Document:

Exhibit 10.2

Exhibit 10.2

	 	 	 
	

	 	Western Digital
Corporation

ID: 95-2647125

20511 Lake Forest Drive

Lake Forest, CA 92630-7741
	 
	 	 
	Notice of Grant of Stock Option

and Option Agreement — Executives
	 	 

	 	 	 
	Name

	 	Option No.: #######
	Address Line 1

	 	Plan: 2004 Performance Incentive Plan
	City, State Zip

	 	ID: ####

Congratulations! Effective <<date>>, you have been granted a(n) <<option
type>> to buy <<number>> shares of Western Digital Corporation stock at <<$
option price>> per share. The option was granted under the Amended and Restated 2004
Performance Incentive Plan (the “Plan”).1

Vesting:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Shares1	 	Vest Type	 	 	Full Vesting	 	 	Expiration Date2	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

Your option is subject to the terms and conditions of this Notice, the attached Standard Terms and
Conditions for Stock Options — Executives (the “Standard Terms”), and the Plan. By accepting the
option, you are agreeing to the terms of the option as set forth in those documents. You should
read the Plan, the Prospectus for the Plan, and the Standard Terms. The Standard Terms and the
Plan are each incorporated into (made a part of) this Notice by this reference. You do not have to
accept your option. If you do not agree to the terms of your option, you should promptly return
this Notice to the Western Digital Corporation Stock Plans Administrator.

A copy of the Plan, the Prospectus for the Plan, and the Standard Terms have 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 web
site. These documents are also available on the Western Digital Intranet site under Legal.

	 	 	 
	1.	 	The number of shares subject to the option and the per-share exercise price of the option are
subject to adjustment under 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 Section 5 of the attached Standard Terms and
Conditions for Stock Options.

 

 

Western Digital Corporation 20511 Lake Forest Drive

Lake Forest, California 92630 Telephone 949 672-7000

STANDARD TERMS AND CONDITIONS FOR STOCK OPTIONS — EXECUTIVES

Amended and Restated 2004 Performance Incentive Plan

1. Option Subject to Amended and Restated 2004 Performance Incentive Plan.

The option (the “Option”) referred to in the attached Notice of Grant of Stock Option and Option
Agreement (the “Notice”) was issued under Western Digital Corporation’s (the “Corporation’s”)
Amended and Restated 2004 Performance Incentive Plan (the “Plan”). The Option is subject to the
terms and provisions of the Notice, these Standard Terms and Conditions for Stock Options -
Executives (these “Standard Terms”), and the Plan. To the extent any information in the Notice,
the prospectus for the Plan, or other information provided by the Corporation conflicts with the
Plan and/or these Standard Terms, the Plan or these Standard Terms, as applicable, shall control.
To the extent any terms and provisions in these Standard Terms conflict with the terms and
provisions of the Plan, the Plan shall control. The holder of the Option is referred to herein as
the “Participant.” Capitalized terms not defined herein have the meanings set forth in the Plan.

Unless otherwise expressly provided in other sections of these Standard Terms, 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.

The Notice and these Standard Terms, together, constitute the Option Agreement with respect to the
Option pursuant to Section 5.3 of the Plan.

3. Type of Stock Option

The Notice indicates whether the Option is intended to qualify as an incentive stock option (an
“ISO”) under the Internal Revenue Code of 1986, as amended (the “Code”), or is a nonqualified stock
option (an option that is not an ISO). ISOs are subject to additional requirements under the Code
as generally described in Section 5.1 of the Plan. If the aggregate fair market value of the
shares with respect to which ISOs (whether granted under the Option or otherwise) first become
exercisable by the Participant in any calendar year exceeds $100,000, as measured on the applicable
option grant dates and as determined in accordance with Code Section 422 and the regulations
promulgated thereunder, the limitations of Section 5.1.2 of the Plan shall apply and to such extent
the Option will be rendered a nonqualified stock option.

4. Vesting

The Option shall vest and become exercisable in percentage installments of the aggregate number of
shares subject to the Option as set forth in the Notice. The first vesting installment of the
Option shall be a fixed installment covering the number of shares, and vesting on the fixed vesting
date, set forth in the first line of the Notice under “Vesting.” In each case, the Option is
subject to earlier termination in accordance with Section 5.

 

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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.

Except as expressly provided in Sections 6 and 7 below, the vesting schedule requires continued
employment or 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.
Except as expressly provided in Sections 6 and 7 below, employment or service for only a portion of
the vesting period, even if a substantial portion, 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 employment or services as provided in Section 7 below 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 as provided in
Section 7 below, (b) the termination of the Option as provided in Section 7.4 of the Plan,
or (c) the Expiration Date set forth in the Notice. The Option may not be exercised at any
time after a termination or expiration of the Option.

