EXHIBIT 10.18
LONG-TERM RETENTION AGREEMENT - CASH
This Long-Term Retention Agreement-Cash (the "Agreement") is made and
entered into effective as of September 21, 2004 (the "Grant Date") by and
between Western Digital Corporation, a Delaware corporation, and Xxxxxxx X.
Xxxxxxxx (the "Executive") dated as of the Grant Date.
W I T N E S S E T H:
WHEREAS, the Executive is employed by Western Digital Technologies,
Inc., a subsidiary of the Company, in a key position and the Company desires the
Executive to remain in such service;
WHEREAS, to give the Executive added incentive to advance the interests
of the Company, the Company wishes to grant the Executive a cash award under the
terms and conditions established by Company;
NOW, THEREFORE, in consideration of these premises, the parties agree
that the following shall constitute the agreement between the Company and the
Executive:
1. DEFINITIONS.
As used herein, the following terms shall have the meanings ascribed
thereto below:
(a) "ACCOUNT" means a bookkeeping account maintained by the
Company for this Award to track vesting and value pursuant to Section 4.
(b) "ADMINISTRATOR" means the Committee.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CASH AWARD" means the commitment of the Company to make
payments in cash under this Agreement to the Executive in amounts determined in
accordance with Section 4.
(e) "CHANGE OF CONTROL" has the meaning set forth in the
Company's Change of Control Severance Plan.
(f) "CHANGE OF CONTROL SEVERANCE PLAN" means the Company's
Amended and Restated Change of Control Severance Plan.
(g) "COMMITTEE" means the Compensation Committee of the Board
consisting solely of two (2) or more Non-employee Directors.
(h) "COMPANY" means Western Digital Corporation, a Delaware
corporation, and its subsidiaries and affiliates, unless the context otherwise
requires.
(i) "DEFERRED COMPENSATION PLAN" means the Company's Amended
and Restated Deferred Compensation Plan, as amended from time to time, or any
successor deferred compensation plan adopted by the Company.
(j) "NON-EMPLOYEE DIRECTOR" means a director who is both a
"non-employee director" as defined in Rule 16b-3 under the Securities Exchange
Act of 1934, as amended, and an "outside director" within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended.
(k) "PAYMENT AMOUNT" has the meaning set forth in Section 4.5.
(l) "SUB-ACCOUNT" means a First Sub-Account, Second
Sub-Account, or Third Sub-Account making up a portion of an Account as described
in Section 3.1.
2. AWARD.
2.1 Award Terms. The Company hereby grants to the Executive a
Cash Award of $450,000.00, subject to vesting and termination as set forth in
Section 4.
2.2 Continued Employment. The grant of a Cash Award to the
Executive pursuant to this Agreement does not give the Executive any right to be
retained in the employ of the Company; and the right and power of the Company to
dismiss or discharge the Executive, with or without cause, for any reason, is
specifically reserved. Nothing in this Agreement is intended to alter the
at-will nature of Executive's employment.
2.3 No Property Rights. The grant of a Cash Award to the
Executive pursuant to this Agreement shall not be deemed the grant of a property
interest in any assets of the Company. The Cash Award evidences only a general
obligation of the Company to comply with the terms and conditions of the
Agreement and make payments in accordance with the Agreement from the assets of
the Company that are available for the satisfaction of obligations to creditors.
The Company shall not segregate any assets in respect of the Cash Award or the
Executive's Account. The rights of the Executive to benefits under this
Agreement shall be solely those of a general, unsecured creditor of the Company.
2.4 No Rights as a Stockholder. The Executive shall have no
dividend, voting, or any other rights as a stockholder with respect to any
Account.
2.5 Reorganization. This Cash Award shall not affect the right
of the Company to reclassify, recapitalize or otherwise change its capital or
debt structure or to merge, consolidate, convey any or all of its assets,
dissolve, liquidate, windup or otherwise reorganize.
3. CREDITS TO ACCOUNTS.
3.1 Credits. The Company shall establish an Account for the
Executive with respect to the Cash Award. An amount equal to the Cash Award
granted under Section 2.1 shall be credited to such Account and allocated into
three sub-accounts, the first consisting of 25% of the Cash Award (the "First
Sub-Account"), the second consisting of 30% of the Cash Award
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(the "Second Sub-Account"), and the third consisting of 45% of the Cash Award
(the "Third Sub-Account"). The Account shall not earn interest.
