EX. 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and
between Western Digital Corporation (the "Company") and Matthew E. Massengill
("Executive") as of the 25th day of August, 2005 ("Effective Date").
RECITALS
WHEREAS, Executive is currently employed by the Company as its Chief
Executive Officer;
WHEREAS, Executive desires to transition from the position of Chairman
and Chief Executive Officer to the position of Chairman of the Board of
Directors ("Chairman of the Board") of the Company.
NOW, THEREFORE, in consideration of the foregoing, and the mutual
promises and covenants contained below, the parties agree as follows:
AGREEMENT
1. EMPLOYMENT.
The Company hereby employs Executive and Executive hereby accepts such
employment, upon the terms and conditions hereinafter set forth, from the
Effective Date to and including January 1, 2007. ("Employment Period").
2. DUTIES.
A. Chief Executive Officer. From the Effective Date through September 30,
2005, Executive shall continue to serve as Chairman and Chief Executive Officer
of the Company, and shall report to the Company's Board of Directors.
B. Chairman of the Board. From October 1, 2005 through January 1, 2007,
Executive shall serve as Chairman of the Board or in such other executive
position or capacity as the Board of Directors may assign Executive. Executive
shall report to the Board of Directors, and shall have such duties and
responsibilities as the Board of Directors shall determine from time to time,
including, but not limited to, offering assistance to the Company's new Chief
Executive Officer as may be requested and coordinating investor communications.
C. Executive agrees to devote substantially all of his time, energy and
ability to the business of the Company.
3. COMPENSATION.
A. Base Salary. From the Effective Date through January 1, 2007, the
Company will continue to pay to Executive a base salary at the rate of $800,000
per year. Such salary shall be earned monthly and shall be payable in periodic
installments in accordance with the Company's customary practices. Amounts
payable shall be reduced by standard withholding and other authorized
deductions.
B. Bonus. Executive's target annual bonus each fiscal year during the
Employment Period (including with respect to fiscal 2006) for purposes of the
Company's semi-annual bonus program for such fiscal period shall be 100% of his
base salary from the Company for such fiscal period.
C. Retirement and Welfare Benefit Plans; Fringe Benefits. Executive (and,
in the case of welfare benefit plans, his eligible dependents, as the case may
be), shall be eligible for participation in the retirement, welfare, and fringe
benefit plans, practices, policies and programs provided by the Company on terms
consistent with those generally applicable to the Company's other senior
executives and approved by the Compensation Committee of the Board of Directors.
D. Expenses. Executive shall be entitled to receive prompt reimbursement
for all reasonable employment expenses incurred by him in accordance with the
policies, practices and procedures as in effect generally with respect to other
executives of the Company.
E. Modification. The Company reserves the right to modify, suspend or
discontinue any and all of the above plans, practices, policies and programs at
any time without recourse by Executive so long as such action is taken generally
with respect to other senior executives of the Company and does not single out
Executive; provided, however, that the Company may not eliminate or materially
diminish Executive's opportunity to earn a bonus pursuant to Section 3.B. or
receive expense reimbursement pursuant to Section 3.E.
4. RESTRICTED STOCK; OTHER EQUITY AWARDS.
A. The following awards are hereby terminated and Executive shall have no
further rights with respect thereto or in respect thereof: (i) the stock options
previously granted by the Company to Executive that are currently outstanding
but only to the extent that such options are scheduled (without giving effect to
any accelerated vesting provision) to vest after July 31, 2007; (ii) the
restricted shares of Company Common Stock previously granted by the Company to
Executive that are currently outstanding but only to the extent that such
restricted shares are scheduled (without giving effect to any accelerated
vesting provision) to vest after July 31, 2007 (which shares are hereby
transferred from the Executive to the Company); and (iii) the entire Performance
Share Award granted by the Company to Executive on or about January 20, 2005.
Executive shall promptly deliver to the Company any share certificates
evidencing the shares of restricted stock covered by clause (ii) of the
preceding sentence and shall timely provide the Company with such additional
documents of transfer that the Company may reasonably request to confirm the
transfer of such shares to the Company.
