EXHIBIT 10.19
SEPARATION and RELEASE
AGREEMENT
This Separation and Release
Agreement (this “Agreement”) is made by and between
William D. Watkins (“Executive”) and Seagate Technology
(US) Holdings, Inc. and Seagate Technology, a limited company
domiciled in the Cayman Islands (collectively,
“Seagate”). Executive and Seagate are called the
“Parties” in this Agreement.
Recitals
A. Executive
has served as Chief Executive Officer of Seagate Technology and an
employee of Seagate Technology (US) Holdings, Inc. Effective
January 12, 2009, Seagate Technology terminated
Executive’s role as its Chief Executive Officer and informed
Executive that his employment by Seagate would be involuntarily
terminated.
B. Executive’s
employment with Seagate terminated on February 4, 2009, and
the Parties have agreed to resolve all outstanding issues
pertaining to Executive’s service with Seagate in accordance
with the terms and conditions of this Agreement, the Seagate
Technology Executive Officer Severance and Change in Control (CIC)
Plan (the “Plan”), and the Restrictive Covenants
Agreement (the “Covenants Agreement”) attached hereto
as Exhibit “A” (collectively, “Applicable
Agreements”). This Agreement shall be deemed controlling to
the extent its terms vary from those of the Plan, but as to matters
not addressed by this Agreement, the Plan governs the benefits
payable to Executive under this Agreement.
C. Executive
has had 21 days in which to consider and execute this Agreement,
and is advised to consult an attorney about it. Executive
acknowledges that once he executes this Agreement, he will have an
additional 7 days in which to revoke his execution.
Executive’s written notice of revocation shall be delivered
to Kenneth M. Massaroni either in person or mailed by certified
mail, return receipt requested, and addressed to:
Kenneth M. Massaroni
Senior Vice President and General
Counsel
Seagate Technology
920 Disc Drive
Scotts Valley, California 95066
If Executive does not timely revoke
his execution of this Agreement, then the eighth day following the
later to occur of: (i) his date of his execution of this
Agreement and all Exhibits providing for Executive’s
signature; or (ii) approval of the Agreement by the
Compensation Committee of the Seagate Technology Board of Directors
(the “Compensation Committee”) will be the
“Effective Date” of this Agreement; this Agreement will
not become effective unless approved by the Compensation
Committee.
D. By
executing this Agreement, Executive represents that he understands
the terms and effect of this Agreement and enters into it knowingly
and voluntarily.
Based on these recitals, the Parties
agree as follows:
Terms
1. Upon his
execution of this Agreement, Executive will tender a letter to
Kenneth M. Massaroni, Seagate’s General Counsel, confirming
his termination of employment with Seagate effective
February 4, 2009 (the “Termination Date”); this
letter shall be in the form attached hereto as Exhibit
“B.” Executive will also tender a letter to Stephen J.
Luczo, Chairman of the Board of Directors of Seagate Technology,
confirming his resignation from Seagate Technology’s Board of
Directors (“Board”) effective on the Termination Date;
this resignation letter shall be in the form attached hereto as
Exhibit “C”. Executive will also, as requested, tender
his resignation from all officer or director or other positions
that he may hold with Seagate Technology or any of its subsidiaries
and affiliates or otherwise at the request or for the benefit of
Seagate Technology, with the effective dates of these resignations
to be as designated by Seagate; Executive agrees that he will
cooperate with Seagate in facilitating preparation of and signing
any documentation that may reasonably be required in connection
with formalizing such resignations. No later than the business day
following the Resignation Date, Seagate will deliver to Executive
his payroll check for employment through the Termination Date,
subject to applicable tax withholdings and deductions, which
payment Executive is entitled to receive for his service to Seagate
through the Resignation Date and without entering into this
Agreement.
2. Effective
February 9, 2009 Executive will begin a period as a consultant
to Seagate, which period (the “Consultant Period”) will
last from February 9, 2009 to December 2, 2009, but the
Consultant Period may be terminated at any time after May 11,
2009, and for any reason or no reason after this date by Executive
giving at least 5 business days’ notice to Seagate. During
the Consultant Period, Executive will perform for Seagate only
those services or work on special projects that may be requested of
him by the Board, its designee, or Seagate Technology’s Chief
Executive Officer (“CEO”) and performed in accordance
with the mutual agreement and convenience of Seagate and
Executive.
Seagate will pay Executive $500 per
hour for his consulting services during the Consultant Period,
subject to any applicable withholdings. Executive will invoice
Seagate and will be paid for his consulting services on a monthly
basis. Executive acknowledges that he will not be an employee of
Seagate during the Consultant Period, and agrees that except as may
otherwise be provided in this Agreement he shall not be entitled to
any other benefits, compensation, or programs available to
employees of Seagate or its related companies during the Consultant
Period. Seagate will reimburse Executive for all reasonable,
approved out-of-pocket expenses incurred in providing consulting
services, including reasonable travel expenses directly incurred in
connection with providing these services. To assist Executive in
performance of his consulting services during the Consultant
Period, Seagate will, until June 30, 2009
provide Executive with administrative support
services on a reasonable, as-requested basis, either through his
most recent Seagate administrative assistant or such other
administrative assistant as Seagate may designate for these
duties.