6. Change in Control Event Generally

Subject to Sections 7.5, 7.6 and 7.7 of the Plan, upon (or, as may be necessary to
effectuate the purposes of this acceleration, immediately prior to) the occurrence of a
Change in Control Event in which the Option is to terminate (i.e., the Administrator has
not made a provision for the substitution, assumption, exchange or other continuation of
the Option and the Option will not otherwise continue in accordance with its terms in the
circumstances), the portion of the Option that is outstanding and unvested immediately
prior to the Change in Control Event shall vest and become exercisable. In the event the
Option is to be terminated in connection with a Change in Control Event, the Participant
shall, unless the Administrator has made a provision for the settlement of the Option, be
given reasonable advance notice of the impending termination and a reasonable opportunity
to exercise the outstanding portion of the Option in accordance with its terms (subject to
Sections 7.5, 7.6 and 7.7 of the Plan, after giving effect to the acceleration of vesting)
before the termination of the Option in such circumstances (except that in no case shall
more than ten (10) days’ notice of accelerated vesting and the impending termination be
required and any acceleration may be made contingent upon the actual occurrence of the
event).

7. Termination of Employment, Total Disability or Death

The Option shall be exercisable by the Participant (or his or her permitted successor in interest)
following the Participant’s termination of employment only to the extent provided below in this
Section 7. Except as provided in Section 7(f) below, the last day that the Participant is employed
by the Corporation or a Subsidiary prior to a period of non-employment by any such entity is
referred to as the Participant’s “Severance Date.” In each case described below, the Option shall
be subject to earlier termination as contemplated by Section 5.

(a) Termination of Employment Generally. Except as expressly provided below in this
Section 7, in the event the Participant ceases to be an employee of the Corporation or any of its
Subsidiaries for any reason, the Option shall terminate on the Participant’s Severance Date to the
extent that it is not vested and exercisable on that date and, to the extent that the Option is
exercisable by the Participant on the Participant’s Severance Date, it may be exercised by the
Participant at any time within three months following the Participant’s Severance Date. The
Option, to the extent exercisable for the three-month period following the Participant’s Severance
Date and not exercised during such period, shall terminate at the close of business on the last day
of the three-month period.

 

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(b) Total Disability. In the event that the Participant ceases to be an employee of the
Corporation or any of its Subsidiaries at a time when the Participant is Totally Disabled and is
not eligible to Retire, the Option shall
terminate on the Participant’s Severance Date to the extent that it is not vested and exercisable
on that date. In such circumstances, or in the event that the Participant incurs such a Total
Disability within not more than three months of the Participant’s Severance Date if the termination
of the Participant’s employment was for any reason other than a termination of employment by the
Corporation or one of its Subsidiaries for Cause, the Option may, to the extent the Option was
exercisable by the Participant on the Participant’s Severance Date, be exercised by the Participant
(or, if the Participant is then incapacitated, by the Participant’s personal representatives,
heirs, or legatees) at any time during the one-year period following the Participant’s Severance
Date. The Option, to the extent exercisable for the one-year period following the Participant’s
Severance Date and not exercised during such period, shall terminate at the close of business on
the last day of the one-year period. For purposes of the Option, “Total Disability” (which term
shall include “Totally Disabled”) means a “permanent and total disability” within the meaning of
Section 22(e)(3) of the Code.

(c) Death. If the Participant dies while he or she is an employee of the Corporation or
any of its Subsidiaries, the Option (to the extent outstanding and not previously vested and
exercisable) shall vest and become exercisable on the Participant’s Severance Date and shall
continue to be exercisable by the Participant’s personal representatives, heirs or legatees, as
applicable, at any time during the three-year period following the Participant’s Severance Date.
The Option, to the extent exercisable for the three-year period following the Participant’s
Severance Date and not exercised during such period, shall terminate at the close of business on
the last day of the three-year period.

