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Exhibit 10.49
[WESTERN DIGITAL LOGO] Western Digital Corporation
00000 Xxxx Xxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Tel: 000.000.0000
July 5, 2001
Xx. Xxxxxx X. Xxxx
00000 Xxxxxxx Xxxx
Xxxxxxx Xxxxx XX 00000
Dear Xxxxx:
This letter, when signed by you, constitutes the agreement (the "Agreement")
relative to your resignation from Western Digital Corporation ("WDC") and
Western Digital Technologies, Inc. ("WTC" and, collectively with WDC, the
"Company"). The terms of this Agreement are as follows:
1. EMPLOYMENT PERIOD. You will resign your position as Vice President and Chief
Financial Officer of WDC and WTC effective Friday, September 28, 2001, or
such earlier time as requested by the Chief Executive Officer ("CEO").
Effective such date (the "Resignation Date"), you will also resign all of
your positions with the Company's subsidiaries. You will continue to be
treated as an employee, subject to the limitations below, until the earlier
of September 27, 2002 or your death (the "Employment Period").
2. STOCK OPTIONS AND RESTRICTED SHARES.
(a) During the Employment Period stock options previously granted to you
under the Company's Employee Stock Option Plan and the Company's
subsidiary's Stock Incentive Plans (collectively, the "Options") will
continue to vest in accordance with their terms. During the period from
September 28, 2001 through September 27, 2002, the approximate
additional vesting of shares would be as follows: WDT - 93,440; Connex,
Inc. - 7,500; SageTree, Inc. - 12,500; and Keen Personal Media, Inc. -
19,792. In the event of your death prior to September 27, 2002, the
Options will immediately vest to the extent they would have as of
September 27, 2002. You will have up to three (3) years following
September 27, 2002 to exercise the Options or, in the event of your
death, such longer period as may be provided in the Options. A stock
option summary and detailed schedule setting forth these options, their
grant dates, exercise prices, and vesting schedules are attached as
Attachment "A" and incorporated herein by reference.
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(b) On September 27, 2002, 25,000 shares of the restricted stock (the
"Restricted Shares") award you received in December 2000 will vest. The
remaining shares covered by such award shall be immediately canceled. A
copy of the original letter confirming your restricted stock award is
attached as Attachment "B" and incorporated herein by reference.
(c) The foregoing extended vesting schedules notwithstanding, if you violate
any of your covenants set forth in paragraph 10 hereof, (i) any
unexercised Options shall be immediately canceled and shall no longer be
exercisable, (ii) the Restricted Shares shall be immediately canceled,
and (iii) WDC and/or WDT shall have the right to recover any profits
realized by you as a result of the exercise of Options or the sale of
Restricted Shares or of shares received pursuant to the exercise of
Options during the six month period prior to the date of any such
violation, as determined by the Board of Directors. Any such
determination shall be made by the Company's Board of Directors;
provided, however, that in the event of a proceeding brought under
Section 15 hereof, any such determination shall be made de novo by the
arbitrator appointed thereunder.
3. COMPENSATION.
(a) You will be paid $375,000.00 in wage continuation based on your current
base salary. Vesting of your cash-based awards under the Company's
executive retention programs will cease as of September 28, 2001, and,
since no additional amounts will vest between the date hereof and
September 28, 2001, no further amounts will be paid thereunder.
Twenty-six (26) bi-weekly payments of $14,423.08 will begin on October
12, 2001, and conclude with a final payment on September 27, 2002.
