EXHIBIT 10.6
WESTERN DIGITAL CORPORATION
AMENDED AND RESTATED
CHANGE OF CONTROL SEVERANCE PLAN
1. Purpose of Plan. The Executives have made and are expected to make
major contributions to the profitability, growth and financial strength of the
Company and its affiliates. In addition, the Company considers the continued
availability of the Executives' services, managerial skills and business
experience to be in the best interest of the Company and its stockholders and
desires to assure the continued services of the Executives on behalf of the
Company and/or its affiliates without the distraction of the Executives
occasioned by the possibility of an abrupt change in control of the Company.
2. Definitions. Whenever the following terms are used in this Plan, they
shall have the meaning specified below unless the context clearly indicates to
the contrary:
2.01 "Board" shall mean the Board of Directors of the Company.
2.02 "Cause" shall mean the occurrence or existence of any of the
following with respect to the Executive, as determined by a majority of the
disinterested directors of the Board or the Committee:
(a) the Executives' conviction by, or entry of a plea of guilty
or nolo contendere in, a court of competent and final jurisdiction for any crime
involving moral turpitude or any felony punishable by imprisonment in the
jurisdiction involved;
(b) whether prior or subsequent to the date hereof, the
Executives' willful engaging in dishonest or fraudulent actions or omissions
which results directly or indirectly in any demonstrable material financial or
economic harm to the Company or any of its subsidiaries or affiliates;
(c) the Executives' failure or refusal to perform his or her
duties as reasonably required by the Employer, provided that Executive shall
have first received written notice from the Employer stating with specificity
the nature of such failure or refusal and affording the Executive at least five
(5) days to correct the act or omission complained of;
(d) gross negligence, insubordination, material violation by the
Executive of any duty of loyalty to the Company or any subsidiary or affiliate
of the Company, or any other material misconduct on the part of the Executive,
provided that the Executive shall have first received written notice from the
Company stating with specificity the nature of such action or violation and
affording the Executive at least five (5) days to correct such action or
violation;
(e) the repeated non-prescription use of any controlled
substance, or the repeated use of alcohol or any other non-controlled substance
which in the Board's reasonable
determination renders the Executive unfit to serve in his or her capacity as an
officer or employee of the Company or any of its subsidiaries or affiliates;
(f) sexual harassment by the Executive that has been reasonably
substantiated and investigated;
(g) involvement in activities representing conflicts of interest
with the Company or any of its subsidiaries or affiliates;
(h) improper disclosure of confidential information;
(i) conduct endangering, or likely to endanger, the health or
safety of another employee;
(j) falsifying or misrepresenting information on the records of
the Company or any of its subsidiaries or affiliates; or
(k) the Executive's physical destruction or theft of substantial
property or assets of the Company or any of its subsidiaries or affiliates.
