EXHIBIT 10.1.3
WESTERN DIGITAL CORPORATION
AMENDED AND RESTATED 2004 PERFORMANCE INCENTIVE PLAN
NON-EMPLOYEE DIRECTOR OPTION GRANT PROGRAM
1. ESTABLISHMENT; PURPOSE. This Non-Employee Director Option Grant Program (this
"PROGRAM") is adopted under the Western Digital Corporation Amended and Restated
2004 Performance Incentive Plan (the "PLAN"). The purpose of this Program is to
promote the success of the Corporation and the interests of its stockholders by
providing members of the Board who are not officers or employees of the
Corporation or one of its Subsidiaries ("NON-EMPLOYEE DIRECTORS") an opportunity
to acquire an ownership interest in the Corporation and more closely aligning
the interests of Non-Employee Directors and stockholders. Except as otherwise
expressly provided herein, the provisions of the Plan shall govern all awards
made pursuant to this Program. Capitalized terms are defined in the Plan if not
defined herein.
2. PARTICIPATION. Awards under this Program shall be made only to Non-Employee
Directors, shall be evidenced by award agreements substantially in the form of
Exhibit 1 hereto and shall be further subject to such other terms and conditions
set forth therein.
3. OPTION GRANTS.
3.1 INITIAL AWARD FOR NEW DIRECTORS. Upon first being appointed or elected
to the Board and subject to approval by the Board or the Administrator, a
Non-Employee Director who has not previously served on the Board shall be
granted a nonqualified stock option to purchase a number of shares of
Common Stock that produces an approximate value for the option grant equal
to $300,000 (using a Black-Scholes valuation as of the time of grant as
determined in consultation with Company management); provided, however,
that the Board or the Administrator, in its discretion, may increase or
decrease the number of shares of Common Stock subject to the stock option.
The date of grant of each such stock option will be the date on which such
stock option is approved by the Board or the Administrator, which date
shall coincide to the extent practicable with the date such Non-Employee
Director is first appointed or elected to the Board.
3.2 SUBSEQUENT AWARDS. Immediately following the Corporation's regular
annual meeting of stockholders in each year during the term of the Plan
commencing in 2005 and subject to approval by the Board or the
Administrator, each Non-Employee Director then in office shall be granted a
nonqualified stock option to purchase a number of shares of Common Stock
that produces an approximate value for the option grant equal to $100,000
(using a Black-Scholes valuation as of the time of grant as determined in
consultation with Company Management); provided, however, that the Board or
the Administrator, in its discretion, may increase or decrease the number
of shares of Common Stock subject to the stock option. The date of grant of
each such stock option will be the date on which such stock option is
approved by the Board or the Administrator, which date shall coincide to
the extent practicable with the date of the annual meeting of stockholders.
An individual who was previously a member of the Board, who then ceased to
be a member of the Board for any reason, and who then again
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becomes a Non-Employee Director shall thereupon again become eligible to be
granted stock options under this Section 3.2.
3.3 OPTION PRICE. The purchase price per share of the Common Stock covered
by each option granted pursuant to this Section 3 shall be 100 percent of
the Fair Market Value of a share of Common Stock on the date of grant of
the option (the "AWARD DATE"). The exercise price of any option granted
under this Section 3 shall be paid in full at the time of each purchase in
cash or by check, in shares of Common Stock valued at their fair market
value on the date of exercise of the option, or partly in such shares and
partly in cash, or in any other manner authorized by the Administrator
pursuant to Section 5.5 of the Plan; provided that any shares used in
payment shall have been owned by the Non-Employee Director for at least six
months prior to the date of exercise.
3.4 TRANSFER RESTRICTIONS. Options granted pursuant to this Section 3 shall
be subject to the transfer restrictions set forth in Section 5.7 of the
Plan. For purposes of clarity, the Administrator has not approved any
transfer exceptions with respect to the options in accordance with Section
5.7.2 of the Plan.