Additionally, you will be eligible to receive a $100,000.00 transition
retention payment. This payment is contingent upon your performing
certain of your normal and customary duties through the Resignation Date
as are specified by the CEO and is intended to facilitate a smooth
transition of your current job responsibilities and work related
activities. In this regard, it is expected that your duties will be
primarily directed towards the controller, treasury, audit and corporate
finance functions. In addition, you will continue to assist the new
ventures as directed by the CEO in their funding and strategic
transaction efforts. You will not be directed to give substantive
attention to the financial analysis function of the HDS business unit or
to sign SEC filings, including the Company's 10-K for the fiscal year
ending June 29, 2001. In coordination with the CEO, you will assist in
presenting the report of financial results at the Company's July
conference call, and, within the limits of your knowledge of the
Company's financial and operating results and forecasts, you will
communicate with and respond to questions from analysts, shareholders
and creditors as appropriate. Upon satisfactorily performing the
specified responsibilities, the transition retention payment will be
paid within thirty (30) days after the Resignation Date. The Company
agrees to provide you with written notice and a reasonable opportunity
to remedy any dissatisfaction before claiming it has no obligation to
pay the transition retention payment and agrees that it will not dispute
the judgment of Xx. Xxxxxxxxxx if he has approved the payment.
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(b) You are a participant in the Company's Change of Control Severance Plan
("Severance Plan"). If, prior to the Resignation Date, there is a Change
of Control of the Company as that term is defined in the Severance Plan
("Change of Control"), and as a result you become eligible for severance
payments under the Severance Plan, the Company shall pay to you the
entire amount remaining to be paid to you pursuant to Section 3(a)
above, including the transition retention payment, such amount to be
payable at the time severance payments under the Severance Plan are due
and payable to the executive officers of the Company. If, after the
Resignation Date but during the Employment Period there is a Change in
Control or Xx. Xxxxxxx Xxxxxxxxxx has ceased or ceases to be President
or Chief Executive Officer of the Company, the Company shall pay to you
the entire amount remaining to be paid to you pursuant to Section 3(a)
above, including the transition retention payment, such amount to be
payable within thirty (30) days after the Change of Control or the date
Xx. Xxxxxxxxxx ceases to be President or Chief Executive Officer,
whichever event shall last occur. Payments to you pursuant to this
Section 3(b) will be in lieu of any severance payments you would be
eligible to receive as a participant in the Change of Control Severance
Plan.
4. BENEFITS. The status of your current benefits is set forth on Attachment "C"
hereto and hereby made a part hereof. During the Employment Period you will
continue to receive benefits accorded to employees generally, other than
vacation accruals, and benefits accorded to you and other executives in
comparable pay grades ("special benefits"), provided that such special
benefits continue to be furnished to executives generally in comparable pay
grades. These include:
(a) Your flex benefit allowance of $335.56 per pay period.
(b) Employee Stock Purchase Plan (ESPP) will continue and deductions will be
made from your wage continuation checks through the next two purchase
dates.
(c) 401(k) participation and Western Digital employer match will continue
with deductions coming from your wage continuation checks.
(d) Financial planning assistance of up to $7,000 per fiscal year.
(e) Supplemental executive medical coverage of up to $5,000 per fiscal year.
If any benefits (including special benefits) are discontinued and
adjustments are made to compensation or benefits of employees generally, or
of executives in comparable pay grades, in lieu of the discontinued
benefits, and if such discontinuances apply to you under this Agreement,
then in such instances like adjustments will be made to payments or benefits
accorded to you with respect to the Employment Period. The foregoing shall
include surrenders, cancellations or changes in options that accomplish a
change in an option strike price for the benefit of employees or executives.
No actions will be taken with respect to the moneys payable or the benefits
accorded to you that are intended to affect adversely only you or other
terminating employees, unless such actions are taken as a result of a
material breach by you of any of your obligations under this Agreement.
Should you take another position prior to the expiration of wage
continuation as an employee of a company with health insurance coverages,
Western Digital's health coverages stop at the end of the month in which you
start to work for the other company.
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Your Western Digital benefits will cease sixty days after September 27, 2002
month-end. You may be entitled to continued basic health insurance coverage
under the Company's COBRA plan. If you so elect, this continuation will be
on terms consistent with applicable federal laws and regulations. If you
elect and are eligible to continue this coverage, you will be charged a
monthly premium to cover the cost of providing this insurance including a
small administrative fee. Our benefits administration staff will give you
complete details in this regard.