2.03 "Change in Control" shall mean an occurrence of any of the
following events, unless the Board shall provide otherwise:
(a) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act, a "Person"), alone or together with its affiliates
and associates, including any group of persons which is deemed a "person" under
Section 13(d)(3) of the Exchange Act (other than the Company or any subsidiary
thereof or any employee benefit plan (or related trust) of the Company or any
subsidiary thereof, or any underwriter in connection with a firm commitment
public offering of the Company's capital stock), becomes the "beneficial owner"
(as such term is defined in Rule 13d-3 of the Exchange Act, except that a person
shall also be deemed the beneficial owner of all securities which such person
may have a right to acquire, whether or not such right is presently exercisable,
referred to herein as "Beneficially Own" or "Beneficial Owner" as the context
may require) of thirty-three and one third percent or more of (i) the then
outstanding shares of the Company's common stock ("Outstanding Company Common
Stock") or (ii) securities representing thirty-three and one-third percent or
more of the combined voting power of the Company's then outstanding voting
securities ("Outstanding Company Voting Securities") (in each case, other than
an acquisition in the context of a merger, consolidation, reorganization, asset
sale or other extraordinary transaction covered by, and which does not
constitute a Change in Control under, clause (c) below);
(b) a change, during any period of two consecutive years, of a
majority of the Board as constituted as of the beginning of such period, unless
the election, or nomination for election by the Company's stockholders, of each
director who was not a director at the beginning of such period was approved by
vote of at least two-thirds of the Incumbent Directors then in office (for
purposes hereof, "Incumbent Directors" shall consist of the directors holding
office as of the Effective Date and any person becoming a director subsequent to
such date whose election, or nomination for election by the Company's
stockholders, is approved by a vote of at least a majority of the Incumbent
Directors then in office);
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(c) consummation of any merger, consolidation, reorganization or
other extraordinary transaction (or series of related transactions) involving
the Company, a sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets or stock of another entity
by the Company or any of its subsidiaries (each, a "Business Combination"), in
each case unless, following such Business Combination, (1) all or substantially
all of the individuals and entities that were the Beneficial Owners of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such Business Combination Beneficially Own, directly or
indirectly, more than 50% of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the entity
resulting from such Business Combination (including, without limitation, an
entity that, as a result of such transaction, owns the Company or all or
substantially all of the Company's assets directly or through one or more
subsidiaries (a "Parent")), (2) no Person (excluding any entity resulting from
such Business Combination or a Parent or any employee benefit plan (or related
trust) of the Company or such entity resulting from such Business Combination or
Parent, and excluding any underwriter in connection with a firm commitment
public offering of the Company's capital stock) Beneficially Owns, directly or
indirectly, more than thirty-three and one third percent of, respectively, the
then-outstanding shares of common stock of the entity resulting from such
Business Combination or the combined voting power of the then-outstanding voting
securities of such entity, and (3) at least a majority of the members of the
board of directors or trustees of the entity resulting from such Business
Combination or a Parent were Incumbent Directors at the time of execution of the
initial agreement or of the action of the Board providing for such Business
Combination; or
(d) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company (other than in the context of a
merger, consolidation, reorganization, asset sale or other extraordinary
transaction covered by, and which does not constitute a Change in Control under,
clause (c) above).
2.04 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.05 "Committee" shall mean the Compensation Committee of the
Board.
2.06 "Company" shall mean Western Digital Corporation, a Delaware
corporation, and, as permitted by Section 12.03(b), its successors and assigns.
2.07 "Date of Termination" following a Change in Control shall
mean the dates, as the case may be, for the following events: (a) if the
Executive's employment is terminated by death, the date of death, (b) if the
Executive's employment is terminated due to a Permanent Disability, thirty (30)
days after the Notice of Termination is given (provided that the Executive shall
not have returned to the performance of his or her duties on a full-time basis
during such period), (c) if the Executive's employment is terminated pursuant to
a termination for Cause, the date specified in the Notice of Termination, and
(d) if the Executive's employment is terminated for any other reason, fifteen
(15) days after delivery of the Notice of Termination unless otherwise agreed by
the Executive and the Company.
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2.08 "Disability" shall mean that the Executive is unable, by
reason of injury, illness or other physical or mental impairment, to perform
each and every task of the position for which the Executive is employed, which
inability is certified by a licensed physician reasonably selected by the
Employer.
2.09 "Effective Date" shall mean March 29, 2001.
2.10 "Employer" shall mean the Company or its subsidiary
employing Executive, provided however, that nothing contained herein shall
prohibit the Company or another of its subsidiaries fulfilling any obligation of
the employing entity to the Executive and for such purposes will be deemed the
act of the Employer.
2.11 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
2.12 "Executive" shall mean any Tier 1 Executive or Tier 2
Executive.