B. The stock options previously granted by the Company to Executive that
are currently outstanding, to the extent that such options are otherwise
scheduled to vest (without giving effect to any accelerated vesting provision)
after January 1, 2007 and on or before July 31, 2007, are hereby amended such
that such portion of the options is scheduled to vest on January 1, 2007
(subject to Executive's continued employment by the Company through that date
other than as expressly provided in Section 5.C(ii)). In the event that
Executive remains continuously employed by the Company through January 1, 2007,
Executive will have until the later of the following two dates to exercise his
stock options granted by the Company to the extent that such stock options are
outstanding and otherwise unvested on January 1, 2007: (i) January 1, 2010, and
(ii) the time such options would have otherwise expired or been terminated in
accordance with the termination of employment rules otherwise applicable to such
options; provided that in all cases the options remain subject to earlier
termination upon the maximum term of such options and earlier termination in
connection with a change in control or similar event affecting the Company as
provided for in the applicable stock option agreement or plan under which such
options were granted.
C. The restricted shares of Company Common Stock previously granted by the
Company to Executive that are currently outstanding, to the extent that such
restricted shares are otherwise scheduled to vest (without giving effect to any
accelerated vesting provision) after January 1, 2007 and on or before July 31,
2007, are hereby amended such that such restricted shares are scheduled to vest
on January 1, 2007 (subject to Executive's continued employment by the Company
through that date other than as expressly provided in Section 5.C(ii)).
D. Other than the bonus opportunity contemplated by Section 3.B, Executive
shall have no right to any other annual or long-term incentive compensation or
awards with respect to his employment during the Employment Period.
5. TERMINATION.
A. Cause. The Company may terminate Executive's employment for Cause. For
purposes of this Agreement, "Cause" shall mean that the Company, acting in good
faith based upon the information then known to the Company, determines that
Executive has engaged in or committed: (i) willful misconduct, (ii) fraud, (iii)
failure or refusal to perform the duties assigned by the Board of Directors, or
(iv) a conviction of or a plea of nolo contendre to a felony.
B. Other than Cause. The Company may terminate Executive's employment at
any time, with or without cause, upon 30 days' written notice.
C. Obligations of the Company Upon Termination.
(i) Cause. If Executive's employment is terminated by the Company for
Cause, this Agreement shall terminate without further obligations to Executive
other than for the timely payment of the sum of (i) Executive's annual base
salary through the date of termination to the extent not theretofore paid and
(ii) any compensation previously deferred by Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts described in clauses
(i) and (ii) shall be hereinafter referred to as the "Accrued Obligations"). If
it is subsequently determined that the Company did not have Cause for
termination under this Section 5-C(i), then the Company's decision to terminate
shall be deemed to have been made under Section 5-C(ii), and the amounts payable
thereunder shall be the only amounts Executive may receive for his termination.
(ii) Other than Cause. If the Company terminates Executive's employment for
other than Cause, this Agreement shall terminate without further obligations to
Executive other than:
(a) a lump sum cash payment equal to the base salary and target bonus (at
100% of target) for the remainder of the Employment Period; and
(b) accelerated vesting of any and all options and other equity-based
awards granted by the Company that are then outstanding and not otherwise fully
vested, but only to the extent such awards would have otherwise become vested
had Executive remained employed by the Company through July 31, 2007. Any
portion of such awards that do not so vest shall automatically terminate upon
termination of Executive's employment with the Company and Executive shall have
no rights with respect thereto or in respect thereof. Executive's rights as to
any options and other equity-based awards granted by the Company that are
outstanding at the time Executive's employment with the Company terminates, to
the extent such awards are then vesting (after giving effect to any accelerated
vesting contemplated by this clause), shall be governed by the terms and
conditions of the applicable award agreement and incentive plan under which the
option or other award, as applicable, was granted.
D. Exclusive Remedy. Executive agrees that the payments contemplated by
this Agreement shall constitute the exclusive and sole remedy for any
termination of his employment, and Executive covenants not to assert or pursue
any other remedies, at law or in equity, with respect to any termination of
employment.
6. CONFIDENTIALITY AND INVENTION.
Executive has previously executed an Employee Invention and
Confidentiality Agreement ("Invention Agreement"), which is incorporated herein
as if fully set forth. In the event of an inconsistency between a provision of
this Agreement and a provision of the Invention Agreement, the provision of this
Agreement controls.