4. OPTION PERIOD AND EXERCISABILITY. Each option granted under Section 3 above
and all rights or obligations under this Program with respect to a particular
option shall expire ten years after the date of grant of such option and shall
be subject to earlier termination as provided below. Subject to Sections 5, 6
and 7 hereof, each option granted under Section 3 shall become exercisable as to
25% of the total number of shares subject thereto on the first anniversary of
the date of grant of the option and as to an additional 6.25% of the total
number of shares subject thereto at the end of each of the next 12 three-month
periods thereafter.
5. TERMINATION OF DIRECTORSHIP. Subject to the maximum ten-year term of the
option and subject to earlier termination pursuant to Section 7 below, if a
Non-Employee Director ceases to be a member of the Board for any reason, the
following rules shall apply with respect to any option granted to the
Non-Employee Director pursuant to Section 3 above (the last day that the
Director is a member of the Board is, except as otherwise provided below,
referred to as the Director's "SEVERANCE DATE"):
- other than as expressly provided below in this Section 5, (a) the
Non-Employee Director will have until the date that is one (1) year
after his or her Severance Date to exercise such option (or portion
thereof) to the extent that it was vested on the Severance Date, (b)
such option, to the extent not vested on the Severance Date, shall
terminate on the Severance Date, and (c) such option, to the extent
exercisable for the one-year period following the Severance Date and
not exercised during such period, shall terminate at the close of
business on the last day of the one-year period;
- if the Non-Employee Director ceases to be a member of the Board due to
his or her Retirement (as defined below) and the Non-Employee Director
has served as a member of the Board of Directors for at least twelve
(12) continuous months following the grant date of such option, (a)
the Non-Employee Director will have until the date that is three (3)
years after his or her Severance Date to exercise
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such option, (b) such option, to the extent not otherwise vested on
the Severance Date, shall automatically become fully vested as of the
Severance Date, and (c) such option, to the extent exercisable for the
three-year period following the Severance Date and not exercised
during such period, shall terminate at the close of business on the
last day of the three-year period;
provided, however, that if the Board or the Administrator determines that any
such Non-Employee Director who has Retired renders services as an employee,
director, consultant, contractor or otherwise to a competitor of the Corporation
or one of its Subsidiaries at any time during such three-year period, then any
such option shall immediately terminate to the extent not exercised as of the
date the Board or the Administrator makes such determination. In addition, in
such event the Corporation shall have the right to recover any profits realized
by such Retired Non-Employee Director as a result of any exercise of such option
during the six-month period prior to the date such Non-Employee Director
commenced providing such services to a competitor.
For purposes of this Section 5, the term "RETIREMENT" (which term shall
include "Retired") shall mean the cessation of a director's services as a member
of the Board due to his or her voluntary resignation at any time after such
director has served as a member of the Board for at least forty-eight (48)
months.
Notwithstanding any other provision of this Section 5, if a Non-Employee
Director ceases to be a member of the Board (regardless of the reason) but,
immediately thereafter, is employed by the Corporation or one of its
Subsidiaries, such director's Severance Date shall not be the date the director
ceases to be a member of the Board but instead shall be the last day that the
director is either or both (1) a member of the Board and/or (2) employed by the
Corporation or a Subsidiary.
6. ADJUSTMENTS. Options granted under this Program shall be subject to
adjustment as provided in Section 7.1 of the Plan, but only to the extent that
such adjustment is consistent with adjustments to options held by persons other
than executive officers or directors of the Corporation (to the extent that
persons other than executive officers or directors of the Corporation then hold
options). The grant levels reflected in Section 3 above shall be automatically
adjusted upon the record date for any stock split, reverse stock split, or stock
dividend to give effect to such change in capitalization unless otherwise
provided by the Board or the Administrator in the circumstances, and may be
adjusted in the discretion of the Board or the Administrator in any other
circumstances contemplated by Section 7.1.