(d) Retirement. If the Participant Retires from the Corporation or one of its
Subsidiaries, the Option (to the extent outstanding and not previously vested and exercisable)
shall vest and become exercisable on the Participant’s Severance Date and shall continue to be
exercisable by the Participant (or if the Participant is then deceased, by the Participant’s
personal representatives, heirs or legatees, as applicable) at any time during the three-year
period following the Participant’s Severance Date. The Option, to the extent exercisable for the
three-year period following the Participant’s Severance Date and not exercised during such period,
shall terminate at the close of business on the last day of the three-year period. Notwithstanding
the foregoing, in the event a Retired Participant provides services to a competitor of the
Corporation or any of its Subsidiaries as an employee, consultant, director, officer,
representative, independent contractor or otherwise, or otherwise competes with the business of the
Corporation or its Subsidiaries (in each case as determined by the Administrator its sole
discretion), the Option, to the extent not previously exercised, shall immediately terminate. In
addition, in such event the Corporation shall have the right to recover any profits realized by
such Retired Participant as a result of any exercise of the Option during the six-month period
prior to the date such Retired Participant commenced providing such services to a competitor. For
this purpose, the Participant shall be deemed to have “Retired” (which term shall include
“Retirement,” “Retire” and “Retires”) if the Participant retires from employment with the
Corporation or one of its Subsidiaries for any reason other than Cause after satisfying all of the
following at the time of such retirement: (i) the Participant is at least 65 years of age, (ii) the
Participant’s age plus total years of continuous service with the Corporation or any of its
Subsidiaries (as determined by the Administrator in its sole discretion) totals at least 75, and
(iii) the Participant has five (5) or more years of continuous service with the Corporation or any
of its Subsidiaries (as determined by the Administrator in its sole discretion) ending on the date
of such retirement. For purposes of calculating “age plus total years of continuous service” under
clause (ii) above, fractional years shall be disregarded but may be cumulated (so that, by way of
example only, a Participant who is age 65 and 6 months with 9 years and 6 months of continuous
service would satisfy the requirements of clause (ii), while a Participant who is age 65 and 6
months with 9 years and 5 months of continuous service would not satisfy the requirements of clause
(ii)). For purposes of calculating the Participant’s “years of continuous service” under clause
(ii) or clause (iii) above, in no event shall the Participant accrue more than one year of service
with respect to any period of twelve consecutive months (that is, concurrent employment by both the
Corporation and one or more of its Subsidiaries, or by multiple Subsidiaries, for a month shall not
be counted as more than one month of service).

(e) Termination for Cause. Notwithstanding the foregoing provisions of this Section 7, if
the Participant’s employment with the Corporation or any of its Subsidiaries is terminated by the
Corporation or one of its Subsidiaries for Cause, the Option (whether or not all or any portion of
such Option is then vested and exercisable) shall immediately terminate on the Participant’s
Severance Date.

 

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For purposes of this Section 7 and as to any termination of employment or services that occurs
prior to the occurrence of a Change in Control Event, the term “Cause” shall mean the occurrence or
existence of any of the
following with respect to the Participant, as determined by the Administrator or its delegate or
delegates in its or their sole discretion:

(i) the Participant’s conviction by, or entry of a plea of guilty or nolo contendre in,
a court of competent and final jurisdiction for any crime involving moral turpitude or any
felony punishable by imprisonment in the jurisdiction involved;

(ii) whether prior or subsequent to the date hereof, the Participant’s willful engaging
in dishonest or fraudulent actions or omissions;

(iii) the Participant’s failure or refusal to perform his or her duties as reasonably
required by his or her employer;

(iv) negligence, insubordination, violation by the Participant of any duty (loyalty or
otherwise) owed to the Corporation, one or more of its Subsidiaries, or any of their
respective affiliates, or any other misconduct on the part of the Participant;

(v) the repeated non-prescription use of any controlled substance, or the repeated use
of alcohol or any other non-controlled substance which in the Administrator’s (or its
delegate’s or delegates’) reasonable determination interferes with the Participant’s service
as an officer or employee of the Corporation, one or more of its Subsidiaries, or any of
their respective affiliates;

(vi) sexual harassment by the Participant that has been reasonably substantiated and
investigated;

(vii) involvement in activities representing conflicts of interest with the
Corporation, one or more of its Subsidiaries, or any of their respective affiliates;

(viii) improper disclosure of confidential information;

(ix) conduct endangering, or likely to endanger, the health or safety of another
employee;

(x) falsifying or misrepresenting information on the records of the Corporation, one or
more of its Subsidiaries, or any of their respective affiliates;

(xi) the Participant’s physical destruction or theft of substantial property or assets
of the Corporation, one or more of its Subsidiaries, or any of their respective affiliates;

(xii) breach of any policy of, or agreement with, the Corporation, one or more of its
Subsidiaries, or any of their respective affiliates applicable to the Participant or to
which the Participant is otherwise bound.