3.2 Corporate Changes. In the event of a liquidation of the Company, or
a merger, reorganization, or consolidation of the Company with any other
corporation in which the Company is not the surviving corporation or the Company
becomes a wholly-owned subsidiary of another corporation, if the surviving
corporation in any such merger, reorganization, or consolidation does not assume
the Award or agree to issue a substitute award in place thereof, then any
unvested portion of the Cash Award shall vest in full and become payable in
accordance with Section 4.5 of this Agreement immediately prior to such merger,
reorganization, or consolidation
3.3 Cessation of Credits. There shall be no further credits to a
Sub-Account after the Grant Date, or to any Account or Accounts of the Executive
after termination of the Executive's employment with the Company.
4. VESTING AND PAYMENT.
4.1 Vesting. Except as provided in Sections 4.3 and 4.4, the Executive
shall have no interest in the Cash Award prior to vesting thereof or in excess
of the amount thereof vested. The Cash Award shall vest in three installments:
4.1.1 The First Sub-Account shall vest on September 1, 2005;
4.1.2 The Second Sub-Account shall vest on September 1, 2006; and
4.1.3 The Third Sub-Account shall vest on September 1, 2007.
4.2 Termination. Except as provided in Sections 4.3 and 4.4, if the
Executive's employment with the Company terminates for any reason, vesting shall
immediately cease upon the date of termination and no vesting credit shall be
given for partial years, regardless of the reason for the termination.
4.3 Termination in Connection With a Change of Control. Notwithstanding
Sections 4.1 and 4.2, if Executive's employment with the Company terminates as
described in Section 5.01 of the Change of Control Severance Plan, then any
unvested portion of the Cash Award shall vest in full and become payable in
accordance with Section 4.5 of this Agreement.
4.4 Termination due to Death. Notwithstanding Sections 4.1 and 4.2, if
the Executive's employment with the Company terminates due to death, then the
next Sub-Account due to vest, if any, shall immediately become payable in
accordance with Section 4.5 of this Agreement, and vesting shall immediately
cease upon the date of death for any other Sub-Account that was not already
vested prior to the date of death.
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4.5 Payment Amount. Within fifteen (15) business days after a
Sub-Account vests, the Company shall pay to the Executive a cash amount equal to
the balance of that Sub-Account.
4.6 Payments only to the Executive. Payments pursuant to this
Agreement shall be made only to the Executive or his heirs.
4.7 Deferral. Subject to the terms of the Deferred
Compensation Plan, the Executive may elect at any time prior to December 31 of
the year prior to the year of vesting and payment of any Sub-Account, to defer
receipt of any or all payments due under this Agreement with respect to such
Sub-Account. Such election shall be made, and any such deferral shall be
effected and administered, in accordance with the Deferred Compensation Plan.
Notwithstanding anything to the contrary in the Agreement, the Administrator
reserves the right to modify or eliminate this Section 4.7, and the right of the
Executive to defer payment hereunder, in whole or in part.
5. ADMINISTRATION OF THE AGREEMENT.
5.1 Administrator. This Agreement shall be administered by the
Administrator, which shall have complete discretion and authority to interpret
and construe the Agreement, decide all questions of benefits (including
underlying factual determinations), and adjudicate all claims and disputes. The
Committee may delegate any of its responsibilities with respect to the Agreement
to the Company's Chief Executive Officer. The determinations of the
Administrator on the matters referred to in this Agreement shall be final and
binding on all interested parties.
5.2 Administrative Rules. The Administrator may (a) adopt,
amend, and rescind rules and regulations relating to the administration of this
Agreement; (b) construe the provisions of the Agreement; (c) correct any defect
or supply any omission or reconcile any inconsistency in the Agreement in the
manner and to the extent it, in its sole discretion, shall deem expedient to
carry the Agreement into effect; and (d) make all determinations necessary or
advisable for administering the Agreement.
5.3 Amendment, Modification, Suspension and Termination of
Cash Award. The Administrator may from time to time in its discretion amend,
modify, suspend, or terminate, in whole or in part, any or all provisions of the
Agreement, including but not limited to providing for shorter or longer vesting
periods. Notwithstanding the foregoing, the Cash Award shall not be amended,
modified, suspended or terminated in such a manner as to impair any rights of
the Executive under the Cash Award without the consent of the Executive.