7. ACCELERATION AND POSSIBLE EARLY TERMINATION. If a Change in Control Event (as
such term is defined in the Plan) occurs and in connection with such Change in
Control Event a Non-Employee Director ceases to be a member of the Board, each
option granted under Section 3 above to such Non-Employee Director, to the
extent such option is then outstanding, shall become immediately exercisable and
vested in full. For purposes of this Section 7, but without limitation, a
director will be deemed to have ceased to be a member of the Board in connection
with a Change in Control Event if such director (a) is removed by or resigns
upon the request of any Person exercising practical voting control over the
Corporation following such Change in Control Event or a person acting upon
authority or at the instruction of such Person, or (b) is
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willing or able to continue as a member of the Board but is not re-elected to or
retained as a member of the Board by the Corporation's stockholders at the
stockholder vote or consent action for the election of directors that precedes
and is taken in connection with, or next follows, such Change in Control Event.
Each option granted under this Program shall be subject to adjustment and
termination pursuant to Section 7 of the Plan.
8. MAXIMUM NUMBER OF SHARES; AMENDMENT; ADMINISTRATION. If option grants
otherwise required pursuant to this Program would otherwise exceed any
applicable share limit under Section 4.2 of the Plan, such grants shall be made
pro-rata to directors entitled to such grants. The Board or the Administrator
may from time to time amend this Program without stockholder approval; provided
that no such amendment shall materially and adversely affect the rights of a
Non-Employee Director as to an option granted under this Program before the
adoption of such amendment. This Program does not limit the authority of the
Board or the Administrator to make other, discretionary award grants to
Non-Employee Directors pursuant to the Plan. The Plan Administrator's power and
authority to construe and interpret the Plan and awards thereunder pursuant to
Section 3.1 of the Plan shall extend to this Program and awards granted
hereunder. As provided in Section 3.2 of the Plan, any action taken by, or
inaction of, the Administrator relating or pursuant to this Program and within
its authority or under applicable law shall be within the absolute discretion of
that entity or body and shall be conclusive and binding upon all persons.
###
As amended (Sections 3.1 and 3.2) and restated November 17, 2005
As amended (Section 5) November 9, 2006
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EXHIBIT 1
(WESTERN DIGITAL(R) LOGO)
Western Digital Corporation 20511 Lake Forest Drive
Lake Forest, California 92630 Telephone 949-672-7000
NOTICE OF GRANT OF STOCK OPTION
AND OPTION AGREEMENT - NON-EMPLOYEE DIRECTORS
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________________________________________________________________________________
Western Digital Corporation (the "Corporation") has granted to you (the
"Participant"), effective on the Date of Grant set forth below, a nonqualified
option to purchase shares of the Corporation's Common Stock (the "Option") as
follows:
Grant Number <<nbr>>
Date of Grant <<optdt>>
Option Price per Share(1) $<<optprc>>
Number of Shares Granted(1) <<shgtd>>
Expiration Date(2)
1. OPTION SUBJECT TO AMENDED AND RESTATED 2004 PERFORMANCE INCENTIVE PLAN. The
Option was granted pursuant to the Non-Employee Director Option Grant Program
(the "Program"), adopted under the Western Digital Corporation Amended and
Restated 2004 Performance Incentive Plan (the "Plan"). The Option is subject to
the terms and conditions of this Notice, the Program and the Plan. By accepting
the Option, you are agreeing to the terms of the Option as set forth in these
documents. A copy of each of these documents has been provided to you. If you
need another copy of any of these documents, or if you would like to confirm
that you have the most recent version, you may obtain another copy in the
Company Library on the E*TRADE Stock Plans web site. The documents are also
available on the Western Digital Intranet site under Legal.
You should read the Program, the Plan, the Prospectus for the Plan and this
Notice. The Program and the Plan are each incorporated into (made a part of)
this Notice by this reference. To the extent any information in this Notice, the
Prospectus for the Plan, or other information provided by the Corporation
conflicts with the Program and/or the Plan, the Program or the Plan, as
applicable, shall control. Capitalized terms not defined herein have the
meanings set forth in the Plan.
You do not have to accept the Option. If you do not agree to the terms of the
Option, you should promptly return this Notice to the Western Digital
Corporation Stock Plans Administrator.