For purposes of this Section 7 and as to any termination of employment or services that occurs upon
or after the occurrence of a Change in Control Event, the term “Cause” shall mean the occurrence or
existence of any of the following with respect to the Participant, as determined by a majority of
the disinterested directors of the Board:

(A) the Participant’s conviction by, or entry of a plea of guilty or nolo contendre 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 Participant’s willful engaging
in dishonest or fraudulent actions or omissions which results directly or indirectly in any
demonstrable material financial or economic harm to the Corporation, one or more of its
Subsidiaries, or any of their respective affiliates;

 

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(C) the Participant’s failure or refusal to perform his or her duties as reasonably
required by his or her employer, provided that the Participant shall have first received
written notice from the employer stating with specificity the nature of such failure or
refusal and affording the Participant at least five (5) days to correct the act or omission
complained of;

(D) gross negligence, insubordination, material violation by the Participant of any
duty of loyalty to the Corporation, one or more of its Subsidiaries, or any of their
respective affiliates, or any other material misconduct on the part of the Participant,
provided that the Participant shall have first received written notice from the Corporation
stating with specificity the nature of such action or violation and affording the
Participant 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 interferes with the Participant’s service as an officer or employee of the
Corporation, one or more of its Subsidiaries, or any of their respective affiliates;

(F) sexual harassment by the Participant that has been reasonably substantiated and
investigated;

(G) involvement in activities representing conflicts of interest with the Corporation,
one or more of its Subsidiaries, or any of their respective 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 Corporation, one or
more of its Subsidiaries, or any of their respective affiliates; or

(K) the Participant’s physical destruction or theft of substantial property or assets
of the Corporation, one or more of its Subsidiaries, or any of their respective affiliates.

(f) Termination of Employment in Connection with a Change in Control Event. In the event
the Participant ceases to be employed by the Corporation or any of its Subsidiaries as a result of
either a termination of employment by the Corporation or one of its Subsidiaries without Cause or
the resignation of the Participant for “Good Reason” (as defined below), in either case upon or
within the one (1) year period following the occurrence of a Change in Control Event and the
Participant is not eligible to Retire at the time of such termination (i.e., Section 7(d) does not
apply), the Option (to the extent outstanding and not previously vested and exercisable) shall vest
and become exercisable on the Participant’s Severance Date and shall continue to be exercisable by
the Participant at any time within three months following the Participant’s Severance Date. The
Option, to the extent exercisable for the three-month period following the Participant’s Severance
Date and not exercised during such period, shall terminate at the close of business on the last day
of the three-month period.

For purposes of this Section 7, the term “Good Reason” shall mean any of the following without the
Participant’s express written consent:

(i) a material diminution in the Participant’s authority, duties or responsibilities in
effect immediately prior to the Change in Control Event;

(ii) a material diminution by the Employer (as defined below) in the Participant’s base
compensation in effect immediately prior to a Change in Control Event;

(iii) any material breach by the Corporation or the Employer of any right that the
Participant has under a written severance plan of the Corporation or the Employer in which
the Participant participates or by the Corporation or the Employer of any written employment
agreement either of them may be a party to with the Participant; or

 

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(iv) the requirement by the Employer that the Participant’s principal place of
employment be relocated more than fifty (50) miles from his or her place of employment
immediately prior to a Change in Control Event;

provided, however, that any such condition shall not constitute “Good Reason” unless both
(i) the Participant provides written notice to the Corporation of the condition claimed to
constitute Good Reason within ninety (90) days of the initial existence of such condition,
and (ii) the Corporation fails to remedy such condition within thirty (30) days of receiving
such written notice thereof; and provided, further, that in all events the termination of
the Participant’s employment with the Corporation shall not be treated as a termination for
“Good Reason” unless such termination occurs not more than one (1) year following the
initial existence of the condition claimed to constitute “Good Reason.”

For purposes of this Option Agreement, “Employer” shall mean the Corporation or its Subsidiary
employing the Participant; provided however, that nothing contained herein shall prohibit the
Corporation or another of its Subsidiaries fulfilling any obligation of the employing entity to the
Participant and for such purposes will be deemed the act of the Employer.

(g) Continuation of Services. If the Participant’s employment with the Corporation or any
of its Subsidiaries terminates (regardless of the reason) but, immediately thereafter, the
Participant continues to render services to the Corporation or any of its Subsidiaries as an
employee, director or consultant, such Participant’s Severance Date for purposes of the Option
shall not be the date such Participant’s employment terminates, but instead shall be the last day
that the Participant either is employed by or actually renders services to the Corporation or any
of its Subsidiaries. As provided in Section 6.1 of the Plan, the Administrator shall be the sole
judge for purposes of the Option of whether the Participant continues to render services the
Corporation or its Subsidiaries and the date, if any, upon which such services shall be deemed to
have terminated.