2.13 "Good Reason" shall mean any of the following without the
Executive's express written consent:
(a) (i) the assignment to the Executive of any duties
materially and adversely inconsistent with the Executive's positions, duties,
responsibilities and status with the Employer immediately prior to a Change in
Control or with significantly less authority than immediately prior to the
Change in Control;
(ii) a significant adverse alteration in the nature of
the Executive's reporting responsibilities, titles, or offices with the Employer
from those in effect immediately prior to a Change in Control, or
(iii) any removal of the Executive from, or any failure
to reelect the Executive to, any such positions, except in connection with a
termination of the employment of the Executive for Cause, Permanent Disability,
or as a result of the Executive's death or by the Executive other than for Good
Reason;
(b) a reduction by the Employer in the Executive's base salary in
effect immediately prior to a Change in Control;
(c) failure by the Employer to continue in effect any
compensation plan, bonus or incentive plan, stock purchase plan, stock option
plan, life insurance plan, health plan, disability plan or other benefit plan or
arrangement in which the Executive is participating at the time of a Change in
Control unless the Employer substitutes a plan or arrangement which, when viewed
in the totality of the benefits provided, does not adversely impact the
Executive in a material respect, or the taking of any action by the Employer
which would adversely affect, in a material respect, Executive's participation
in or materially reduce Executive's benefits under any of such plans;
(d) any material breach by the Company or the Employer of any
provision of this Plan;
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(e) following a Change in Control, the Executive is excluded
(without substitution of a substantially equivalent plan) from participation in
any incentive, compensation, stock option, health, dental, insurance, pension or
other benefit plan generally made available to persons at Executive's level of
responsibility in the Company or the Employer;
(f) the requirement by the Employer that the Executive's
principal place of employment be relocated more than fifty (50) miles from his
or her place of employment prior to a Change in Control, or that the Executive
must travel on the Employer's business to an extent materially greater than the
Executive's customary business travel obligations prior to a Change in Control;
or
(g) the Company's failure to obtain a satisfactory agreement from
any successor to assume and agree to perform the Company's obligations under
this Plan, as contemplated in Section 12.03(b) hereof.
2.14 "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Plan relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
2.15 "Permanent Disability" shall mean if, as a result of the
Executive's Disability, the Executive shall have been absent from his or her
duties with the Employer on a full-time basis for six (6) months of any
consecutive eight (8) month period.
2.16 "Termination of Employment" shall mean the time when the
employee-employer relationship between the Executive and the Employer is
terminated for any reason, voluntarily or involuntarily, with or without Cause,
including, without limitation, a termination by reason of resignation, discharge
(with or without Cause), Permanent Disability, death or retirement, but
excluding terminations where there is a simultaneous re-employment of the
Executive by the Company or a subsidiary of the Company.
2.17 "Tier 1 Executive" shall mean an officer of the Company who
is elected or appointed by the Board of Directors and is subject to Section 16
of the Exchange Act.
2.18 "Tier 2 Executive" shall mean an employee who is appointed
as an officer of the Company by the President of the Company pursuant to the
Company's Bylaws and such other employee of the Company or any of its
subsidiaries who is designated as a Tier 2 Executive by the Board or the
Committee.
3. Term. This Plan shall be effective until March 29, 2011.
4. Compensation Upon A Change In Control.
4.01 Salary. Commencing on the date a Change in Control shall
occur, the Employer shall pay a salary to the Executive at an annual rate at
least equal to the annual salary payable to the Executive immediately prior to
such date. The salary, as it may be changed from time to time by mutual
agreement between the Executive and the Employer, shall be paid in
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equal installments on each regular payroll payment date after the date of this
Plan and shall be subject to regular withholding for federal, state and local
taxes in accordance with law.
4.02 Other Benefits.
(a) Commencing on the date a Change in Control shall occur, the
Executive shall be entitled to participate in and to receive benefits under
those employee benefit plans or arrangements (including, without limitation, any
pension or welfare plan, life, health, hospitalization and other forms of
insurance and all other "fringe" benefits or perquisites) made available to
executives of the Company or the Employer, or any successor thereto. The
Executive's level of participation in, or entitlements under, any such employee
benefit plan or arrangement of any successor to the Company shall be calculated
as if the Executive had been an employee of such successor to the Company from
the date of the Executive's employment by the Employer.
