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.
3.1 Initial
Award for New Non-Employee Directors .
3.1.1 Upon
or as soon as reasonably practicable after 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 and based on the Fair Market
Value of a share of Common Stock on the trading day immediately
preceding the grant date of the stock option); provided, however,
that the Board or the Administrator, in its discretion, may at the
time of grant of the award increase or decrease the number of
shares of Common Stock otherwise 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.
3.1.2 Each
member of the Board who was previously an employee of the
Corporation or any of its Subsidiaries who first becomes a
Non-Employee Director by virtue of retiring or otherwise ceasing to
be employed by the Corporation or any of its Subsidiaries shall,
upon or as soon as reasonably practicable after the date that he or
she is first a Non-Employee Director, be granted a nonqualified
stock option to purchase a number of shares of Common Stock that
produces an approximate value for the option grant (using a
Black-Scholes valuation as of the time of grant as determined in
consultation with Company management and based on the Fair Market
Value of a share of Common Stock on the trading day immediately
preceding the grant date of the stock option) of (i) $125,000,
divided by (ii) 365, multiplied by (iii) the number of
days from
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the date such
person is first a Non-Employee Director to the anticipated date of
the Corporation’s next annual meeting of stockholders;
provided, however, that the Board or the Administrator, in its
discretion, may at the time of grant of the award increase or
decrease the number of shares of Common Stock otherwise 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 person first becomes a Non-Employee
Director.
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 2008 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 $125,000 (using a Black-Scholes valuation
as of the time of grant as determined in consultation with Company
management and based on the Fair Market Value of a share of Common
Stock on the trading day immediately preceding the grant date of
the stock option); provided, however, that the Board or the
Administrator, in its discretion, may at the time of grant of the
award increase or decrease the number of shares of Common Stock
otherwise 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 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 seven 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
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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 seven-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
”):
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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;
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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 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;
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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
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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
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