connected with his service as an employee of any Releasee, his separation from
his position as employee of any Releasee, or any other transactions, occurrences, acts or omissions
or any loss, damage or injury whatever, known or unknown, suspected or unsuspected, resulting from
any act or omission by or on the part of said Releasees, or any of them, committed or omitted prior
to the date of Executive’s execution of this Agreement including, without limiting the generality
of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Americans with
Disabilities Act, the Age Discrimination in Employment Act, the Family and Medical Leave Act of
1993, the Worker Adjustment Retraining Notification Act, the California Fair Employment and Housing
Act, the California Family Rights Act, or any other federal, state or local law, regulation or
ordinance, or any claim for severance pay, bonus, sick leave, holiday pay, vacation pay, life
insurance, health or medical insurance or any other fringe benefit, or disability; provided,
however, that the foregoing release shall not apply to (i) any obligation created by or arising
out of this Agreement for which receipt or satisfaction has not been acknowledged, and (ii) any
claim for defense or indemnity arising under California Labor Code Section 2802, California
Corporations Code Section 317, Western Digital’s by-laws, or any federal or state statute, law,
regulation or provision that confers upon Executive a right to defense or indemnification arising
out of the services he performed for Western Digital or any of the Releasees.
Except for those obligations created by or arising out of this Agreement, Western Digital
hereby releases and discharges and covenants not to xxx Executive from and with respect to any and
all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or
unsuspected (collectively “Claims”) resulting from any act or omission by or on Executive’s part
committed or omitted prior to the date of this Agreement; provided, however, that the
foregoing release of Executive shall not apply to any claims, known or unknown, suspected or
unsuspected, arising from Executive’s (i) willful breach of fiduciary duty, (ii) fraud in
connection with the business of Western Digital, or (iii) commission of a crime under any federal,
state, or local statute, law, ordinance or regulation.
V. Waiver of Unknown Claims. It is a further condition of the consideration hereof
and is the intention of Executive and Western Digital in executing this instrument that the same
shall be effective as a bar as to each and every claim, demand and cause of action hereinabove
specified and, in furtherance of this intention, Executive and Western Digital hereby expressly
waive any and all rights or benefits conferred by the provisions of SECTION 1542 OF THE CALIFORNIA
CIVIL CODE and expressly consent that this release shall be given full force and effect according
to each and all of its express terms and conditions, including those relating to unknown and
unsuspected claims, demands and causes of actions, if any, as well as those relating to any other
claims, demands and causes of actions hereinabove specified. SECTION 1542 provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR.”
Executive and Western Digital each acknowledge that they understand the significance and
consequence of such release and such specific waiver of SECTION 1542.
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VI. ADEA Waiver. Executive expressly acknowledges and agrees that by entering into
this Agreement, he is waiving any and all rights or claims that he may have arising under the Age
Discrimination in Employment Act of 1967, as amended, which have arisen on or before the date of
execution of this Agreement. Executive further expressly acknowledges and agrees that:
A. In return for this Agreement, he will receive consideration beyond that which he was
already entitled to receive before executing this Agreement;
B. He is hereby advised in writing to consult with an attorney before signing this
Agreement;
C. He was given a copy of this Agreement on November 10, 2010, and informed that he had
twenty-one (21) days within which to consider this Agreement; and
D. He was informed that he had seven (7) days following the date of execution of this
Agreement in which to revoke this Agreement. Any revocation must be received in writing by
Xxxxxx XxXxxxx within the seven-day period following execution of this Agreement by
Executive.
Executive expressly acknowledges and agrees that this Agreement will become null and void and he
will not be entitled to any of the benefits set forth in the Agreement if he elects to revoke this
Agreement during the revocation period set forth above.
VII. No Transferred Claims. Executive warrants and represents that he has not
heretofore assigned or transferred to any person not a party to this Release any released matter or
any part or portion thereof and he shall defend, indemnify and hold Releasees, and each of them,
harmless from and against any claim (including the payment of attorneys’ fees and costs actually
incurred whether or not litigation is commenced) based on or in connection with or arising out of
any such assignment or transfer made, purported or claimed.