(b) Commencing on the date a Change in Control shall occur, the
Executive shall be entitled to reimbursement, in accordance with the usual
practices of the Employer, for all reasonable travel and other business expenses
incurred by the Executive in the performance of his or her duties on behalf of
the Employer.
5. Termination of Employment of Executive.
5.01 Payment of Severance Benefits Upon Change of Control. In the
event of a Change in Control of the Company, Executive shall be entitled to the
severance benefits set forth in Section 6, but only if during the term of this
Plan:
(a) the Executive's employment by the Employer is terminated by
the Employer without Cause within one (1) year after the date of the Change in
Control;
(b) the Executive terminates his or her employment with the
Employer for Good Reason within one (1) year after the date of the Change in
Control and complies with the procedures set forth in Section 5.02;
(c) the Executive's employment by the Employer is terminated by
the Employer prior to the Change in Control and such termination arose in
connection with or in anticipation of the Change in Control (for purposes of
this Plan, meaning that at the time of such termination the Company had entered
into an agreement, the consummation of which would result in a Change in
Control, or any person had publicly announced its intent to take or consider
actions that would constitute a Change in Control, and in each case such Change
in Control is consummated, or the Board adopts a resolution to the effect that a
potential Change in Control for purposes of this Plan has occurred); or
(d) the Executive terminates his or her employment with the
Employer for Good Reason prior to the Change in Control, the event constituting
Good Reason arose in connection with or in anticipation of the Change in Control
and the Executive complies with the procedures set forth in Section 5.02.
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5.02 Good Reason.
(a) Notwithstanding anything contained in any employment
agreement between the Executive and the Employer to the contrary, during the
term of this Plan the Executive may terminate his or her employment with the
Employer for Good Reason as set forth in Section 5.01(b) or (d) and be entitled
to the benefits set forth in Section 6, provided that the Executive gives
written notice to the Company and the Employer of his or her election to
terminate his or her employment for such reason within 180 days after the time
he or she becomes aware of the existence of facts or circumstances constituting
Good Reason or, if later, within ten (10) days of the time the claim is resolved
pursuant to Section 5.02(b).
(b) If the Executive believes that he or she is entitled to
terminate his or her employment with the Employer for Good Reason, he or she may
apply in writing to the Company for confirmation of such entitlement prior to
the Executive's actual separation from employment, by following the claims
procedure set forth in Section 9. The submission of such a request by the
Executive shall not constitute "Cause" for the Company to terminate the
Executive's employment and the Executive shall continue to receive all
compensation and benefits he or she was receiving at the time of such submission
throughout the resolution of the matter pursuant to the procedures set forth in
Section 9. If the Executive's request for a termination of employment for Good
Reason is denied under both the request and appeal procedures set forth in
Sections 9.02 and 9.03, then the parties shall use their best efforts to resolve
the claim within ninety (90) days after the claim is submitted to binding
arbitration pursuant to Section 9.04.
5.03 Permanent Disability. In the event of a Permanent Disability
of the Executive, the Executive shall be entitled to no further benefits under
this Plan, provided that the Employer shall have provided the Executive a Notice
of Termination and the Executive shall not have returned to the full-time
performance of the Executive's duties within thirty (30) days of such Notice of
Termination.
5.04 Cause. The Employer may terminate the employment of the
Executive for Cause. The Executive shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to the Executive a
Notice of Termination and a certified copy of a resolution of the Board adopted
by the affirmative vote of not less than a majority of the entire membership of
the Board (other than the Executive if he or she is a member of the Board at
such time) at a meeting called and held for that purpose and at which the
Executive was given an opportunity to be heard, finding that the Executive was
guilty of conduct constituting Cause based on reasonable evidence, specifying
the particulars thereof in detail. For purposes of this Section 5.04, no act or
failure to act on the Executive's part shall be considered "willful" unless done
or omitted to be done by him or her not in good faith and without reasonable
belief that his or her action or omission was in the best interest of the
Company and the Employer.