5. CONFIDENTIALITY AND COMMUNICATIONS. You and the Company agree that the terms
of this arrangement will be held in confidence except to the extent that
disclosures may be required by government regulations or judicial process or
to receive tax, legal or financial advice. References that may request
information about your employment will be referred to the Vice President of
Human Resources, and all responses to requests for information will be
limited to a confirmation of the periods of your employment with the Company
and the positions held. You and the Company agree that neither party will at
any time defame or slander the other in any manner likely to be harmful to
your business or reputation or the personal or business reputation of the
Company or any of its officers or directors; provided, that each party shall
respond accurately and fully to any question, inquiry or request for
information when required by legal process. A letter of recommendation from
Xx. Xxxxxxxxxx substantially in the form attached hereto as Attachment "D"
will be placed in your personnel file. The Company will allow you to confirm
the contents of your personnel file upon reasonable notice.
6. VACATION. By September 28, 2001 you will be paid all accrued and unused
vacation and an additional two weeks of vacation. Although you will continue
on the Company payroll through September 27, 2002, you will accrue no more
vacation subsequent to September 28, 2001.
7. TEAM-BASED INCENTIVE PLAN. Any distribution to which you become entitled as
a result of awards under the Team-Based Incentive Plan ("TBIP") for the
six-month period ending June 29, 2001, and the six-month period ending
December 31, 2001 will be made to you in accordance with the terms of the
TBIP, except that you will be entitled to an amount equal to 1/2 of any
amount for the period ending December 31, 2001. You will not be eligible to
participate in the TBIP beyond that date.
8. OUTPLACEMENT SERVICES. The Company will provide executive outplacement
assistance through Xxx Xxxxx Xxxxxxxx; Challenger, Xxxx and Christmas, or
another firm of your choosing to assist you in finding another position.
These services may begin anytime prior to September 27, 2002. Contact the
Vice President of Human Resources for assistance with these arrangements.
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9. INDEMNIFICATION AND ASSISTANCE.
(a) If you are subjected to any claim or demand involving any action or
inaction allegedly taken by you during the course of your employment or
directorship with the Company, you will be entitled to all rights of
indemnification which may then be available to other executive officers
or directors of the Company, including, without limitation, insurance
protection under any director and/or officer liability insurance
coverage maintained by the Company or any subsidiary and any rights to
indemnification provided by applicable law or the By-laws of the Company
or any subsidiary, and the Company will, and shall cause any subsidiary
to, cooperate fully with you in responding to or defending against any
such claim or demand.
(b) You agree to make yourself available to respond to inquiries by the
Company regarding management, regulatory, and legal activities of which
you acquired knowledge while employed by the Company. You agree to make
yourself available, without the requirement of being subpoenaed, to
confer with counsel at reasonable times and locations and upon
reasonable notice concerning any knowledge you have or may have with
respect to actual and/or potential disputes arising out of the
activities of the Company during your period of employment. You further
agree to submit to deposition and/or testimony in accordance with the
laws of the forum involved concerning any knowledge you have or may have
with respect to actual and/or potential disputes arising out of the
activities of the Company during your period of employment. The Company
agrees to pay to you the amount of such reasonable expenses and costs
incurred by you in satisfaction of such obligation, including any
compensation loss incurred by you.
10. NON-COMPETITION AND NON-SOLICITATION. You agree that you will not, at any
time during the Employment Period and for a period of one (1) year
thereafter:
(a) Directly or indirectly, whether for your own account or as an employee,
director, consultant or advisor, provide services to any of the
following businesses or entities:
(i) Maxtor Corporation
(ii) Seagate Technologies
(iii) Fujitsu Hard Drive Division
(iv) Samsung Hard Drive Division
(v) Tivo Corporation;
(b) Directly solicit for employment any of the senior executives (Director
and above) of the finance organization of the Company or any of its
subsidiaries; or
(c) Induce or attempt to induce any financial institution that is currently
in a vendor, creditor, investment banking or shareholder relationship
with the Company (or any of its subsidiaries) to cease doing business
with the Company (or any of its subsidiaries) or in any way interfere
with the existing business relationship between any such financial
institution and the Company (or any of its subsidiaries).