- ----------
(1) The number of shares subject to the Option and the per-share exercise price
of the Option are subject to adjustment under Section 6 of the Program and
Section 7.1 of the Plan (for example, and without limitation, in connection
with stock splits).
(2) The Option is subject to early termination under Sections 5 and 7 of the
Program.
Unless otherwise expressly provided in other sections of this Notice, provisions
of the Plan that confer discretionary authority on the Board or the
Administrator do not and shall not be deemed to create any rights in the
Participant unless such rights are expressly set forth herein or are otherwise
in the sole discretion of the Board or the Administrator so conferred by
appropriate action of the Board or the Administrator under the Plan after the
grant date of the Option.
2. OPTION AGREEMENT. This Notice constitutes the Option Agreement with respect
to the Option pursuant to Section 5.3 of the Plan.
3. TYPE OF STOCK OPTION. The Option is not intended to qualify as an incentive
stock option under Section 422 of the Internal Revenue Code of 1986, as amended.
4. VESTING. Subject to earlier termination in accordance with Section 5, the
Option shall vest and become exercisable in percentage installments of the
aggregate number of shares subject to the Option as set forth in this Notice and
Section 4 of the Program. The Option may be exercised only to the extent it is
vested and exercisable. To the extent that the Option is vested and exercisable,
the Participant has the right to exercise the Option (to the extent not
previously exercised), and such right shall continue, until the expiration or
earlier termination of the Option as provided in Section 5. Fractional share
interests shall be disregarded, but may be cumulated.
The vesting schedule requires continued service through each applicable vesting
date as a condition to the vesting of the applicable installment of the Option
and the rights and benefits under this Option Agreement. Service for only a
portion of the vesting period with respect to a vesting installment, even if
services are provided for a substantial portion of that period, will not entitle
the Participant to any proportionate vesting or avoid or mitigate a termination
of rights and benefits upon or following a termination of services as provided
under Section 5 of the Program or under the Plan.
5. EXPIRATION OF OPTION. The Option shall expire and the Participant shall have
no further rights with respect thereto upon the earliest to occur of (a) the
termination of the Option in connection with a termination of the director's
services as provided in Section 5 of the Program, (b) the termination of the
Option as provided in Section 7.4 of the Plan, or (c) the Expiration Date set
forth in this Notice. The Option may not be exercised at any time after a
termination or expiration of the Option.
6. EXERCISE OF OPTION. The Option shall be exercisable by the delivery to the
Secretary of the Corporation (or such other person as the Administrator may
require pursuant to such administrative exercise procedures as the Administrator
may implement from time to time) of:
- a written notice stating the number of shares of Common Stock to be
purchased pursuant to the Option or by the completion of such other
administrative exercise procedures as the Administrator may require
from time to time,
- payment in full for the purchase price (the per-share exercise price
of the Option multiplied by the number of shares to be purchased) in
cash, check or by electronic funds transfer to the Corporation, or
(subject to compliance with all applicable laws, rules, regulations
and listing requirements and further subject to such rules as the
Administrator may adopt as to any non-cash payment) in shares of
Common Stock already owned by the Participant, valued at their fair
market value on the exercise date, provided, however, that any shares
initially acquired upon exercise of a stock option or otherwise from
the Corporation must have been owned by the Participant for at least
six (6) months before the date of such exercise; and
- any written statements or agreements required by the Administrator
pursuant to Section 8.1 of the Plan.
The Administrator also may, but is not required to, authorize a non-cash payment
alternative by notice and third party payment in such manner as may be
authorized by the Administrator.
7. NONTRANSFERABILITY. The Option and any other rights of the Participant under
this Option Agreement, the Program or the Plan are nontransferable and
exercisable only by the Participant, except as set forth in Section 5.7 of the
Plan. For purposes of clarity, the Administrator has not authorized any transfer
exceptions as contemplated by Section 5.7.2 of the Plan.
8. NO SERVICE COMMITMENT. Nothing contained in this Option Agreement, the
Program or the Plan constitutes an employment or service commitment by the
Corporation or any of its Subsidiaries, confers upon the Participant any right
to remain in service to the Corporation or any Subsidiary, interferes in any way
with the right of the Corporation or any Subsidiary at any time to terminate
such service, or affects the right of the Corporation or any Subsidiary to
increase or decrease the Participant's other compensation.