5.05 Notice of Termination. Any termination of the Executive's
employment by the Employer or by the Executive (other than termination based on
the Executive's death) following a Change in Control shall be communicated by
the terminating party in a Notice of Termination to the other party hereto.
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6. Compensation and Benefits Upon Termination of Employment.
6.01 Severance Benefits. If the Executive shall be terminated
from employment with the Employer or shall terminate his or her employment with
the Employer as described in Section 5.01, then the Executive shall be entitled
to receive the following:
(a) In lieu of any further payments to the Executive except as
expressly contemplated hereunder, the Employer shall pay as severance pay to the
Executive an amount equal to two times (in the case of a Tier 1 Executive) or
one times (in the case of a Tier 2 Executive) the Executive's annual base
compensation plus target bonus as in effect immediately prior to the Change in
Control or as in effect on the date of the Notice of Termination, whichever is
higher. Such cash payment shall be payable in a single sum, within ten (10)
business days following the Executive's Date of Termination.
(b) Any non-vested stock options granted to the Executive by the
Company shall become 100% vested and may be exercised by the Executive for the
longer of (i) ninety (90) days after the Date of Termination or (ii) the period
specified in the plan or agreement governing such options.
(c) For a period of twenty-four months (in the case of a Tier 1
Executive) or twelve months (in the case of a Tier 2 Executive) following the
Executive's Date of Termination (the "payment period"), the Executive shall be
entitled to the continuation of the same or equivalent life, health,
hospitalization, dental and disability insurance coverage and other employee
insurance or welfare benefits (including equivalent coverage for his or her
spouse and dependent children) and car allowances as he or she was receiving
immediately prior to the Change in Control. In the event that Executive is
ineligible under the terms of such insurance to continue to be so covered, the
Employer shall provide Executive with a lump sum payment equal to the cost of
obtaining such coverage for the payment period. If the Executive, prior to a
Change in Control, was receiving any cash-in-lieu payments designed to enable
the Executive to obtain insurance coverage of his or her choosing, the Employer
shall, in addition to any other benefits to be provided under this Section
6.01(d), provide Executive with a lump-sum payment equal to the amount of such
in-lieu payments that the Executive would have been entitled to receive over the
payment period. The benefits to be provided under this Section 6.01(d) shall be
reduced to the extent of the receipt of substantially equivalent coverage by the
Executive from any successor employer.
(d) All awards under the Company's Executive Retention Plan
adopted in July, 1998 or any similar plan shall accelerate and be payable
fifteen (15) days after the Date of Termination.
(e) If any payments received by a Tier 1 Executive pursuant to
this Plan will be subject to the excise tax imposed by Section 4999 of the Code,
or any successor or similar provision of the Code or any comparable provision of
state law (the "Excise Tax"), the Employer shall pay to the Tier 1 Executive
additional compensation such that the net amount received by the Tier 1
Executive after deduction of any Excise Tax (and taking into account any
federal, state and local income taxes payable by the Tier 1 Executive as a
result of the receipt of such gross-up compensation), shall be equal to the
total payments he or she would have received had no such
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Excise Tax (or any interest or penalties thereon arising primarily from the acts
or omissions of the Employer) been paid or incurred. The Employer shall pay such
additional compensation at the time when the Employer withholds such Excise Tax
from any payments to the Tier 1 Executive. The calculation of the tax gross-up
payment shall be approved by the Company's independent certified public
accounting firm and the Tier 1 Executive's designated financial advisor.