6. TAXES.
6.1 Withholding. The amounts payable to the Executive under
this Agreement shall be reduced by any amount that the Company is required to
withhold with respect to such payments under the then-applicable provisions of
the Internal Revenue Code of 1986, as amended, and state and local law.
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6.2 Executive Taxes. The Company is not responsible for, and
makes no representation or warranty whatsoever in connection with, the tax
treatment hereunder, and the Executive should consult Executive's own tax
advisor.
7. ASSIGNMENT.
No right or interest to or in this Agreement, or any payment or benefit
to the Executive under this Agreement shall be assignable by the Executive
except by will or the laws of descent and distribution. No right, benefit or
interest of the Executive hereunder shall be subject to anticipation,
alienation, sale, assignment, encumbrance, charge, pledge, hypothecation or set
off in respect of any claim, debt or obligation, or to execution, attachment,
levy or similar process or assignment by operation of law. Any attempt,
voluntarily or involuntarily, to effect any action specified in the immediately
preceding sentences shall, to the full extent permitted by law, be null, void
and of no effect; provided, however, that this provision shall not preclude the
Executive from designating one or more beneficiaries to receive any amount that
may be payable to the Executive under this Agreement after Executive's death and
shall not preclude the legal representatives of the Executive's estate from
assigning any right hereunder to the person or persons entitled thereto under
Executive's will, or, in the case of intestacy, to the person or persons
entitled thereto under the laws of intestacy applicable to the Executive's
estate.
8. GENERAL.
8.1 Laws Governing. The substantive laws of the State of
Delaware shall govern the validity, construction, enforcement and interpretation
of this Agreement, unless otherwise specified herein.
8.2 Good Faith Determinations. No member of the Committee or
the Board shall be liable, with respect to this Agreement, for any act, whether
of commission or omission, taken by any other member or by any officer, agent,
or employee of the Company, nor, excepting circumstances involving his or her
own bad faith, for anything done or omitted to be done by himself or herself.
The Company shall indemnify and hold harmless each member of the Committee and
Board from and against any liability or expense hereunder, except in the case of
such member's own bad faith.
8.3 Effect of Headings. Section headings contained in the
Agreement are for convenience only and shall not affect the construction or
interpretation of the Agreement.
8.4 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term of the Agreement, such provision shall be fully
severable; the Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never been a part of the Agreement; and
the remaining provisions of the Agreement shall remain in full force and effect
and shall not be affected by the illegal, invalid or unenforceable provision or
severance from the Agreement. Furthermore, in lieu of such illegal, invalid or
unenforceable provision there shall be added automatically as part of the
Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as is possible and still be legal, valid and
enforceable.
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8.5 Set-Off. The Company shall be entitled, at its option and
not in lieu of any other remedies to which it may be entitled, to set off any
amounts due the Company or any affiliate of the Company against any amount due
and payable by the Company or any affiliate of the Company to the Executive
pursuant to this Agreement or otherwise.
8.6 Venue. Each of the parties hereto consents to the
jurisdiction of any state or federal court located within the County of Orange,
State of California, and irrevocably agrees that all actions or proceedings
relating to this Agreement shall be litigated in such courts, and each of the
parties waives any objection which it may have based on personal jurisdiction,
improper venue or forum non conveniens to the conduct of any such action or
proceeding in any such court.
8.7 Waiver. No waiver of any term or condition hereof shall be
binding unless it is in writing and signed by the Company and the Executive. The
waiver by any party of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach by any party.
8.8 Inurement. The rights and obligations under this Agreement
shall inure to the benefit of, and shall be binding upon the Company, its
successors and assigns, and the Executive and the Executive's beneficiaries and
legal representatives.
8.9 Entire Agreement. This Agreement constitutes the entire
agreement between the Company and the Executive concerning the subject matter
hereof, and supersedes all other agreements, whether written or oral, with
respect to such subject matter. This is an integrated agreement.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement.
WESTERN DIGITAL CORPORATION, EXECUTIVE
a Delaware corporation
By /s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxxx
Senior Vice President, Administration Senior Vice President,
and General Counsel Research & Development
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