VIII. Confidential Information.
A. Confidential Material. Executive, in the performance of Executive’s services
on behalf of Western Digital, has had access to, received and been entrusted with
Confidential Material. In addition, Executive, in the performance of Executive’s consulting
services during the Salary Continuation Period, may continue to receive and be entrusted with
Confidential Material. For purposes of this Agreement, “Confidential Material” includes, but
is not limited to, (a) copyrighted materials, (b) patented materials, (c) lists of Western
Digital’s past, present or prospective customers, suppliers or employees, (d) costs of
materials, manufacturing techniques, component parts or other systems used in Western
Digital’s business, (e) compensation paid to employees and other terms of employment, or (f)
any other information of, about, or concerning the business of Western Digital,
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or its manner of operation, or other data of any kind, nature, or
description which is maintained as a trade secret or on a confidential basis. All such
Confidential Material is considered secret and was made or will be made available to
Executive in confidence. Executive represents that he has held all such information
confidential and agrees he will continue to do so. Without limiting the generality of the
foregoing, Executive agrees he will not, at any time, whether during or subsequent to the
term of Executive’s employment with Western Digital, in any fashion, form or manner, unless
specifically consented to in writing by Western Digital, either directly or indirectly, use
or divulge, disclose, or communicate to any person, firm, or entity or corporation, in any
manner whatsoever, any Confidential Material of any kind, nature or description concerning
any matters affecting or relating to the business of Western Digital. Executive understands
and agrees that Executive’s obligations with respect to Western Digital’s Confidential
Material apply to all Confidential Material he received, possessed, or viewed during his
employment with Western Digital, as well as all Confidential Material he receives, possesses
or views during the Salary Continuation Period, including but not limited to Confidential
Material he may have received, possessed, or viewed during his employment with Western
Digital but before Executive signed this Agreement. Executive understands that Confidential
Material is important material and represents confidential trade secrets, proprietary
information and confidential business information of Western Digital and affects the
successful conduct of Western Digital’s business and its goodwill. Executive understands
that any breach of any term of this Section VIII is a material breach of this Agreement.
B. Use and Return of Confidential Material. Executive shall not, directly or
indirectly for any reason whatsoever, disclose or use any such Confidential Material except
in the course and scope of his employment with Western Digital, unless such Confidential
Material ceases (through no fault of Executive’s) to be confidential because it has become
part of the public domain or he is otherwise obligated to disclose such information by the
lawful order of any competent jurisdiction. All records, files, drawings, documents,
equipment and other tangible items, wherever located, relating in any way to the Confidential
Material or otherwise to the business of Western Digital which Executive prepared, used or
encountered, shall be and remain the sole and exclusive property of Western Digital and shall
be included in the Confidential Material. On or before the Termination Date, Executive shall
promptly deliver to Western Digital any and all of the Confidential Material, not previously
delivered to Western Digital, which may be or at any previous time has been in Executive’s
possession or under Executive’s control. Executive further agrees to return all documents,
memoranda, reports, files, samples, books, correspondence, lists, programs, documentation,
and/or other related materials produced as a result of Executive’s employment with Western
Digital, other written or graphic records, and the like, affecting or relating to the
business of Western Digital.
C. Unfair Competition. Executive hereby acknowledges that the sale or
unauthorized use or disclosure of any of the Confidential Material by any means whatsoever
shall constitute “Unfair Competition.” Executive agrees that Executive shall not engage in
Unfair Competition at any time.
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IX. Return of Company Property. On or before the Termination Date, Executive shall
return all Western Digital property in his possession to Western Digital, including, but not
limited to, any keys, computers, cell phone, personal data assistants, equipment and notebooks.
X. Consulting Services. During the Salary Continuation Period, Executive agrees to
provide advice and consultation to Western Digital as Western Digital may reasonably request from
time to time on matters with which Executive was familiar and/or about which Executive acquired
knowledge, expertise and/or experience during the time that Executive was employed by Western
Digital. During the Salary Continuation Period, Executive shall report only to Western Digital’s
Chief Executive Officer (“CEO”) or CEO’s designee and shall not initiate any business-related
contact with other employees of Western Digital unless requested by the CEO or CEO’s designee.