(f) In the event that the amount of payments or other benefits
payable to a Tier 2 Executive under this Plan, together with any payments or
benefits payable under any other plan, program, arrangement or agreement
maintained by the Employer or one of its affiliates, would constitute an 'excess
parachute payment' (within the meaning of Section 280G of the Code), the
payments under this Plan shall be reduced (by the minimum possible amounts)
until no amount payable to the Tier 2 Executive under this Plan constitutes an
'excess parachute payment' (within the meaning of Section 280G of the Code);
provided, however, that no such reduction shall be made if the net after-tax
payment (after taking into account Federal, state, local or other income and
excise taxes) to which the Tier 2 Executive would otherwise be entitled without
such reduction would be greater than the net after-tax payment (after taking
into account Federal, state, local or other income and excise taxes) to the Tier
2 Executive resulting from the receipt of such payments with such reduction. If,
as a result of subsequent events or conditions (including a subsequent payment
or absence of a subsequent payment under this Plan or other plans, programs,
arrangements or agreements maintained by the Employer or one of its affiliates),
it is determined that payments hereunder have been reduced by more than the
minimum amount required under this Section 6.01(f), then an additional payment
shall be promptly made to the Tier 2 Executive in an amount equal to the excess
reduction. All determinations required to be made under this Section 6.01(f),
including whether a payment would result in an 'excess parachute payment' and
the assumptions to be utilized in arriving at such determination, shall be made
and approved by the Company's independent certified public accounting firm and
the Tier 2 Executive's designated financial advisor.
6.02 Accrued Benefits. Upon termination of the employment of
Executive for any reason, any accumulated but unused vacation shall be paid
through the Date of Termination. Upon termination of the employment of Executive
as set forth in Section 5.01, any accrued but unpaid bonus shall be paid through
the Date of Termination. Unless otherwise specifically provided in this Plan,
any payments or benefits payable to the Executive hereunder, including without
limitation any bonus, in respect of any calendar year during which the Executive
is employed by the Employer for less than the entire such year shall be prorated
in accordance with the number of days in such calendar year during which he or
she is so employed.
7. No Mitigation. The Executive shall not be required to mitigate the
amount of any payments provided for by this Plan by seeking employment or
otherwise, nor shall the amount of any cash payments or benefits provided under
this Plan be reduced by any compensation or benefits earned by the Executive
after his or her Date of Termination (except as provided in the last sentence of
Section 6.01(d) above). Notwithstanding the foregoing, if the Executive is
entitled, by operation of any applicable law, to unemployment compensation
benefits or benefits under the Worker Adjustment and Retraining Act of 1988
(known as the "WARN" Act) in connection with the termination of his or her
employment in addition to amounts required to be paid to him or her under this
Plan, then to the extent permitted by applicable statutory law
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governing severance payments or notice of termination of employment, the Company
shall be entitled to offset the amounts payable hereunder by the amounts of any
such statutorily mandated payments.
8. Limitation on Rights.
8.01 No Employment Contract. This Plan shall not be deemed to
create a contract of employment between the Employer and the Executive and shall
create no right in the Executive to continue in the Employer's employment for
any specific period of time, or to create any other rights in the Executive or
obligations on the part of the Company or its subsidiaries, except as set forth
herein. Except as set forth herein, this Plan shall not restrict the right of
the Employer to terminate the employment of Executive, or restrict the right of
the Executive to terminate his or her employment.
8.02 No Other Exclusions. This Plan shall not be construed to
exclude the Executive from participation in any other compensation or benefit
programs in which he or she is specifically eligible to participate either prior
to or following the Effective Date of this Plan, or any such programs that
generally are available to other executive personnel of the Company, nor shall
it affect the kind and amount of other compensation to which the Executive is
entitled.
9. Administrator and Claims Procedure.
9.01 Administrator. Except as set forth herein, the administrator
(the "Administrator") for purposes of this Plan shall be the Company. The
Company shall have the right to designate one or more of the Company's or the
Employer's employees as the Administrator at any time. The Company shall give
the Executive written notice of any change in the Administrator, or in the
address or telephone number of the same.
