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Exhibit 10.1.1
WESTERN DIGITAL CORPORATION
AMENDED AND RESTATED
EMPLOYEE STOCK OPTION PLAN
1. Purpose. The purpose of this Western Digital Corporation
Employee Stock Option Plan (the "Plan") is to further the growth and
development of Western Digital Corporation (the "Company") and its subsidiaries
by providing, through ownership of stock of the Company, an incentive to
officers and other key employees who are in a position to contribute materially
to the prosperity of the Company, to increase such persons' interest in the
Company's welfare, to encourage them to continue their services to the Company
or its subsidiaries, and to attract individuals of outstanding ability to enter
the employment of the Company or its subsidiaries.
2. Incentive and Non-Qualified Stock Options. Two types of
options (referred to herein as "options" without distinction between such two
types) may be granted under the Plan: options intended to qualify as incentive
stock options ("Incentive Stock Options") under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"); and other options not
specifically authorized or qualified for favorable income tax treatment by the
Code ("Non-Qualified Stock Options").
3. Administration.
3.1 Administration by Board. Subject to Section 3.2, the Plan
shall be administered by the Board of Directors of the Company (the "Board").
Subject to the provisions of the Plan, the Board shall have authority to
construe and interpret the Plan, to promulgate, amend, and rescind rules and
regulations relating to its administration, from time to time to select from
among the eligible employees (as determined pursuant to Section 4) of the
Company and its subsidiaries those employees to whom options will be granted,
to determine the timing and manner of the grant of the options, to determine
the exercise price, the number of shares covered by and all of the terms of the
options, to determine the duration and purpose of leaves of absence which may
be granted to optionees without constituting termination of their employment
for purposes of the Plan, and to make all of the determinations necessary or
advisable for administration of the Plan. The interpretation and construction
by the Board of any provision of the Plan, or of any grant or agreement issued
and executed under the Plan, shall be final and binding upon all parties. No
member of the Board shall be liable for any action or determination undertaken
or made in good faith with respect to the Plan or any agreement executed
pursuant to the Plan.
3.2 Administration by Committee. The Board may, in its sole
discretion, delegate any or all of its administrative duties to a committee
appointed by the Board (the "Committee") consisting of three Board members,
each of whom, during such time as one or more persons eligible to receive
options under the Plan is subject to Section 16 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") shall be disinterested within the
meaning of Rule 16b-3 under the Exchange Act (or any successor rule, "Rule
16b-3"), provided, however, that the Board may from time to time increase the
size of the Committee, and add additional members to, or remove members from,
the Committee. The Committee shall act pursuant to a majority vote, or the
written consent of a majority of its members, and minutes shall be kept of all
of its meetings and copies thereof shall be provided to the Board. Subject to
the provisions of the Plan and the directions of the Board, the Committee may
establish and follow such rules and regulations for the conduct of its business
as it may deem advisable. No member of the Committee shall be liable for any
action or determination undertaken or made in good faith with respect to the
Plan or any agreement executed pursuant to the Plan. The Board or the
Committee, as the case may be, is sometimes referred to herein as the
"Administrator."
4. Eligibility. Any employee (including any officer who is an
employee) of the Company or any of its subsidiaries who does not own stock
possessing more than 10% of the total combined voting power of all outstanding
shares of all classes of stock of the Company or any of its parent or
subsidiary corporations shall be eligible to receive a grant or grants of such
options under the Plan; provided, however, that notwithstanding the foregoing,
any employee of the Company who owns stock possessing more than 10% of the
total combined voting power of all outstanding shares of all classes of stock
of the Company or any of its parent or subsidiary
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corporations shall be eligible to receive a grant or grants of such options
under the Plan if at the time such options are granted the option exercise
price therefor is at least 110% of the Fair Market Value (as defined below) of
the shares subject to the option and such option by its terms is not
exercisable after the expiration of five years from the date such option is
granted. An employee may receive more than one option under the Plan.
Notwithstanding the foregoing, no person who is a director of the Company shall
be eligible to receive an option under the Plan unless the granting of such
option shall be effected in such a manner as not to impair the Plan's
qualification under Rule 16b-3.