This Agreement does not authorize Executive to act for Western Digital as its agent or to make
commitments on behalf of Western Digital. Executive shall not hold himself out as an agent of
Western Digital for any purpose, including reporting to any governmental authority or agency, and
shall have no authority to bind Western Digital to any obligation whatsoever.
XI. Soliciting Employees. Executive promises and agrees that he will not, during the
Salary Continuation Period, directly or indirectly solicit any employee of Western Digital to work
for any business, individual, partnership, firm, or corporation.
XII. Injunctive Relief. It is expressly agreed that Western Digital will or would
suffer irreparable injury if Executive were to breach Section VIII, IX or XI of this Agreement, and
that, therefore, Western Digital shall be entitled to an injunction prohibiting Executive from any
breach or threatened breach of such provisions of this Agreement.
XIII. Non-Disparagement. Executive agrees that he shall not (1) directly or
indirectly, make or ratify any statement, public or private, oral or written, to any person that
disparages, either professionally or personally, Western Digital, as well as its trustees,
directors, officers, members, managers, partners, agents, attorneys, insurers, employees,
stockholders, representatives, assigns, and successors, past and present, and each of them, or (2)
make any statement or engage in any conduct that has the purpose or effect of disrupting the
business of Western Digital. In the event Western Digital receives inquiries from potential
employers regarding Executive, Western Digital will provide only Executive’s dates of employment,
position history, and compensation. Executive agrees that he will direct all reference inquiries
to Western Digital’s third-party verification service, The Work Number. Nothing herein shall in
any way prohibit Executive or Western Digital from disclosing such information as may be required
by law, or by judicial or administrative process or order or the rules of any securities exchange
or similar self-regulatory organization applicable to Executive or Western Digital.
XIV. Workers’ Compensation. Executive acknowledges that Executive has no pending
claim for workers’ compensation benefits against Western Digital. Executive warrants and
represents that he does not have any work related injury or illness arising from his employment at
Western Digital.
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XV. Miscellaneous.
A. Successors.
1. This Agreement is personal to Executive and shall not, without the prior written
consent of Western Digital, be assignable by Executive.
2. This Agreement shall inure to the benefit of and be binding upon Western Digital and
its respective successors and assigns and any such successor or assignee shall be deemed
substituted for Western Digital under the terms of this Agreement for all purposes. As used
herein, “successor” and “assignee” shall include any person, firm, corporation or other
business entity which at any time, whether by purchase, merger or otherwise, directly or
indirectly acquires ownership of Western Digital or to which Western Digital assigns this
Agreement by operation of law or otherwise.
B. Waiver. No waiver of any breach of any term or provision of this Agreement
shall be construed to be, nor shall be, a waiver of any other breach of this Agreement. No
waiver shall be binding unless in writing and signed by the party waiving the breach.
C. Modification. This Agreement may not be amended or modified other than by a
written agreement executed by Executive and the Chief Executive Officer of Western Digital.
D. Complete Agreement. This Agreement constitutes and contains the entire
agreement and final understanding concerning Executive’s relationship with Western Digital
and the other subject matters addressed herein between the parties, and supersedes and
replaces all prior negotiations and all agreements proposed or otherwise, whether written or
oral, concerning the subject matters hereof. Any representation, promise or agreement not
specifically included in this Agreement shall not be binding upon or enforceable against
either party. This Agreement constitutes an integrated agreement.
