EXHIBIT 10.55
[WESTERN DIGITAL LETTERHEAD]
March 31, 2002
Mr Michael A. Cornelius
25196 Black Horse Lane
Laguna Hills CA 92653
Dear Michael:
This letter, when signed by you, constitutes the agreement (the "Agreement")
relative to your retirement 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. TRANSITION PERIOD. You voluntarily retired from your position as Vice
President, Law and Administration, and Secretary of WDC and WDT, and from
all of your other positions with the Company's other subsidiaries,
effective Thursday, March 28, 2002. Effective such date, you will
continue to be an employee of WDC, subject to the limitations below, and
function as Vice President, Intellectual Property, pay grade 76, until
the earlier of March 31, 2003, earlier termination by the Company as
provided in this Section 1, or your death (the "Transition Period").
During the Transition Period, you will report to the Company's Chairman
and Chief Executive Officer and will coordinate with the Vice President,
General Counsel and Secretary, and shall perform such transitional duties
as assigned from time to time, including, but not limited to, managing
the Company's Intellectual Property Department (IPD) within the Legal
department until the Company reassigns these responsibilities to another
individual. You will also be responsible for project specific assignments
as directed from time to time. It is intended that (i) from March 28,
2002 through June 30, 2002, you will work as a full-time employee with a
forty (40) hour work week; (ii) from July 1, 2002, through September 30,
2002, you will work as a part-time employee with a thirty (30) hour work
week; (iii) from October 1, 2002, through December 31, 2002, you will
work as a part-time employee with a twenty (20) hour work week; and (iv)
from January 1, 2003, through March 31, 2003, you will work as a
part-time employee with a ten (10) hour work week. If you terminate the
Transition Period and your employment with the Company before March 31,
2003, you are required to give at least two weeks' written notice. In
such an event, your Transition Period, and any entitlement to
compensation or vesting under this Agreement, shall cease on the
fourteenth day following
Mr. Michael A. Cornelius
March 31, 2002
Page 2
the date on which notice is given. The Company retains the right to
terminate the Transition Period at any time. Should this occur, the
Transition Period end-date will be determined at the time of such an
event.
2. STOCK OPTIONS AND RESTRICTED SHARES.
(a) During the Transition 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 Transition Period, all of your Options will become
fully vested, and you will have up to three (3) years following
the later of March 31, 2003 or the end of the Transition Period 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) Upon your full performance through the Transition Period all
remaining unvested restricted stock (the "Restricted Shares")
awarded you in December 2000 will vest. Should the Company
terminate the Transition Period any time prior to March 31, 2003,
all unvested restricted stock awarded you in December 2000 will
vest.
(c) Notwithstanding anything to the contrary in this Agreement, if you
breach any of your covenants set forth in paragraphs 9, 10, 11, or
13 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) During the Transition Period, you will be paid at the following
base salary wage rate: (i) $22,917 per month through June 30,
2002; (ii) $17,188 per month from June 1, 2002, through September
30, 2002; (iii) $11,459 per month from October 1, 2002, through
December 31, 2002; and (iv) $5,729 per month from January 1, 2003,
through March 31, 2003. Should the Company terminate the
Transition Period any time prior to March 31, 2003, you will be
given a one-time lump sum payment as determined by calculating the
time remaining from the new Transition Period end-date to March
31, 2003, per the above base salary wage rate schedule.
(b) During the Transition Period, you will be a participant in the
Company's Change of Control (COC) Severance Plan ("Severance
Plan") and are eligible to participate at
Mr. Michael A. Cornelius
March 31, 2002
Page 3
the Executive Officer 16(b) level at the Company, even though you
will not be a 16(b) Executive Officer. You will participate on a
prorated basis as defined by your then current part-time
employment status.
4. BENEFITS. Your eligibility and level of participation for benefits during
the Transition Period will be determined by your full-time or part-time
employee status and pay grade. You will receive the full $5,000.00
Financial Planning benefit regardless of your employment status
throughout the Transition Period.