7. LITIGATION ASSISTANCE.
Executive agrees to cooperate with the Company in any actual or
threatened litigation that arises against or brought by the Company at any time
during or after the Employment Period, including but not limited to
participating in interviews with the Company's counsel to assist the Company in
any such litigation.
8. ARBITRATION.
Any controversy arising out of or relating to Executive's employment,
this Agreement, its enforcement or interpretation, or because of an alleged
breach, default, or misrepresentation in connection with any of its provisions,
shall be submitted to arbitration in Orange County, California, before a sole
arbitrator selected from Judicial Arbitration and Mediation Services, Inc.,
Orange County, California, or its successor ("JAMS"), or if JAMS is no longer
able to supply the arbitrator, such arbitrator shall be selected from the
American Arbitration Association, and shall be conducted in accordance with the
provisions of California Civil Procedure Code ss.ss. 1280 et seq. as the
exclusive remedy of such dispute; provided, however, that provisional injunctive
relief may, but need not, be sought in a court of law while arbitration
proceedings are pending, and any provisional injunctive relief granted by such
court shall remain effective until the matter is finally determined by the
Arbitrator. Final resolution of any dispute through arbitration may include any
remedy or relief which the Arbitrator deems just and equitable. Any award or
relief granted by the Arbitrator hereunder shall be final and binding on the
parties hereto and may be enforced by any court of competent jurisdiction. The
parties agree that they are hereby waiving any rights to trial by jury in any
action, proceeding or counterclaim brought by either of the parties against the
other in connection with any matter whatsoever arising out of or in any way
connected with this Agreement or Executive's employment.
9. SUCCESSORS.
A. This Agreement is personal to Executive and shall not, without the prior
written consent of the Company, be assignable by Executive.
B. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns and any such successor or assignee shall
be deemed substituted for the Company under the terms of this Agreement for all
purposes. As used herein, "successor" and "assignee" shall include any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires the stock of the
Company or to which the Company assigns this Agreement by operation of law or
otherwise.
10. WAIVER.
No waiver of any breach of any term or provision of this Agreement
shall be construed to be, nor shall be, a waiver of any other breach of this
Agreement. No waiver shall be binding unless in writing and signed by the party
waiving the breach.
11. MODIFICATION.
This Agreement shall not be modified by any oral agreement, either
express or implied, and all modifications hereof shall be in writing and signed
by the parties hereto.
12. SAVINGS CLAUSE.
If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are declared to be
severable.
13. COMPLETE AGREEMENT.
This Agreement (and all other agreements, exhibits, and schedules
referred to in this Agreement, including without limitation the Invention
Agreement) constitutes and contains the entire agreement and final understanding
concerning Executive's employment with the Company and the other subject matters
addressed herein between the parties. It is intended by the parties as a
complete and exclusive statement of the terms of their agreement. It supersedes
and replaces all prior negotiations and all agreements proposed or otherwise,
whether written or oral, concerning the subject matter hereof. Any
representation, promise or agreement not specifically included in this Agreement
shall not be binding upon or enforceable against either party. This is a fully
integrated agreement.
14. GOVERNING LAW.
This Agreement shall be deemed to have been executed and delivered
within the County of Orange, State of California and the rights and obligations
of the parties hereunder shall be construed and enforced in accordance with, and
governed by, by the laws of the State of California without regard to principles
of conflict of laws.
15. CONSTRUCTION.
Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any party on the basis that the party was the
drafter. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect.
16. COMMUNICATIONS.
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered or if
mailed by registered or certified mail, postage prepaid, addressed to Executive
at: Western Digital Corporation, 20511 Lake Forest Drive, Lake Forest,
California 92630, or addressed to the Company at: Western Digital Corporation,
Attn. Corporate Secretary, 20511 Lake Forest Drive, Lake Forest, California
92630. Either party may change the address at which notice shall be given by
written notice given in the above manner.
17. EXECUTION.
This Agreement is being executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Photographic copies of such signed counterparts may
be used in lieu of the originals for any purpose.
[This section has been intentionally left blank.]
In witness whereof, the parties hereto have executed this Agreement as
of the date first above written.
THE COMPANY:
By: /s/ RAYMOND M. BUKATY
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Name: Raymond M. Bukaty
Title: Senior Vice President,
Administration, General Counsel and
Secretary
EXECUTIVE:
/s/ MATTHEW E. MASSENGILL
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Matthew E. Massengill