3. For a
period of five years following the Termination Date, Executive will
comply, at Seagate’s sole cost, with any reasonable request
by Seagate or its attorneys to assist and/or cooperate in
connection with any pending or future claim, negotiation,
litigation, investigation, administrative proceeding or other
dispute involving Seagate or any of its affiliates. Seagate will
reimburse Executive for all reasonable, approved out-of-pocket
expenses incurred in providing such assistance, including
reasonable travel and lodging expenses directly incurred in
connection with such assistance and/or cooperation. Executive
acknowledges and agrees that he will not be paid for any time spent
in consultation on legal matters as required pursuant to this
paragraph, including but not limited to any time required of him in
connection with litigation wherein he is named as co-defendant of
Seagate or any of its subsidiaries or affiliates.
4. Executive
acknowledges that he has had access to highly sensitive Seagate
confidential, proprietary and/or trade secret information, and
agrees he shall not, either before the Termination Date or
thereafter, disclose to any person or entity any Seagate
confidential, proprietary and/or trade secret information, whether
directly or indirectly, or use such information in any way except
in the course of providing services for the Company, as authorized
in writing by the Company, or as required to be disclosed by
applicable law. Executive acknowledges and agrees that his duties
and obligations under the Seagate At-Will Employment, Confidential
Information, and Invention Assignment Agreement (other than the
paragraph thereof entitled “Arbitration,” which is
hereby deleted from such agreement and shall be of no further force
or effect) shall remain in full force and effect and that he will
adhere to them. Executive acknowledges that he may not disclose to
any person or entity any Seagate confidential, proprietary and/or
trade secret information, whether directly or indirectly, after
termination of his employment except in the course of providing
services for the Company, as authorized in writing by the Company,
or as required to be disclosed by applicable law. Executive further
acknowledges that such information includes, but is not limited to,
formulae, customer lists, patterns, devices, inventions, processes,
compilations of information, files, records, documents, drawings,
specifications, and equipment.
5. Executive
acknowledges and affirms that he has returned to Seagate, or will
return to Seagate on the Effective Date: (i) all documents,
records, procedures, books, notebooks and other documentation in
any form whatsoever, including but not limited to written, audio,
video or electronic, containing any information pertaining to
Seagate, including any and all copies of such documentation then in
Executive’s possession or control, regardless of whether such
documentation was prepared or compiled by Executive, Seagate, other
employees of Seagate or any of their respective representatives,
agents or independent contractors; and (ii) all equipment or
tangible personal property entrusted to Executive by
Seagate.
Executive further acknowledges that
he will use his reasonable best efforts to fully disclose to the
CEO any and all pending matters relating to Seagate and
regarding
which only he may possess full or specialized
knowledge or familiarity. Executive acknowledges and agrees that he
will, as part of the consultancy described in Paragraph 2, meet as
soon as possible with the CEO and such other Seagate personnel as
the CEO may designate in order to discuss and help ensure full
disclosure of details pertaining to such matters.
6. Seagate
will provide the following compensation and benefits to Executive
(or, in the event of Executive’s death, to Executive’s
surviving spouse or, if she is not surviving, Executive’s
estate) as consideration for his execution of this Agreement and
compliance with the terms and conditions hereof and of the
Covenants Agreement:
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a.
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Seagate shall
provide Executive, within 10 business days after the later to occur
of the Termination Date or Effective Date, a lump-sum payment of
$2,500,004, subject to applicable tax withholdings and deductions.
Seagate will not contest any claim Executive makes for public
unemployment compensation.
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b.
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Seagate shall
provide Executive, within 10 business days after December 2,
2009, a lump-sum payment of $2,500,004, subject to applicable tax
withholdings and deductions. Seagate’s payment of this amount
shall be conditioned and contingent upon Executive’s full
compliance, between the Termination Date and December 2, 2009,
with all terms and conditions of both this Agreement and the
Covenants Agreement. If a Change in Control (as defined in the
Plan) shall be effected during the six month period following the
Termination Date, then Seagate shall provide Executive (or his
spouse, in the event of Executive’s death) within 10 business
days after December 2, 2009, an additional lump-sum payment of
$2,500,004, subject to applicable tax withholdings and deductions,
which amount represents the additional amount of cash severance
benefits Executive shall be entitled to receive under the Plan upon
a Termination Event (as defined in the Plan) occurring during a
Change in Control Period (as defined in the Plan). Seagate’s
payment of this additional amount following a Change in Control
shall be conditioned upon Executive’s full compliance,
between the Termination Date and December 2, 2009, with all
terms and conditions of both this Agreement and the Covenants
Agreement. Further, this payment, as with other payments and
benefits described in this Paragraph 6, shall be subject to
adjustment for tax purposes as described in Section 8 of the
Plan.