9.02 Claims Procedure. The Executive, or other person claiming
through the Executive, must file a written claim for benefits with the
Administrator as a prerequisite to the payment of benefits under this Plan. The
Administrator shall make all determinations as to the right of any person to
receive benefits under Sections 9.02 and 9.03. The decision by the Administrator
of a claim for benefits by the Executive, his or her heirs or personal
representative (the "claimant") shall be stated in writing by the Administrator
and delivered or mailed to the claimant within thirty (30) days after receipt of
the claim, unless special circumstances require an extension of time for
processing the claim. If such an extension is required, written notice of the
extension shall be furnished to the claimant prior to the termination of the
initial thirty-day period. In no event shall such extension exceed a period of
thirty (30) days from the end of the initial period. Any notice of denial shall
set forth the specific reasons for the denial, specific reference to pertinent
provisions of this Plan upon which the denial is based, a description of any
additional material or information necessary for the claimant to perfect his or
her claim, with an explanation of why such material or information is necessary,
and a description of claim review procedures, written to the best of the
Administrator's ability in a manner that may be understood without legal or
actuarial counsel.
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9.03 Appeals. A claimant whose claim for benefits has been wholly
or partially denied by the Administrator may request, within sixty (60) days
following the date of such denial, in a writing addressed to the Administrator,
a review of such denial. The claimant shall be entitled to submit written
comments, documents, records and other information he or she shall consider
relevant to a determination of his or her claim, and he or she may include a
request for a hearing in person before the Administrator. Prior to submitting
his or her request, the claimant shall be entitled to review such documents,
records, and other information as the Administrator shall reasonably agree are
pertinent to his or her claim. The claimant may, at all stages of the review, be
represented by counsel, legal or otherwise, of his or her choice, provided that
the fees and expenses of such counsel shall be borne by the claimant, unless the
claimant is successful, in which case, such costs shall be borne by the Company.
The review of the claim shall take into account all information submitted by
claimant relating to the claim, without regard to whether such information was
submitted in the initial benefit determination. All requests for review shall be
promptly resolved. The Administrator's decision with respect to any such review
shall be set forth in writing and shall be mailed to the claimant not later than
sixty (60) days following receipt by the Administrator of the claimant's request
unless special circumstances, such as the need to hold a hearing, require an
extension of time for processing, in which case the Administrator's decision
shall be so mailed not later than one hundred and twenty (120) days after
receipt of the claimant's request. The time and place of any hearing shall be as
mutually agreed by the parties. If the claimant is dissatisfied with the
Administrator's decision on review, the claimant may then either, at his or her
option, invoke the arbitration procedures described in Section 9.04 or pursue a
remedy in a judicial forum. No legal action may be commenced prior to the
completion of the claims and appeals procedures described in the foregoing
provisions of Section 9.02 and 9.03. Notwithstanding the foregoing, no legal
action may be commenced after ninety (90) days after the date upon which the
Administrator's written decision on appeal was sent to claimant.
9.04 Arbitration. A claimant who has followed the procedures in
Sections 9.02 and 9.03, but who has not obtained full relief on his or her claim
for benefits, may, within sixty (60) days following his or her receipt of the
Administrator's written decision on review pursuant to Section 9.03, apply in
writing to the Administrator for expedited and binding arbitration of his or her
claim before an arbitrator in Orange County, California in accordance with the
commercial arbitration rules of the American Arbitration Association, as then in
effect, or pursuant to such other form of alternative dispute resolution as the
parties may agree (collectively, the "arbitration"). Subject to Section 10, the
Company or the Employer shall pay filing fees and other costs required to
initiate the arbitration. The arbitrator's sole authority shall be to interpret
and apply the provisions of this Plan; and except as set forth herein he or she
shall not change, add to, or subtract from, any of its provisions. The
arbitrator shall have the power to compel attendance of witnesses at the
hearing. Any court having jurisdiction may enter a judgment based upon such
arbitration. The arbitrator shall be appointed by mutual agreement of the
Company and the claimant; provided that if the Company and the claimant cannot
agree, the arbitrator shall be appointed pursuant to the applicable commercial
arbitration rules. The arbitrator shall be a professional person with a
reputation in the community for expertise in employee benefit matters and who is
unrelated to the claimant, the Company or its subsidiaries or any employees of
the Company or its subsidiaries. All decisions of the arbitrator shall be final
and binding on the claimant and the Company.