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11. CONFIDENTIAL INFORMATION. When you joined the Company you signed an
agreement setting forth your obligations to the Company during and after
your employment. A copy of your agreement is attached hereto as Attachment
"E" and incorporated herein by reference. You understand and agree that in
the course of your employment with the Company, you have acquired
confidential information and trade secrets concerning the Company's business
and financial operating plans and budgets, its strategic business plans and
those of its subsidiaries, and its personnel. You understand and agree it
could be extremely damaging to the Company if you disclosed such information
to a competitor or made it available to any other person or company. You
understand and agree that such information has been divulged to you in
confidence, and you understand and agree that you will keep such information
secret and confidential unless disclosure is required by court order or
otherwise by compulsion of law. In view of the nature of your employment and
the information and trade secrets which you have had access to during the
course of your employment, you also agree that the Company could be
irreparably harmed by any violation, or threatened violation of the
agreements in this Paragraph and that, therefore, the Company shall be
entitled to an injunction prohibiting you from any violation or threatened
violation of such agreements.
12. RELEASE OF CLAIMS. You agree that the consideration provided for in this
Agreement represents payment in full of all outstanding obligations owed to
you by the Company or any subsidiary of the Company. You, on behalf of
yourself and your heirs, agents, representatives, immediate family members,
executors, successors, and assigns, hereby fully and forever release the
Company and its agents, directors, employees, attorneys, investors,
shareholders, administrators, affiliates, divisions, subsidiaries, parents,
predecessor and successor corporations, and assigns from, and agree not to
xxx or otherwise institute or cause to be instituted any legal or
administrative proceedings concerning, any claim, duty, obligation or cause
of action relating to any matters of any kind, whether presently known or
unknown, suspected or unsuspected, that you may possess against the Company
arising from any omissions, acts or facts that have occurred up until and
including the Effective Date including, without limitation,
(a) Any and all claims relating to or arising from your relationship with
the Company or any subsidiary of the Company and the termination of that
relationship;
(b) Any and all claims relating to, or arising from, your right to purchase,
or actual purchase of shares of stock of the Company or any subsidiary
of the Company, including, without limitation, any claims for fraud,
misrepresentation, breach of fiduciary duty, breach of duty under
applicable state corporate law, and securities fraud under any state or
federal law;
(c) Any and all claims for wrongful discharge of employment; termination in
violation of public policy; discrimination; breach of contract, both
express and implied; breach of a covenant of good faith and fair
dealing, both express and implied; promissory estoppel; negligent or
intentional infliction of emotional distress; negligent or intentional
misrepresentation; negligent or intentional interference with contract
or prospective economic advantage; unfair business practices;
defamation; libel; slander; negligence; personal injury; invasion of
privacy; false imprisonment; and conversion;
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(d) Any and all claims for violation of any federal, state or municipal
statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in
Employment Act of 1967, the Americans with Disabilities Act of 1990, the
Fair Labor Standards Act, the Employee Retirement Income Security Act of
1974, The Worker Adjustment and Retraining Notification Act, the Older
Workers Benefit Protection Act; the California Fair Employment and
Housing Act, and the California Labor Code;
(e) Any and all claims for violation of the federal or any state
constitution;
(f) Any and all claims arising out of any other laws and regulations
relating to employment or employment discrimination; and
(g) Any and all claims for attorneys' fees and costs.
You and the Company agree that the release set forth in this Paragraph shall
be and remain in effect in all respects as a complete general release as to
the matters released. This release does not extend to any obligations
incurred under this Agreement.