(h) Exercise Period for ISOs. Notwithstanding any post-termination exercise period
provided for herein or in the Plan, the Option will qualify as an ISO only if it is exercised
within the applicable exercise periods for ISOs under, and meets all of the other requirements of,
the Code. If the Option is not exercised within the applicable exercise periods for ISOs or does
not meet such other requirements, the Option will be rendered a nonqualified stock option.

8. 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;

	 	•	 	any written statements or agreements required by the Administrator pursuant to
Section 8.1 of the Plan; and

	 	•	 	satisfaction of the tax withholding provisions of Section 8.5 of the Plan.

 

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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.

The Option will qualify as an ISO only if it meets all of the applicable requirements of the Code.

9. Nontransferability

The Option and any other rights of the Participant under this Option Agreement 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.

10. No Right to Employment

Nothing contained in this Option Agreement or the Plan constitutes a continued employment or
service commitment by the Corporation or any of its Subsidiaries, affects the Participant’s status,
if he or she is an employee, as an employee at will who is subject to termination without cause,
confers upon the Participant any right to remain employed by or 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 employment or service, or affects the right of the Corporation or any
Subsidiary to increase or decrease the Participant’s other compensation.

11. 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.

12. 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 payroll 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 employed by the
Corporation or a Subsidiary, shall be deemed to have been duly given five business days after the
date mailed in accordance with the foregoing provisions of this Section 12.

13. Arbitration

Any controversy arising out of or relating to this Option Agreement (including these Standard
Terms) 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 §§
1280 et seq. as the exclusive forum for the resolution

 

7

 

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 13).

14. Governing Law

This Option Agreement, including these Standard Terms, 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.

15. Severability

If the arbitrator selected in accordance with Section 13 or a court of competent jurisdiction
determines that any portion of this Option Agreement (including these Standard Terms) or the Plan
is in violation of any statute or public policy, then only the portions of this Option Agreement 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 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 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.

16. Entire Agreement

This Option Agreement (including these Standard Terms) 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 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.

17. 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.

 

8Exhibit 10.3

Exhibit 10.3

	 	 	 
	Western®

Digital

	 	Western Digital Corporation

ID: 95-2657125

P.O. Box 19665

Lake Forest, CA 92630-7741

(949) 672-7000 x 27985/27986

Notice of Grant of Stock Units

and Stock Unit Award Agreement — Executives

	 	 	 	 	 
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Congratulations! Effective «optdt», you have been granted stock units of Western Digital
Corporation. These stock units were granted under the 2004 Performance Incentive Plan (the
“Plan”).1

Vesting2:

	 	 	 	 	 
	Units	 	Vest Type	 	Full Vest
	«sp1»
	 	«vtpr1»
	 	«vdp1»
	«sp2»
	 	«vtp2»
	 	«vdp2»
	«sp3»
	 	«vtp3»
	 	«vdp3»
	«sp4»
	 	«vtp4»
	 	«vdp4»

Your stock unit award is subject to the terms and conditions of this Notice, the attached Standard
Terms and Conditions for Stock Unit Awards — Executives (the “Standard Terms”) and the Plan. By
accepting the award, you are agreeing to the terms of the award as set forth in those documents.
You should read the Plan, the Prospectus for the Plan, and the Standard Terms. The Standard Terms
and the Plan are each incorporated into (made a part of) this Notice by this reference. You do not
have to accept your award. If you do not agree to the terms of your award, you should promptly
return this Notice to the Western Digital Corporation Stock Plans Administrator.

A copy of the Plan, the Prospectus for the Plan, and the Standard Terms have been provided to you.
If you need another copy of these documents, or if you would like to confirm that you have the most
recent version, please contact the Company’s Stock Plans Administrator.

 

	 	 	 
	1	 	The number of stock units subject to the award is
subject to adjustment under Section 7.1 of the Plan (for example, and without
limitation, in connection with stock splits).
	 
	2	 	The stock units covered by the award are subject to
forfeiture under Section 8 of the attached Standard Terms and Conditions for
Stock Unit Awards.

