EXHIBIT 10.56
[LETTER HEAD OF WESTERN DIGITAL]
October 30, 2002
Xx. Xxxxxxx Xxxxxxx Xxxxx
00 Xxxxxxx Xxx
Xxxxxx XX 00000-0000
Dear Xxxx:
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. ("WDT" and, collectively with WDC, the
"Company"). In consideration for the covenants and releases contained herein,
you and the Company agree as follows:
1. PAYMENT PERIOD. You will resign your position as Vice President and
Chief Technology Officer of WDC and WTC effective Monday, September 30,
2002. Solely for purposes of the payments and benefits described
herein, you will continue to be treated as if you were an employee,
subject to the limitations below, until the earlier of September 30,
2003, or your death (the "Payment Period"). During the Payment Period,
you shall not be an employee of WDC nor required to perform services
for WDC, except pursuant to the consulting arrangement set forth in
Section 3 of this Agreement.
2. STOCK OPTIONS AND RESTRICTED SHARES.
(a) During the Payment Period, any 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. At the end of the Payment Period,
all of your Options will become fully vested, and you will
have up to three (3) years following September 30, 2003, to
exercise any or all such 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 is being delivered to you separately and is
incorporated herein by reference.
(b) At the end of the Payment Period all remaining unvested
restricted stock (the "Restricted Shares") awarded you in
December 2000 will vest.
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October 30, 2002
Page 2
(c) Notwithstanding anything to the contrary in this Agreement, if
you breach any of your covenants set forth in paragraphs 10,
11, 12, or 14 hereof, (i) any unexercised Options shall be
deemed immediately canceled and shall no longer be
exercisable, (ii) the Restricted Shares shall be deemed
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 breach, as
determined by the Board of Directors.
3. COMPENSATION.
(a) You will be paid $275,000.00 in wage continuation based on
your current base salary. The delivery vehicle for such wage
continuation will be the Company's current bi-weekly payroll
process. Notwithstanding that you will not be an employee, you
agree to have tax withholding and other payroll deductions
made at the present rates, subject to any changes you wish to
make in accordance with Company policies.
(b) In consideration of this Agreement, you agree to provide, if
requested by the Company, up to ten (10) hours per month of
consulting services related to your present areas of
responsibility, which include, without limiting the generality
of the foregoing, the matters in development in the Chief
Technology Officer department and patent prosecution matters.
You shall be available for the performance of consulting
services hereunder at reasonable times convenient to you. The
Company acknowledges that you may have other business and
personal obligations, and that your duties under this
Agreement shall be scheduled in a manner to avoid a conflict
with those other obligations.
4. BENEFITS. During the Payment 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.
(b) Employee Stock Purchase Plan (ESPP) will continue and
deductions will be made from your wage continuation checks.
(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.
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October 30, 2002
Page 3
(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 Payment
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. Your Western Digital benefits will
cease sixty (60) days after September 30, 2003, 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 Agreement 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.
6. VACATION. By September 30, 2002, you will be paid all accrued and
unused vacation. Although you will continue on the Company payroll
through September 30, 2003, you will accrue no more vacation subsequent
to September 30, 2002.
7. INCENTIVE COMPENSATION PLAN (ICP). Any distribution to which you become
entitled as a result of awards under the Incentive Compensation Plan
("ICP") for the six-month period ending December 31, 2002, will be made
to you in accordance with the terms of the ICP, except that you will be
entitled to an amount equal to 1/2 of any amount for the period. You
will not be eligible to participate in the ICP beyond that date.
Calculation for the payment will be made at the end of the ICP period
and paid at such time as all then-current employees.
8. OUTPLACEMENT SERVICES. The Company will provide executive outplacement
assistance through Xxx Xxxxx Xxxxxxxx, Right Management Consultants, or
another firm of your
Xx. Xxxxxxx Xxxxxxx Xxxxx
October 30, 2002
Page 4
choosing to assist you in finding another position. These services may
begin anytime prior to September 30, 2003. Contact the Vice President
of Human Resources for assistance with these arrangements.
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 that 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) During the Payment Period and thereafter, 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 the period you were employed by the Company.
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 the period you were employed by the Company.
10. NON-COMPETITION. You acknowledge that you have in your capacity as an
officer and director of the Company been given access to, and possess
knowledge of, valuable proprietary and confidential information of the
Company. You acknowledge that it would be impossible for you to provide
work, advice, consulting, or other services to a competitor of the
Company, whether as an employee, independent contractor, adviser,
volunteer, director or in any other capacity, for any individual,
partnership, corporation, or other business entity, without using,
disclosing, evaluating or relying upon the Company's proprietary and
confidential information. Accordingly, you agree that during the
Payment Period and for a period of one (1) year thereafter you will not
directly or indirectly, whether for your own account or as an employee,
director, consultant or advisor, provide services to any business or
engage in any business which at the time of commencement of such
services is, or is expected to be, competitive with the Company's or
any of its subsidiaries' product lines or business activities, unless
you obtain the prior written consent of the Company's Chief Executive
Officer. This includes but is not limited to the following businesses
or
Xx. Xxxxxxx Xxxxxxx Xxxxx
October 30, 2002
Page 5
entities: (i) Maxtor Corporation; (ii) Seagate Technologies; (iii)
Fujitsu Hard Drive Division; (iv) Samsung Hard Drive Division; (v)
SonicBlue Corporation; (vi) IBM Hard Drive Division, and (vii) Hitachi
Hard Drive Division.