13. ACKNOWLEDGMENT OF WAIVER OF CLAIMS UNDER ADEA. You acknowledge that you are
waiving and releasing any rights you may have under the Age Discrimination
in Employment Act of 1967 ("ADEA") and that this waiver and release is
knowing and voluntary. You and the Company agree that this waiver and
release does not apply to any rights or claims that may arise under the ADEA
after the Effective Date of this Agreement. You acknowledge that the
consideration given for this waiver and release Agreement is in addition to
anything of value to which you were already entitled. You further
acknowledge that you have been advised by this writing that (a) you should
consult with an attorney prior to executing this Agreement; (b) you have
seven (7) days following the execution of this Agreement by you to revoke
the Agreement; and (c) this Agreement shall not be effective until the
revocation period has expired. You acknowledge that under ADEA you have at
least twenty one (21) days under which to consider this agreement. After due
consideration and consultation with your attorney, you have hereby knowingly
and voluntarily waived this requirement. Any revocation should be in writing
and delivered in accordance with the notice provisions of Paragraph 21
hereof by close of business on the seventh day from the date that you sign
this Agreement.
14. CIVIL CODE SECTION 1542. You represent that you are not aware of any claim
other than the claims that are released by this Agreement. You acknowledge
that you have been advised by legal counsel and are familiar with the
provisions of California Civil Code Section 1542, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
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You, being aware of said code section, agree to expressly waive any rights
you may have thereunder, as well as under any other federal or state statute
or common law principles of similar effect.
15. REMEDIES IN EVENT OF FUTURE DISPUTE.
(a) Except as provided in subparagraph (b) below, in the event of any future
dispute, controversy or claim between you and the Company arising from
or relating to this Agreement, its breach, any matter addressed by this
Agreement, and/or your employment with the Company through the
Termination Date, you and the Company will first attempt to resolve the
dispute through confidential non-binding mediation to be conducted in
Orange County, California by JAMS-Endispute or such other mediator as
you and the Company shall mutually agree upon. If the dispute is not
resolved through mediation, you and the Company will submit it to final
and binding confidential arbitration to be conducted in Orange County,
California by JAMS/Endispute in accordance with the then existing
JAMS/Endispute Arbitration Rules and Procedures for Employment Disputes.
In the event of such an arbitration proceeding, you and the Company
shall select a mutually acceptable neutral arbitrator from among the
JAMS/Endispute panel of arbitrators. If you and the Company cannot agree
on an arbitrator, the Administrator of JAMS/Endispute shall appoint an
arbitrator. None of you, the Company or the arbitrator shall disclose
the existence, content, or results of any arbitration hereunder without
the prior written consent of both of you and the Company, except as may
be compelled by court order. Except as provided herein, the Federal
Arbitration Act shall govern the interpretation and enforcement of such
arbitration and all proceedings. The arbitrator shall apply the
substantive law (and the law of remedies, if applicable) of the State of
California, or Federal law, or both, as applicable, and the arbitrator
is without jurisdiction to apply any different substantive law. The
arbitrator shall render an award and a written, reasoned opinion in
support thereof. Judgment upon the award may be entered in any court
having jurisdiction thereof. You and the Company intend this arbitration
provision to be valid, enforceable, irrevocable and construed as broadly
as possible.
(b) In the event that a dispute arises concerning compliance with this
Agreement, either you or the Company will be entitled to obtain from a
court with jurisdiction over you and the Company preliminary and
permanent injunctive relief to enjoin or restrict the other party from
such breach or to enjoin or restrict a third party from inducing any
such breach, and other appropriate relief, including money damages. By
seeking any such relief, however, the moving party shall not be relieved
of such party's obligation hereunder to have any remaining portion of
the controversy resolved by binding confidential arbitration in
accordance with subparagraph (a) above.
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(c) The prevailing party in any such arbitration or court proceeding shall
be entitled to recover from the losing party such of her or its
reasonable costs and expenses incurred in connection with the
arbitration or court proceeding as would be recoverable had such party's
claim been brought as a civil action in a court of competent
jurisdiction.