9. RIGHTS AS A STOCKHOLDER. Neither the Participant nor any beneficiary or other
person claiming under or through the Participant shall have any right, title,
interest or privilege in or to any shares of Common Stock subject to the Option
except as to such shares, if any, as shall have been actually issued to such
person and recorded in such person's name following the exercise of the Option
or any portion thereof.
10. NOTICES. Any notice to be given under the terms of this Option Agreement
shall be in writing and addressed to the Corporation at its principal office to
the attention of the Secretary, and to the Participant at the address last
reflected on the Corporation's records, or at such other address as either party
may hereafter designate in writing to the other. Any such notice shall be
delivered in person or shall be enclosed in a properly sealed envelope addressed
as aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government. Any such notice shall be given only
when received, but if the Participant is no longer a member of the Board of
Directors, shall be deemed to have been duly given five business days after the
date mailed in accordance with the foregoing provisions of this Section 10.
11. ARBITRATION. Any controversy arising out of or relating to this Option
Agreement, the Program and/or the Plan, their enforcement or interpretation, or
because of an alleged breach, default, or misrepresentation in connection with
any of their provisions, or any other controversy or claim arising out of or
related to the Option or the Participant's employment, including, but not
limited to, any state or federal statutory claims, shall be submitted to
arbitration in Orange County, California, before a sole arbitrator selected from
Judicial Arbitration and Mediation Services, Inc., Orange, 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 Code of Civil
Procedure Sections 1280 et seq. as The exclusive forum for the resolution of
such dispute; provided, however, that provisional injunctive relief may, but
need not, be sought by either party to this Option Agreement 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, including any and all remedies provided by applicable state or
federal statutes. At the conclusion of the arbitration, the arbitrator shall
issue a written decision that sets forth the essential findings and conclusions
upon which the arbitrator's award or decision is based. 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 acknowledge and 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 any of the matters referenced in the first
sentence above. The parties agree that Corporation shall be responsible for
payment of the forum costs of any arbitration hereunder, including the
arbitrator's fee. The parties further agree that in any proceeding with respect
to such matters, each party shall bear its own attorney's fees and costs (other
than forum costs associated with the arbitration) incurred by it or him or her
in connection with the resolution of the dispute. By accepting the Option, the
Participant consents to all of the terms and conditions of this Option Agreement
(including, without limitation, this Section 11).
12. GOVERNING LAW. This Option Agreement shall be interpreted and construed in
accordance with the laws of the State of Delaware (without regard to conflict of
law principles thereunder) and applicable federal law.
13. SEVERABILITY. If the arbitrator selected in accordance with Section 11 or a
court of competent jurisdiction determines that any portion of this Option
Agreement, the Program or the Plan is in violation of any statute or public
policy, then only the portions of this Option Agreement, the Program or the
Plan, as applicable, which are found to violate such statute or public policy
shall be stricken, and all portions of this Option Agreement, the Program and
the Plan which are not found to violate any statute or public policy shall
continue in full force and effect. Furthermore, it is the parties' intent that
any order striking any portion of this Option Agreement, the Program and/or the
Plan should modify the stricken terms as narrowly as possible to give as much
effect as possible to the intentions of the parties hereunder.
14. ENTIRE AGREEMENT. This Option Agreement, the Program and the Plan together
constitute the entire agreement and supersede all prior understandings and
agreements, written or oral, of the parties hereto with respect to the subject
matter hereof. The Plan, the Program and this Option Agreement may be amended
pursuant to Section 8.6 of the Plan. Such amendment must be in writing and
signed by the Corporation. The Corporation may, however, unilaterally waive any
provision hereof in writing to the extent such waiver does not adversely affect
the interests of the Participant hereunder, but no such waiver shall operate as
or be construed to be a subsequent waiver of the same provision or a waiver of
any other provision hereof.
15. SECTION HEADINGS. The section headings of this Option Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.