5. Shares Subject to Options. The stock available for issuance
upon exercise of stock options granted under the Plan shall be shares of the
Company's authorized but unissued, or reacquired, Common Stock. The aggregate
number of shares that may be issued after September 5, 1985, pursuant to
exercise of options granted under the Plan shall not exceed 15,450,000 shares
of Common Stock (subject to adjustment as provided herein). In the event that
any outstanding option under the Plan for any reason expires or is terminated,
the shares of Common Stock allocable to the unexercised portion of the option
shall not count against the share limit set forth herein and shall again be
available for issuance upon exercise of stock options granted under the Plan as
if no option had been granted with respect to such shares.
6. Terms and Conditions of Options.
6.1 Grants of Options. Subject to the express provisions of the
Plan, the Administrator shall from time to time in its discretion select those
individuals to whom options shall be granted, and shall determine the terms of
such options (which need not be identical) and the number of shares of Common
Stock for which each may be exercised. Notwithstanding anything to the
contrary herein, the number of shares of Common Stock with respect to which an
option or options may be granted to any optionee in any one taxable year of the
Company shall not exceed 400,000, subject to adjustment as provided herein (the
"Maximum Annual Employee Grant"). Each option shall be subject to the terms
and conditions of the Plan and such other terms and conditions established by
the Administrator as are not inconsistent with the purpose and provisions of
the Plan.
6.2 Agreements or Confirming Memos. Options granted under the
Plan may but need not be evidenced by agreements (which need not be identical)
in such form and containing such provisions consistent with the Plan as the
Administrator shall from time to time approve. Options not documented by
written agreement shall be memorialized by a written confirming memorandum
stating the material terms of the option and provided to the option recipient.
Each agreement or confirming memorandum shall specify whether the subject
option is an Incentive Stock Option or a Non-Qualified Stock Option.
6.3 Optionee's Employment. Each optionee shall agree to remain in
the employ of, and to render services to, the Company or its subsidiaries for a
period of one year from the date the option is granted, but neither the Company
nor any of its subsidiaries shall be obligated to continue to employ the
optionee for any period.
6.4 Option Exercise Price. The purchase price for the shares
subject to any option shall be determined by the Administrator but shall not be
less than 100% of the Fair Market Value of the shares of Common Stock of the
Company on the date the option is granted. For purposes of the Plan, the "Fair
Market Value" of any share of Common Stock of the Company at any date shall be
(a) if the Common Stock is listed on an established stock exchange or
exchanges, the last reported sale price per share on such date on the principal
exchange on which it is traded, or if no sale was made on such date on such
principal exchange, at the closing reported bid price on such date on such
exchange, or (b) if the Common Stock is not then listed on an exchange, the
average of the closing bid and asked prices per share for the Common Stock in
the over-the-counter market as quoted on the Nasdaq National Market on such
date, or (c) if the Common Stock is not then listed on an exchange or quoted on
the Nasdaq National Market, an amount determined in good faith by the
Administrator.
6.5 Medium and Time of Payment. The purchase price for any shares
purchased pursuant to exercise of an option granted under the Plan shall be
paid in full upon exercise of the option in cash or such other consideration as
the Administrator may deem acceptable, including without limitation securities
of the Company (delivered by or on behalf of the person exercising the option
or retained by the Company from the stock otherwise
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issuable upon exercise and valued at Fair Market Value as of the exercise
date), provided, however, that the Administrator may, in the exercise of its
discretion, allow exercise of an option in a broker-assisted or similar
transaction in which the exercise price is not received by the Company until
promptly after exercise. Shares of Common Stock transferred to the Company
upon exercise of an option shall not increase the number of shares available
for issuance upon exercise of options granted under the Plan. Notwithstanding
the foregoing, the Company may extend and maintain, or arrange for the
extension and maintenance of, credit to any optionee to finance the optionee's
purchase of shares pursuant to exercise of any option, on such terms as may be
approved by the Administrator, subject to applicable regulations of the Federal
Reserve Board and any other laws or regulations in effect at the time such
credit is extended.
6.6 Option Period and Vesting. Subject to Section 6.14, options
granted under the Plan shall vest and may be exercised as determined by the
Administrator, except that no option may vest and become exercisable at any
time prior to six months from the date the option is granted. Exercise of
options after termination of the optionee's employment shall be subject to
Sections 6.13 and 6.14. Each option granted hereunder and all rights or
obligations under such option shall expire on such date as shall be determined
by the Administrator, but not later than ten years after the date the option is
granted, or five years after the date of grant in the case of an option
recipient who at the time of grant owns more than 10% of the total combined
voting power of all outstanding shares of all classes of stock of the Company
or any of its parent or subsidiary corporations, and shall be subject to
earlier termination as herein provided.