16. ASSIGNMENT. The rights and obligations of the Company under this Agreement
shall inure to the benefit of and shall be binding upon the present and
future subsidiaries of the Company, any and all subsidiaries of a
subsidiary, all affiliated corporations, and successors and assigns of the
Company. No assignment of this Agreement by the Company will relieve the
Company of its obligations. You shall not assign any of your rights and/or
obligations under this Agreement and any such attempted assignment will be
void. This Agreement shall be binding upon and inure to the benefit of your
heirs, executors, administrators, or other legal representatives and their
legal assigns.
17. WAIVER. A waiver by either you or the Company of any of the terms or
conditions of this Agreement in any instance shall not be deemed or
construed to be a waiver of such term or condition for the future, or of any
subsequent breach thereof. All remedies, rights, undertakings, obligations,
and agreements contained in this Agreement shall be cumulative, and none of
them shall be in limitation of any other remedy, right, undertaking,
obligation or agreement of either you or the Company.
18. TAX CONSEQUENCES. The Company makes no representations or warranties with
respect to the tax consequences of the payment of any sums to you under the
terms of this Agreement. You agree and understand that you are responsible
for payment, if any, of local, state and/or federal taxes on the sums paid
hereunder by the Company and any penalties or assessments thereon.
19. COSTS. Except as provided in Paragraph 15 hereof, you and the Company shall
each bear your own costs, expert fees, attorneys' fees and other fees
incurred in connection with this Agreement.
20. NOTICES. All notices required by this Agreement shall by given in writing
either by personal delivery or by first class mail, return receipt
requested. Notices shall be addressed as follows:
To Western Digital: Western Digital Technologies, Inc.
00000 Xxxx Xxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000-0000
Attention: Vice President, Human Resources
and Administration
To Xx. Xxxx: 00000 Xxxxxxx Xxxx
Xxxxxxx Xxxxx, XX 00000
or in each case to such other address as you or the Company shall notify the
other. Notice given by mail shall be deemed given five (5) days following
the date of mailing.
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21. ENTIRE AGREEMENT. This Agreement, including its Attachments and the other
agreements or plans referred to or incorporated herein, represents the
entire agreement and understanding between you and the Company concerning
the subject matter herein, and supersedes and replaces any and all prior
agreements and understandings.
22. NO ORAL MODIFICATION. This Agreement may only be amended by a writing signed
by you and the Chief Executive Officer of the Company or the Chief Legal
Officer of the Company.
23. GOVERNING LAW. This Agreement shall be governed by the internal substantive
laws, but not the choice of law rules, of the State of California.
24. EFFECTIVE DATE. This Agreement is effective eight days after it has been
signed by both you and the Company (the "Effective Date").
25. COUNTERPARTS. This Agreement may be executed in counterparts, and each
counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of you and the
Company.
26. VOLUNTARY EXECUTION OF AGREEMENT. This Agreement is executed by you
voluntarily and without any duress or undue influence on the part or behalf
of the Company, with the full intent of releasing all claims. You
acknowledge that:
(a) You have read this Agreement;
(b) You have been represented in the preparation, negotiation, and execution
of this Agreement by legal counsel of your own choice or that you have
voluntarily declined to seek such counsel;
(c) You understand the terms and consequences of this Agreement and of the
releases it contains; and
(d) You are fully aware of the legal and binding effect of this Agreement.
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Please indicate your agreement to the above by signing below.
Very truly yours,
WESTERN DIGITAL TECHNOLOGIES, INC.
Xxxxxxx X. Xxxxxxxxx
Secretary
I have read and agree to all terms and conditions as outlined above.
------------------------------------------------------ ------------------
Xxxxxx X. Xxxx Date
Attachments:
A - Stock Option Summary
B - Restricted Stock Award Letter
C - Benefits Summary
D - Form of Letter of Recommendation
E - Employment Agreement