 

 

 

Western Digital Corporation 20511 Lake Forest Drive

Lake Forest, California 92630 Telephone 949 672-7000

STANDARD TERMS AND CONDITIONS FOR

STOCK UNIT AWARDS — EXECUTIVES

Amended and Restated 2004 Performance Incentive Plan

1. Stock Units Subject to 2004 Performance Incentive Plan

The Stock Unit Award (the “Award”) referred to in the attached Notice of Grant of Stock Units and
Stock Unit Award Agreement (the “Notice”) was awarded under Western Digital Corporation’s (the
“Corporation’s”) Amended and Restated 2004 Performance Incentive Plan (the “Plan”). Each stock
unit covered by the Award (“Stock Unit”) is a non-voting unit of measurement that is deemed for
bookkeeping purposes to be equivalent to one outstanding share of Common Stock (subject to
adjustment as provided in Section 7.1 of the Plan). The holder of the Stock Units is referred to
herein as the “Participant.” Stock Units shall be used solely as a device for the determination of
the number of shares of Common Stock to eventually be delivered to the Participant if Stock Units
held by such Participant vest pursuant to Section 4, Section 7 or Section 8 and shall not be
treated as property or as a trust fund of any kind. Stock Units granted to the Participant shall
be credited to an unfunded bookkeeping account maintained by the Corporation on behalf of the
Participant (a “Stock Unit Account”).

The Stock Units are subject to the terms and provisions of the Notice, these Standard Terms and
Conditions for Stock Unit Awards — Executives (these “Standard Terms”), and the Plan. To the
extent any information in the Notice, the prospectus for the Plan, or other information provided by
the Corporation conflicts with the Plan and/or these Standard Terms, the Plan or these Standard
Terms, as applicable, shall control. To the extent any terms and provisions in these Standard
Terms conflict with the terms and provisions of the Plan, the Plan shall control. Capitalized
terms not defined herein have the meanings set forth in the Plan.

2. Award Agreement

The Notice and these Standard Terms, together, constitute the Award Agreement with respect to the
Award pursuant to Section 5.3 of the Plan.

3. Deferral of Stock Units

Notwithstanding anything to the contrary contained herein, the Participant may elect, on a form and
in a manner provided by the Corporation and by any applicable deferral election deadline, to defer
the Stock Units subject to the Award under the Corporation’s Deferred Compensation Plan (the
“Deferred Compensation Plan”). If the Participant makes such a deferral election, the Stock Units
will be paid (to the extent vested) in accordance with the payment provisions of the Deferred
Compensation Plan (including without limitation the provisions requiring a six-month payment delay
in the event that the Participant is a “specified employee” for purposes of Section 409A of the
Code), which are incorporated herein by this reference, and any applicable deferral election made
by the Participant under and in accordance with the rules of the Deferred Compensation Plan.
Whether or not the Participant elects to defer the Stock Units, any shares of Common Stock issued
or delivered with respect to the Stock Units shall be charged against the applicable share limits
of the Plan.

4. Vesting

Except as otherwise provided in this Award Agreement, the Award shall vest and become
nonforfeitable in percentage installments of the aggregate number of Stock Units as set forth in
the Notice. Except as expressly provided in Sections 7 and 8 below, the vesting schedule requires
continued employment or service through each
applicable vesting date as a condition to the vesting of the applicable installment of the Award
and the rights and benefits under this Award Agreement. Except as expressly provided in Sections 7
and 8 below, employment or service for only a portion of the vesting period, even if a substantial
portion, 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 employment or services as
provided in Section 8 below or under the Plan.

 

 

 

5. Dividend Equivalent Rights Distributions

As of any date that the Corporation pays an ordinary cash dividend on its Common Stock, the
Corporation shall credit the Participant’s Stock Unit Account with an additional number of Stock
Units equal to (i) the per share cash dividend paid by the Corporation on its Common Stock on such
date, multiplied by (ii) the number of Stock Units remaining subject to the Award as of the related
dividend payment record date, divided by (iii) the Fair Market Value of a share of Common Stock on
the date of payment of such dividend. If the Participant has not made a deferral election with
respect to the Stock Units, then the Stock Units credited pursuant to the foregoing provisions of
this Section 5 shall be subject to the same vesting, payment and other terms, conditions and
restrictions as the original Stock Units to which they relate. If the Participant has made a
deferral election with respect to the Stock Units, then the Stock Units credited pursuant to the
foregoing provisions of this Section 5 shall be credited under, and paid in an equivalent number of
shares of Common Stock in accordance with the payment provisions of, the Deferred Compensation Plan
and any applicable deferral election made by the Participant under and in accordance with the rules
of the Deferred Compensation Plan.