6.7 Exercise of Options. To the extent that an optionee has the
right to exercise an option, the option may be exercised from time to time by
written notice to the Company stating the number of shares being purchased and
accompanied by payment in full of the purchase price for such shares, except
that in no event shall the Company be required to issue fractional shares upon
the exercise of an option, and the Administrator may, in its discretion,
require that any exercise of an option be for at least 100 shares or, if less,
the total number of shares for which the option is then exercisable. Any
certificate(s) for outstanding securities of the Company used to pay the
purchase price shall be accompanied by stock power(s) duly endorsed in blank by
the registered holder of the certificate(s). In the event the certificate(s)
tendered by the optionee in such payment cover more shares than are required
for such payment, the certificate(s) shall also be accompanied by instructions
from the optionee to the Company's transfer agent with respect to disposition
of the balance of the securities covered thereby. Notwithstanding any other
provision of this Plan, the Administrator may impose such conditions upon the
exercise of options (including, without limitation, conditions limiting the
time of exercise to specified periods) as may be required to satisfy applicable
regulatory requirements, including without limitation Rule 16b-3, other
relevant securities laws and rules, and any applicable section of or rule under
the Code. Whenever shares of stock are to be issued upon exercise of an option
granted under the Plan or subsequently transferred, the Administrator shall
have the right to require the optionee or transferor to remit to the Company an
amount sufficient to satisfy any federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares. The Administrator may, in the exercise of its discretion, allow
satisfaction of tax withholding requirements by accepting delivery of
securities of the Company or by withholding a portion of the stock otherwise
issuable upon exercise of an option.
6.8 No Transfer of Option. No option granted under the Plan shall
be assignable or transferable except (i) by will or by the laws of descent and
distribution, or (ii) subject to the final sentence of this Section 6.8, upon
dissolution of marriage pursuant to a qualified domestic relations order or, in
the discretion of the Administrator and under circumstances that would not
adversely affect the interests of the Company, pursuant to a nominal transfer
that does not result in a change in beneficial ownership. During the lifetime
of an optionee, an option granted to him or her shall be exercisable only by
the optionee (or the optionee's permitted transferee) or his or her guardian or
legal representative. Notwithstanding the foregoing, (i) no options owned by
an optionee subject to Section 16 of the Exchange Act may be assigned or
transferred in any manner inconsistent with Rule 16b-3, and (ii) Incentive
Stock Options may not be assigned or transferred in violation of Section
422(b)(5) of the code (or any successor provision) or the Treasury Regulations
thereunder, and nothing herein is intended to allow such assignment or
transfer.
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6.9 Limit on Incentive Stock Options. Subject to Section 12.1,
the aggregate Fair Market Value (determined as of the time the option is
granted) of the stock for which Incentive Stock Options granted to any one
employee under all stock option plans of the Company and its parent and
subsidiary corporations first become exercisable during any calendar year after
December 31, 1986 shall not exceed $100,000.
6.10 Restriction on Issuance of Shares. The issuance of options
and shares shall be subject to compliance with all of the applicable
requirements of law with respect to the issuance and sale of securities,
including, without limitation, any required qualification under the California
Corporate Securities Law of 1968, as amended.
6.11 Investment Representation. Any optionee may be required, as a
condition of issuance of shares covered by his or her option, to represent that
the shares to be acquired pursuant to exercise of the option will be acquired
for investment and without a view to distribution thereof; and in such case,
the Company may place a legend on the certificate evidencing the shares
reflecting the fact that they were acquired for investment and cannot be sold
or transferred unless registered under the Securities Act of 1933, as amended,
or unless counsel for the Company is satisfied that the circumstances of the
proposed transfer do not require such registration, and in addition, the
Company may issue stop transfer instructions to the transfer agent of the
Company's securities restricting the transfer of such shares.
6.12 Rights as a Shareholder or Employee. An optionee or
transferee of an option shall have no rights as a shareholder of the Company
with respect to any shares covered by any option until (i) the Company has
received all amounts payable in connection with the exercise of the option,
including the exercise price and any amounts required by the Company to satisfy
tax withholding requirements, and (ii) a share certificate for such shares has
been issued. No adjustment shall be made for dividends (ordinary or
extraordinary, whether cash, securities, or other property) or distributions or
other rights for which the record date is prior to the date such share
certificate is issued, except as provided in Section 6.15. Nothing in the Plan
or in any grant or option agreement shall confer upon any employee any right to
continue in the employ of the Company or any of its subsidiaries or interfere
in any way with any right of the Company or any subsidiary to terminate the
optionee's employment at any time.