Nothing in this Agreement shall prohibit you from having any ownership
or financial interest in Zetera Corporation following the closing of
the asset sale transaction pursuant to that certain Asset Purchase
Agreement by and between Zetera Corporation and Western Digital
Technologies, Inc. (the "Asset Purchase Agreement"). The parties
acknowledge that pursuant to the Asset Purchase Agreement, if and when
it is executed and delivered, Xxxxxx will acquire certain microsan
technology of Western Digital Technologies, Inc. In addition, if the
Asset Purchase Agreement is executed and delivered by the parties
thereto, nothing in this Agreement shall prohibit you from providing
work, advice, consulting or other services to any venture that acquires
some or all of the microsan technology from Zetera Corporation in a
transaction in compliance with the provisions of the Asset Purchase
Agreement, either as an employee, independent contractor, adviser,
volunteer, director or in any other capacity. Further, if the Asset
Purchase Agreement is executed and delivered, the obligations you may
have regarding use or disclosure of confidential information you
learned about the microsan technology while employed by the Company
shall be addressed by that certain Limited Release by and between you
and Western Digital Technologies, Inc. to be entered into by you in
connection with the Asset Purchase Agreement, and this agreement shall
not supercede such Limited Release.
11. NON-SOLICITATION OF EMPLOYEES. You agree that during the Payment Period
and for a period of one (1) year thereafter you will not directly or
indirectly solicit any individuals to leave the Company's (or any of
its subsidiaries') employ for any reason or interfere in any other
manner with the employment relationships at the time existing between
the Company (or any if its subsidiaries) and its current or prospective
employees.
This Agreement shall not prohibit you, on behalf of Zetera Corporation,
or Zetera Corporation itself, from employing or hiring the following
named employees to work for, advise, or consult with such business
venture: Xxx Xxxxx and Xxx Xxxxxx.
12. NON-SOLICITATION OF BUSINESS RELATIONSHIPS. You agree that during the
Payment Period and for a period of one (1) year thereafter you will not
induce or attempt to induce any customer, supplier, distributor,
licensor, licensee or other business relation of 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 customer, supplier, distributor,
licensor, licensee or other business relation and the Company (or any
of its subsidiaries).
13. IRREPARABLE HARM. You agree that the Company would be irreparably
harmed by any breach or threatened breach of the agreements in
Paragraphs 10, 11 and 12 and that, therefore, the Company shall be
entitled to an injunction prohibiting you from any breach or threatened
breach of such agreements.
Xx. Xxxxxxx Xxxxxxx Xxxxx
October 30, 2002
Page 6
14. NON-DISPARAGEMENT. You and the Company agree that each 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, the other party, the other party's
subsidiaries and affiliates, past and present, and each of them, as
well as its and their trustees, directors, officers, agents, 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
the other party, provided, however, that each party shall respond
accurately and fully to any question, inquiry or request for
information when required by legal process.
15. 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 being delivered to
you separately and is 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 would be
irreparably harmed by any breach, or threatened breach of the
agreements in this Paragraph and that, therefore, the Company shall be
entitled to an injunction prohibiting you from any breach or threatened
breach of such agreements.
16. RELEASE OF CLAIMS. You agree that pursuant to this Agreement, the
Company is providing consideration beyond the obligations owed to you
by the Company or any subsidiary of the Company prior to entering this
Agreement. 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 sue 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, including, but not limited to your resignation from
Xx. Xxxxxxx Xxxxxxx Xxxxx
October 30, 2002
Page 7
your position as Vice President and Chief Technology Officer
of WDC and WDT during the Payment Period;
(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;
(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 arising out of or created by this Agreement.
17. ACKNOWLEDGMENT OF WAIVER OF CLAIMS UNDER XXXX. 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
Xx. Xxxxxxx Xxxxxxx Xxxxx
October 30, 2002
Page 8
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 23 hereof by close of business on the seventh
day from the date that you sign this Agreement.
18. 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.
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.
19. 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, whether arising from or relating to this Agreement,
its breach, any matter addressed by this Agreement, your
employment with the Company before and through the Payment
Period, or otherwise, 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
Xx. Xxxxxxx Xxxxxxx Xxxxx
October 30, 2002
Page 9
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.
(c) The Company shall pay the forum costs for any such
arbitration. The prevailing party in any such arbitration or
court proceeding shall be entitled to recover from the losing
party such of his or its reasonable costs and expenses,
including reasonable attorneys' fees, 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.
20. 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.
21. 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.
22. 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.
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October 30, 2002
Page 10
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.
23. COSTS. Except as provided in Paragraph 19 hereof, you and the Company
shall each bear your own costs, expert fees, attorneys' fees and other
fees incurred in connection with this Agreement.
24. 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 Corporation
00000 Xxxx Xxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000-0000
Attention: Vice President, Human Resources and
Administration
To Xx. Xxxxx: 00 Xxxxxxx Xxx
Xxxxxx XX 00000-0000
or in each case to such other address as you or the Company shall
notify the other. Notice given by personal delivery shall be deemed
given upon delivery. Notice given by mail shall be deemed given five
(5) days following the date of mailing.
25. 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.
26. NO ORAL MODIFICATION. This Agreement may only be modified by a writing
signed by you and the Chief Executive Officer of the Company or the
Chief Legal Officer of the Company.
27. GOVERNING LAW. This Agreement shall be governed by the internal
substantive laws, but not the choice of law rules, of the State of
California.
28. EFFECTIVE DATE. This Agreement is effective eight days after it has
been signed by both you and the Company (the "Effective Date").
29. 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.
30. 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
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October 30, 2002
Page 11
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.
Please indicate your agreement to the above by signing below.
Very truly yours,
WESTERN DIGITAL CORPORATION
/s/ Xxxxx X. Xxxxx
---------------------------
Xxxxx X. Xxxxx
Vice President Human Resources and Administration
I have read and agree to all terms and conditions as outlined above.
/s/ Xxxxxxx X. Xxxxx 10/30/2002
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Xxxxxxx Xxxxxxx Xxxxx Date