6. Timing and Manner of Payment of Stock Units

Except as provided in Sections 3, 7 or 8, on or within fifteen (15) business days following the
vesting of any Stock Units granted (or credited pursuant to Section 5) to the Participant (whether
pursuant to Section 4, Section 7 or Section 8 hereof or Section 7 of the Plan), the Corporation
shall deliver to the Participant a number of shares of Common Stock (either by delivering one or
more certificates for such shares or by entering such shares in book entry form, as determined by
the Corporation in its sole discretion) equal to the number of Stock Units that vest on the
applicable vesting date (including any Stock Units credited as dividend equivalents pursuant to
Section 5 with respect to the Stock Units that vest), subject to adjustment as provided in Section
7 of the Plan. The Corporation’s obligation to deliver shares of Common Stock with respect to
vested Stock Units is subject to the condition precedent that the Participant (or other person
entitled under the Plan to receive any shares with respect to the vested Stock Units) delivers to
the Corporation any representations or other documents or assurances required pursuant to Section
8.1 of the Plan. The Participant shall have no further rights with respect to any Stock Units that
are paid pursuant to this Section 6 or that are terminated pursuant to Section 8 hereof or Section
7 of the Plan, and such Stock Units shall be removed from the Participant’s Stock Unit Account upon
the date of such payment or termination. The Corporation may, in its sole discretion, settle any
Stock Units credited as dividend equivalents by a cash payment equal to the Fair Market Value of a
share of Common Stock on the date of payment (as opposed to payment in the form of shares of Common
Stock).

7. Change in Control Event Generally

Subject to Sections 7.5, 7.6 and 7.7 of the Plan, upon (or, as may be necessary to effectuate the
purposes of this acceleration, immediately prior to) the occurrence of a Change in Control Event in
which the Stock Units subject to the Award are to terminate (i.e., the Administrator has not made a
provision for the substitution, assumption, exchange or other continuation of the Award and the
Award will not otherwise continue in accordance with its terms in the circumstances), the portion
of the Award that is outstanding and unvested immediately prior to the Change in Control Event
shall vest and become payable in accordance with Section 6. Notwithstanding the foregoing or
anything in this Award Agreement or the Plan, if the Participant has elected to defer the Stock
Units as provided in Section 3, then payment with respect to such deferred Stock Units shall not be
made until such Stock Units would have become vested and payable without regard to this Section 7
or Section 7 of the Plan and the Administrator may (to the extent the Stock Units subject to the
Award would otherwise terminate in connection with the Change in Control Event) provide for a cash
amount of equivalent value at the time of the Change in Control Event to be paid in respect of the
deferred Stock Units in lieu of the shares otherwise subject to such Stock Units.

 

2

 

8. Termination of Employment

(a) Termination of Employment Generally. Subject to earlier vesting as provided in Section
7 or below in this Section 8, if the Participant ceases to be employed by or to provide services to
the Corporation or its Subsidiaries for any reason (the last day that the Participant is employed
by the Corporation or a Subsidiary prior to a period of non-employment by any such entity is
referred to as the Participant’s “Severance Date”), the Participant’s Stock Units shall be
forfeited to the Corporation to the extent such Stock Units have not become vested upon the
Severance Date; provided, however, that in the event of the Participant’s death at a time when the
Participant is employed by or providing services to the Corporation or any of its Subsidiaries, a
portion of the otherwise unvested Stock Units shall automatically become fully vested as of such
date of death as set forth in the next sentence, and shall be paid to the Participant’s legal
representative as provided in Section 6 above. In the event the date of the Participant’s death is
at a time when the Participant is employed by or providing services to the Corporation or any of
its Subsidiaries, the number of Stock Units that shall become vested on the date of the
Participant’s death equals: (a) the number of Stock Units that would have vested on the next
scheduled vesting date applicable to the Award (as set forth in the Notice) (the “Next Scheduled
Vesting Date”) had the Participant continued to be employed through such date, multiplied by (b) a
fraction (not greater than one), the numerator of which is the number of calendar days following
the last scheduled vesting date applicable to the Award as set forth in the Notice (or, if there
was no such prior vesting date applicable to the Award, the date of grant of the Stock Units (the
“Measurement Date”) through and including the date of the Participant’s death, and the denominator
of which is the total number of calendar days in the period beginning with the day after the
Measurement Date and ending with the Next Scheduled Vesting Date.

(b) Termination of Employment in Connection with a Change in Control Event. In the event
the Participant ceases to be employed by the Corporation or any of its Subsidiaries as a result of
either a termination of employment by the Corporation or one of its Subsidiaries without “Cause”
(as defined below) or the resignation of the Participant for “Good Reason” (as defined below), in
either case upon or within the one (1) year period following the occurrence of a Change in Control
Event, the Award (to the extent outstanding and not previously vested) shall vest and become
payable on the Participant’s Severance Date in accordance with Sections 3 and 6.