6.13 Termination of Employment, Disability, or Death. In general,
subject to Section 6.14, options shall be exercisable by an optionee (or his or
her permitted successor in interest) following such optionee's termination of
employment only to the extent that such options had become exercisable on or
prior to the date of such termination. In the event an optionee ceases to be
an employee of the Company and its subsidiaries for any reason (other than
cause) while still living, any option or unexercised portion thereof granted to
the optionee may, to the extent such option was exercisable by the optionee on
or prior to the date he or she ceased to be an employee (or is accelerated
pursuant to Section 6.14 to a date within three months of termination of
employment), be exercised by the optionee within three months of the date on
which he or she ceased to be an employee, but in any event not later than the
date of expiration of the option. In the event of the death or disability (as
defined in Section 105(d)(4) of the Code) of the optionee while he or she is an
employee of the Company or any of its subsidiaries or within not more than
three months of the date on which he or she ceased to be an employee for any
reason other than cause, any option or unexercised portion thereof granted to
the optionee may, to the extent such option was exercisable by the optionee on
or prior to the date of death or disability (or is accelerated pursuant to
Section 6.14 to a date within the period during which such option may be
exercised as set forth below), be exercised by the optionee or, if the optionee
is then deceased or incapacitated, by the optionee's personal representatives,
heirs, or legatees at any time prior to the later of (i) one year from the date
on which the optionee ceased to be an employee or (ii) the latest date the
option could have been exercised by the optionee if not disabled or dead, but
in any event, not later than the date of expiration of the option.
Notwithstanding the foregoing, however, if an optionee's employment with the
Company and its subsidiaries is terminated for cause, as determined by the
Administrator in its sole discretion, all options held by such optionee shall
expire on the date of termination of employment and thereafter shall not be
exercisable in whole or in part.
6.14 Modification, Extension, and Renewal of Options; Alteration of
Vesting and Exercise Periods. Subject to the terms and conditions and within
the specific limitations of the Plan, the Administrator may modify,
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extend, or renew outstanding options granted under the Plan, accept the
surrender of outstanding options (to the extent not theretofore exercised), and
authorize the granting of new options in substitution therefor (to the extent
not theretofore exercised) except that no such modification, extension or
renewal shall result in a reduction in the exercise price of such option.
Without limitation of the foregoing and notwithstanding anything in this Plan
to the contrary, the Administrator may at any time and from time to time in its
discretion (i) designate shorter or longer periods than specified herein or in
any particular option grant or agreement following the termination of an
optionee's employment with the Company or any of its subsidiaries or the
optionee's death or disability during which the optionee may exercise options,
provided, however, that any shorter periods determined by the Administrator
shall be effective only if determined at the time of the grant of the affected
option or if such shorter period is agreed to in writing by the optionee, and
any longer periods may not extend beyond the original termination date of the
affected option; (ii) subject to the six-month minimum vesting period described
in Section 6.6, accelerate vesting of an option in whole or part by increasing
the number of shares purchasable at any particular time, provided that no such
acceleration shall increase the total number of shares for which the option may
be exercised; and (iii) extend the period after death or disability or
termination of employment during which vesting of all or any portion of any
options that had not become exercisable on or prior to the date thereof may
occur. Notwithstanding the foregoing, no option shall be modified in such a
manner as to impair any rights of the optionee under the option, or to cause an
Incentive Stock Option to cease to qualify as such, without the consent of the
optionee.