Upon completion or termination of the Transition Period, March 31, 2003,
or earlier, you will be given a one-time lump sum payment equal to 18
months of your then current monthly medical insurance premiums, including
Executive Medical benefits, as then paid by the Company. This payment
will be grossed up to cover the net cost and will not take into account
any estimated escalation in future cost increases.
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. You will continue to accrue vacation hours during the
Transition Period per Company Policy as determined by your full-time or
part-time employee status and number of years at the Company.
7. INCENTIVE COMPENSATION PLAN (ICP). You will be eligible to participate in
the Company's Incentive Compensation Plan (ICP) during the Transition
Period. The potential ICP percentage payout is sixty-five percent (65%)
of base salary and will be prorated as determined by your full-time or
part-time employee status. Should the Company terminate the Transition
Period any time prior to March 31, 2003, you will be given a one-time
lump sum payment as if you had been employed through March 31, 2003,
taking into account your part-time employment status per the base salary
wage rate schedule under "Section 3. Compensation" of this agreement, and
considering any proration consequences of the then current ICP period.
Further, the prorated payment will be equivalent to one hundred percent
(100%) of the ICP funding for your position for the then current ICP
period. Calculation for the payment will be made at the end of the then
current ICP period and paid at such time as all then current employees.
8. 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
Mr. Michael A. Cornelius
March 31, 2002
Page 4
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 Transition 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.
9. 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
Transition 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.
10. NON-SOLICITATION OF EMPLOYEES. You agree that during the Transition
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.
11. NON-SOLICITATION OF BUSINESS RELATIONSHIPS. You agree that during the
Transition 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).
Mr. Michael A. Cornelius
March 31, 2002
Page 5
12. IRREPARABLE HARM. You agree that the Company would be irreparably harmed
by any breach or threatened breach of the agreements in Paragraphs 9, 10
and 11 and that, therefore, the Company shall be entitled to an
injunction prohibiting you from any breach or threatened breach of such
agreements.
13. 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.
14. 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.
15. 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,
Mr. Michael A. Cornelius
March 31, 2002
Page 6
(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, (i) your retirement from your position as Vice
President, Law and Administration, and Secretary of WDC and WDT,
and (ii) you assignment to the position of Vice President,
Intellectual Property, during the Transition 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.
Mr. Michael A. Cornelius
March 31, 2002
Page 7
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.
16. 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 23
hereof by close of business on the seventh day from the date that you
sign this Agreement.
17. 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.
18. 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 Transition 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
Mr. Michael A. Cornelius
March 31, 2002
Page 8
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.
(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.
19. 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.
Mr. Michael A. Cornelius
March 31, 2002
Page 9
20. 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.
21. 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.
22. COSTS. Except as provided in Paragraph 18 hereof, you and the Company
shall each bear your own costs, expert fees, attorneys' fees and other
fees incurred in connection with this Agreement.
23. 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
20511 Lake Forest Drive
Lake Forest, CA 92630-7741
Attention: Vice President, Human Resources
and Administration
To Mr. Cornelius: 25196 Black Horse Lane
Laguna Hills CA 92653
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.
24. 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.
Mr. Michael A. Cornelius
March 31, 2002
Page 10
25. 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.
26. GOVERNING LAW. This Agreement shall be governed by the internal
substantive laws, but not the choice of law rules, of the State of
California.
27. EFFECTIVE DATE. This Agreement is effective eight days after it has been
signed by both you and the Company (the "Effective Date").
28. 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.
29. 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.
Please indicate your agreement to the above by signing below.
Very truly yours,
WESTERN DIGITAL CORPORATION
/s/ David C. Fetah
David C. Fetah
Vice President Human Resources and Administration
I have read and agree to all terms and conditions as outlined above.
/s/ Michael A. Cornelius
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Michael A. Cornelius Date