E. Litigation and Investigation Assistance. Executive agrees to cooperate in
the defense of Western Digital against any threatened or pending litigation or in any
investigation or proceeding by any governmental agency or body that relates to any events or
actions which occurred during or prior to the term of Executive’s employment with Western
Digital or during the Salary Continuation Period. Furthermore, Executive agrees to cooperate
in the prosecution of any claims and lawsuits brought by Western Digital that are currently
outstanding or that may in the future be brought relating to matters which occurred during or
prior to the term of Executive’s employment with Western Digital or during the Salary
Continuation Period. Except as requested by Western Digital or as required by law, Executive
shall not comment upon any (i) threatened or pending claim or litigation (including
investigations or arbitrations) involving Western Digital or (ii) threatened or pending
government investigation
involving Western Digital. Western Digital shall reimburse Executive for all reasonable
out of pocket expenses incurred in providing assistance pursuant to this provision.
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F. Intellectual Property Assistance. Executive agrees that he shall execute
every lawful document that Western Digital requests him to execute (whether or not during his
employment with Western Digital) in connection with the protection of Western Digital’s
intellectual property rights. Such lawful documents include, but are not limited to,
declarations and assignments including declarations of inventorship for filing and
prosecuting patent applications on inventions, assignments to show title to such inventions
and patent applications in Western Digital or Western Digital’s designee, and assignments to
show title to works of authorship and applications for copyright registration. Executive
agrees that he shall give such further assistance, including but not limited to information
and testimony pursuant to Western Digital’s request (whether or not during the Salary
Continuation Period) in connection with its defense, assertion, or protection of Western
Digital’s intellectual property rights. Western Digital shall reimburse Executive for all
reasonable out of pocket expenses incurred in providing assistance pursuant to this
provision.
G. Severability. If any provision of this Agreement or the application thereof
is held invalid, the invalidity shall not affect other provisions or applications of this
Agreement which can be given effect without the invalid provisions or applications and to
this end the provisions of this Agreement are declared to be severable.
H. Choice of Law. This Agreement shall be deemed to have been executed and
delivered within the State of California, and the rights and obligations of the parties
hereunder shall be construed and enforced in accordance with, and governed by, the laws of
the State of California without regard to principles of conflict of laws.
I. Cooperation in Drafting. Each party has cooperated in the drafting and
preparation of this Agreement. Hence, in any construction to be made of this Agreement, the
same shall not be construed against any party on the basis that the party was the drafter.
J. Counterparts. This Agreement may be executed in counterparts, and each
counterpart, when executed, shall have the efficacy of a signed original. Photographic
copies of such signed counterparts may be used in lieu of the originals for any purpose.
K. Advice of Counsel. In entering this Agreement, the parties represent that
they have had the opportunity to seek the advice of counsel prior to executing this
Agreement.
L. Supplementary Documents. All parties agree to cooperate fully and to execute
any and all supplementary documents and to take all additional actions that may be necessary
or appropriate to give full force to the basic terms and intent of this Agreement and which
are not inconsistent with its terms.
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M. Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation of this
Agreement.
N. Taxes. Except for amounts withheld by Western Digital, Executive shall be
solely responsible for any taxes due as a result of any payments or benefits provided by
Western Digital pursuant to this Agreement. Except for amounts withheld by Western Digital,
Executive will defend and indemnify Western Digital from and against any tax liability that
it may have with respect to any such payment and against any and all losses or liabilities,
including defense costs, arising out of Executive’s failure to pay any taxes due with respect
to any such payment or benefits.
O.
Construction. It is intended that the terms of this Agreement will not
result in the imposition of any tax liability pursuant to Section 409A of the Internal
Revenue Code. This Agreement shall be construed and interpreted consistent with that intent.
I have read the foregoing Agreement and I accept and agree to the provisions it contains and
hereby execute it voluntarily with full understanding of its consequences.
EXECUTED this 1st day of December 2010, at Orange County, California.
| “Executive” |
||||
| /s/ Xxxxxx Xxxxxxxxxx | ||||
| Xxxxxx Xxxxxxxxxx | ||||
EXECUTED this 1st day of December 2010, at Orange County, California.
| “Western Digital” | ||||
| Western Digital Corporation, on behalf of itself and all WDC Subsidiaries | ||||
| By: Its Authorized Representative | ||||
| /s/ Xxxxxx XxXxxxx | ||||
| Its: Senior Vice President, Global HR |
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