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10. Legal Fees and Expenses. If any dispute arises between the parties
with respect to the interpretation or performance of this Plan, the prevailing
party in any arbitration or proceeding shall be entitled to recover from the
other party its attorneys fees, arbitration or court costs and other expenses
incurred in connection with any such proceeding. Amounts, if any, paid to the
Executive under this Section 10 shall be in addition to all other amounts due to
the Executive pursuant to this Plan.
11. ERISA. This Plan is an unfunded compensation arrangement for a
member of a select group of the Company's management or that of its subsidiaries
and any exemptions under the Employee Retirement Income Security Act of 1974, as
amended, as applicable to such an arrangement shall be applicable to this Plan.
12. Miscellaneous.
12.01 Administration. This Plan may be administered by the Board
or the Committee. When this Plan refers to any action by the Board, the
Committee may take such action with the same effect as if it had been taken by
the Board.
12.02 Amendments. This Plan may be changed, amended or modified
by resolution of the Board or the Committee.
12.03 Assignment and Binding Effect.
(a) Neither this Plan nor the rights or obligations hereunder
shall be assignable by the Executive or the Company except that this Plan shall
be assignable to, binding upon and inure to the benefit of any successor of the
Company, and any successor shall be deemed substituted for the Company upon the
terms and subject to the conditions hereof'.
(b) The Company will require any successor (whether by purchase
of assets, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform all of the obligations of the Company under this Plan (including the
obligation to cause any subsequent successor to also assume the obligations of
this Plan) unless such assumption occurs by operation of law. Nothing in this
Section 12.03 is intended, however, to require that a person or group referred
to in Section 2.03(a) as being the beneficial owner of shares of stock of the
Company must assume the obligations under this Plan as a result of such stock
ownership.
12.04 No Waiver. No waiver of any term, provision or condition of
this Plan, whether by conduct or otherwise, in any one or more instances shall
be deemed or be construed as a further or continuing waiver of any such term,
provision or condition or as a waiver of any other term, provision or condition
of this Plan.
12.05 Rules of Construction.
(a) This Plan has been executed in, and shall be governed by and
construed in accordance with the laws of, the State of California. Captions
contained in this Plan are for convenience of reference only and shall not be
considered or referred to in resolving questions of interpretation with respect
to this Plan.
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(b) If any provision of this Plan is held to be illegal, invalid
or unenforceable under any present or future law, and if the rights or
obligations of any party hereto under this Plan will not be materially and
adversely affected thereby, (i) such provision will be fully severable, (ii)
this Plan will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (iii) the remaining
provisions of this Plan will remain in full force and effect and will not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision,
there will be added automatically as a part of this Plan a legal, valid and
enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
12.06 Notices. Any notice required or permitted by this Plan
shall be in writing, delivered by hand, or sent by registered or certified mail,
return receipt requested, or by recognized courier service (regularly providing
proof of delivery), addressed to the Board and the Company and where applicable,
the Administrator, at the Company's then principal office, or to the Executive
at the address set forth in the records of the Employer, as the case may be, or
to such other address or addresses the Company or the Executive may from time to
time specify in writing. Notices shall be deemed given when received.
12.07 Section 409A. This Plan shall be construed and interpreted
so as to avoid the imputation of any tax liability (penalty or otherwise)
pursuant to Section 409A of the Code. The Company may suspend the payment of any
benefit pursuant to this Plan to any "specified employee" (within the meaning of
Section 409A of the Code) to a date no earlier than the date that is six months
after the employee's separation of service to the extent, if any, the Committee
determines that such suspension is reasonably necessary to satisfy Code Section
409A(a)(2)(B)(i) (in which case the benefits that would have otherwise been paid
during such six month period shall be paid, without interest, as soon as
practical following the end of such six month period).
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Western Digital Corporation Amended and Restated Change of Control Severance
Plan
As amended (Sections 2.03, 3 and 12.07) February 16, 2006
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