6.15 Recapitalization or Reorganization of the Company. Except as
otherwise provided herein, appropriate and proportionate adjustments shall be
made in the number and class of shares subject to the Plan, the Maximum Annual
Employee Grant, the option rights granted under the Plan, and the exercise
price of such option rights, in the event of a stock dividend (but only on
Common Stock), stock split, reverse stock split, recapitalization,
reorganization, merger, consolidation, separation, or like change in the
capital structure of the Company affecting the Common Stock of the Company. In
the event of a liquidation of the Company, or a merger, reorganization, or
consolidation of the Company with any other corporation in which the Company is
not the surviving corporation or the Company becomes a wholly-owned subsidiary
of another corporation, any unexercised options theretofore granted under the
Plan shall be deemed canceled unless the surviving corporation in any such
merger, reorganization, or consolidation elects to assume the options under the
Plan or to issue substitute options in place thereof; provided, however, that,
notwithstanding the foregoing, if such options would otherwise be canceled in
accordance with the foregoing, the optionee shall have the right, exercisable
during a ten-day period ending on the fifth day prior to such liquidation,
merger, reorganization, or consolidation, to exercise the optionee's option in
whole or in part without regard to any installment exercise provisions in the
optionee's option agreement. To the extent that the foregoing adjustments
relate to stock or securities of the Company, such adjustments shall be made by
the Administrator, the determination of which in that respect shall be final,
binding, and conclusive, provided that an Incentive Stock Option shall not
without the consent of the optionee be adjusted in a manner that causes the
option to fail to continue to qualify as an Incentive Stock Option.
7. Termination or Amendment of Plan. The Board or the Committee
may at any time or from time to time suspend, terminate or amend the Plan;
provided that, without approval of the shareholders of the Company, there shall
be, except as specifically permitted by the Plan, no increase in the total
number of shares issuable upon exercise of options granted under the Plan, no
change in the class of persons eligible to receive options granted under the
Plan, and no extension of the latest date upon which options may be granted
under the Plan; and provided further that, without the consent of the optionee,
no amendment may adversely affect any then outstanding option or any
unexercised portion thereof without the consent of the holder of such option.
8. Indemnification. In addition to such other rights of
indemnification as they may have as members of the Board or the Committee, the
members of the Board or the Committee administering the Plan shall be
indemnified by the Company against reasonable expenses, including attorney's
fees, actually and necessarily incurred in connection with the defense of any
action, suit, or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the Company) or
paid by them in satisfaction of a judgment in any action, suit, or proceeding,
except in relation to matters as to which it shall be
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adjudged in such action, suit, or proceeding that such member is liable for
negligence or misconduct in the performance of his or her duties, provided that
within 60 days after institution of any such action, suit, or proceeding, the
member shall in writing offer the Company the opportunity, at its own expense,
to handle and defend the same.
9. 1978 Non-Qualified Stock Option Plan. The Plan as set forth
herein constitutes an amendment and restatement of the Company's 1978
Non-Qualified Stock Option Plan which was adopted in 1978. The Administrator
may, in its discretion, authorize the conversion, to the fullest extent
permitted by law, of Non-Qualified Stock Options granted under the 1978
Non-Qualified Stock Option Plan prior to such amendment to Incentive Stock
Options under this Plan, as so amended. Any such options converted to
Incentive Stock Options shall be treated as Incentive Stock Options for all
purposes under the Plan; provided, however, that none of the terms or
conditions of any of such options, including, but not limited to, the exercise
price, the term of the option, and the time(s) within which the option may be
exercised, shall be altered or amended by reason of such conversion.
10. Options Granted Prior to Amendment and Restatement. The Plan,
as amended and restated from time to time, shall, in the discretion of the
Administrator, apply to and govern options granted under the Plan prior to the
date of any such amendment or restatement, subject to the consent of any holder
of an option who would be disadvantaged by application to such option of the
Plan as amended and restated after the grant of such option.
11. Term of Plan. Unless sooner terminated by the Board or the
Committee in its sole discretion, the Plan will expire on November 10, 2004
(the "Termination Date"). Options may be granted under the Plan until midnight
on the Termination Date, whereupon the Plan shall terminate. No options may be
granted during any suspension of the Plan or after its termination.
Notwithstanding the foregoing, each option properly granted under the Plan
shall remain in effect until such option has been exercised or terminated in
accordance with its terms and the terms of the Plan.
12. Miscellaneous.
12.1 Plan Provisions Regarding Incentive Stock Options. Options
originally granted as Incentive Stock Options but that subsequently become
Non-Qualified Stock Options need not satisfy any requirements of the Plan
applicable to Incentive Stock Options.
12.2 Other Compensation Plans. The adoption of this Plan shall not
affect any other stock option, incentive, or compensation plans in effect for
the Company or any of its subsidiaries, and the Plan shall not preclude the
Company or any of its subsidiaries from establishing any other forms of
incentive compensation for employees, directors, or advisors of the Company or
any of its subsidiaries.
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