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c.
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Seagate has granted Executive
various equity-based awards (the “Equity Awards”) under
the Seagate Technology 2004 Stock Compensation Plan (the
“2004 Plan”) and the Seagate Technology 2001 Share
Option Plan (“2001 Plan”). All of the Equity Awards
granted to Executive that remained unvested as of the Termination
Date shall be cancelled effective that same date, subject to the
last sentence of this clause c. Executive’s period in which
to exercise any vested Equity Award granted in the form of an
option will (subject to the last sentence of this clause c.) be
limited to three months from the Termination
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Date and shall be subject to all
terms and conditions set forth in the 2004 Plan or 2001 Plan, as
applicable, and the specific option agreement evidencing such
Equity Award. Executive’s Equity Awards granted in a form
other than options shall be subject to all terms and conditions set
forth in the 2004 Plan and the applicable award agreements
evidencing such Equity Awards. Notwithstanding any of the foregoing
in this clause c., all of such Equity Awards remaining unvested as
of the Termination Date shall remain outstanding solely for the
limited purpose of determining whether or not a Change in Control
(as defined in the Plan) occurs during the six month period
following the Termination Date and in the event that a Change in
Control does occur within that period, then such Equity Awards
shall be considered fully vested and exercisable in accordance with
the Plan.
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d.
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During the
twelve month period following the Termination Date, Seagate will
arrange for Executive to receive outplacement assistance from Right
Management Consultants.
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e.
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Executive’s Seagate-provided health,
vision, and dental insurance benefits coverage will cease on
February 28, 2009; however, Executive will be given the
opportunity to elect to continue, at his own expense, his Seagate
health, vision and dental insurance coverage pursuant to COBRA.
Further, Seagate will, within 10 business days after the later to
occur of the Termination Date or Effective Date, provide Executive
with a lump-sum payment of $29,944, subject to applicable
withholdings, which amount is intended to help defray
Executive’s anticipated costs of obtaining continued health,
vision, and dental insurance coverage pursuant to COBRA. If a
Change in Control (as defined in the Plan) occurs during the six
month period following the Termination Date, then Seagate shall
provide Executive (or his spouse, in the event of Executive’s
death) within 10 business days of December 2, 2009, an
additional lump-sum payment of $9,981, subject to applicable tax
withholdings and deductions, representing an additional amount also
intended to help defray Executive’s anticipated costs of
obtaining continued health, vision and dental insurance pursuant to
COBRA. Seagate’s payment of this additional amount following
a Change in Control shall be conditioned upon Executive’s
full compliance, between the Termination Date and December 2,
2009, with all terms and conditions of both this Agreement and the
Covenants Agreement. Further, this payment, as with other payments
and benefits described in this Paragraph 6, shall be subject to
adjustment for tax purposes as described in Section 8 of the
Plan.
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f.
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Executive will,
until June 30, 2009, be eligible to undergo a physical
examination (the “Executive Physical”) at the Mayo
Clinic in Rochester, MN, pursuant to the terms of Seagate’s
Executive Compensation and Benefits Policy, under which Seagate
will bear the entire cost of the Executive Physical for Executive.
Seagate will not cover the cost of any medical treatment undergone
by Executive based upon a diagnosis made during the Executive
Physical or subsequent medical testing. Seagate will reimburse
Executive for reasonable travel and lodging expenses for Executive
incurred in connection with the Executive Physical.
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g.
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Seagate will,
until June 30, 2009, assist Executive with timely and
accurately filing any forms required under Section 16 of the
Securities Exchange Act of 1934, provided however, that Executive
shall disclose to Seagate any information required in connection
with such filing contemporaneously with the transaction upon which
the filing is based.
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7. Executive,
on behalf of himself, his heirs, executors, administrators,
successors, and assigns, fully and forever releases and discharges
Seagate, its current, former and future parents, subsidiaries,
affiliated companies, related entities, employee benefit plans, and
their fiduciaries, predecessors, successors, officers, directors,
members, managers, shareholders, agents, employees and assigns
(each a “Released Party”) from any and all claims,
causes of action, and liabilities up through the date of his
execution of this Agreement. The claims subject to this release
include, but are not limited to, those relating to his employment
with Seagate and/or any predecessor to Seagate and the termination
of such employment. All such claims (including related
attorneys’ fees and costs) are barred without regard to
whether those claims are based on any alleged breach of a duty
arising in statute, contract, or