For purposes of this Section 8(b), the term “Cause” shall mean the occurrence or existence of any
of the following with respect to the Participant, as determined by a majority of the disinterested
directors of the Board:

(A) the Participant’s conviction by, or entry of a plea of guilty or nolo contendre 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 Participant’s willful engaging
in dishonest or fraudulent actions or omissions which results directly or indirectly in any
demonstrable material financial or economic harm to the Corporation, one or more of its
Subsidiaries, or any of their respective affiliates;

(C) the Participant’s failure or refusal to perform his or her duties as reasonably
required by his or her employer, provided that the Participant shall have first received
written notice from the employer stating with specificity the nature of such failure or
refusal and affording the Participant at least five (5) days to correct the act or omission
complained of;

(D) gross negligence, insubordination, material violation by the Participant of any
duty of loyalty to the Corporation, one or more of its Subsidiaries, or any of their
respective affiliates, or any other material misconduct on the part of the Participant,
provided that the Participant shall have first received written notice from the Corporation
stating with specificity the nature of such action or violation and affording the
Participant 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 interferes with the Participant’s service as an officer or employee of the
Corporation, one or more of its Subsidiaries, or any of their respective affiliates;

 

3

 

(F) sexual harassment by the Participant that has been reasonably substantiated and
investigated;

(G) involvement in activities representing conflicts of interest with the Corporation,
one or more of its Subsidiaries, or any of their respective 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 Corporation, one or
more of its Subsidiaries, or any of their respective affiliates; or

(K) the Participant’s physical destruction or theft of substantial property or assets
of the Corporation, one or more of its Subsidiaries, or any of their respective affiliates

For purposes of this Section 8(b), the term “Good Reason” shall mean any of the following without
the Participant’s express written consent:

(i) a material diminution in the Participant’s authority, duties or responsibilities in
effect immediately prior to the Change in Control Event;

(ii) a material diminution by the Employer (as defined below) in the Participant’s base
compensation in effect immediately prior to a Change in Control Event;

(iii) any material breach by the Corporation or the Employer of any right that the
Participant has under a written severance plan of the Corporation or the Employer in which
the Participant participates or by the Corporation or the Employer of any written employment
agreement either of them may be a party to with the Participant; or

(iv) the requirement by the Employer that the Participant’s principal place of
employment be relocated more than fifty (50) miles from his or her place of employment
immediately prior to a Change in Control Event;

provided, however, that any such condition shall not constitute “Good Reason” unless both
(i) the Participant provides written notice to the Corporation of the condition claimed to
constitute Good Reason within ninety (90) days of the initial existence of such condition,
and (ii) the Corporation fails to remedy such condition within thirty (30) days of receiving
such written notice thereof; and provided, further, that in all events the termination of
the Participant’s employment with the Corporation shall not be treated as a termination for
“Good Reason” unless such termination occurs not more than one (1) year following the
initial existence of the condition claimed to constitute “Good Reason.”

For purposes of this Award Agreement, “Employer” shall mean the Corporation or its Subsidiary
employing the Participant; provided however, that nothing contained herein shall prohibit the
Corporation or another of its Subsidiaries fulfilling any obligation of the employing entity to the
Participant and for such purposes will be deemed the act of the Employer.

9. Adjustments

Upon the occurrence of certain events relating to the Corporation’s stock contemplated by Section
7.1 of the Plan, the Administrator will make adjustments if appropriate in the number of Stock
Units then outstanding and the number and kind of securities that may be issued in respect of the
Award. No such adjustment shall be made with respect to any ordinary cash dividend for which
dividend equivalents are paid pursuant to Section 5.

 

4

 

10. Withholding Taxes

Upon or in connection with the vesting of the Stock Units, the payment of dividend equivalents
and/or the distribution of shares of Common Stock in respect of the Stock Units, the Corporation
(or the Subsidiary last employing the Participant) shall have the right at its option to (a)
require the Participant to pay or provide for payment in cash of the amount of any taxes that the
Corporation or the Subsidiary may be required to withhold with respect to such vesting, payment
and/or distribution, or (b) deduct from any amount payable to the Participant the amount of any
taxes which the Corporation or the Subsidiary may be required to withhold with respect to such
vesting, payment and/or distribution. In any case where a tax is required to be withheld in
connection with the delivery of shares of Common Stock under this Award Agreement, the
Administrator may, in its sole discretion, direct the Corporation or the Subsidiary to reduce the
number of shares to be delivered by (or otherwise reacquire) the appropriate number of whole
shares, valued at their then fair market value (with the “fair market value” of such shares
determined in accordance with the applicable provisions of the Plan), to satisfy such
withholding obligation at the minimum applicable withholding rates. Any deferred Stock Units shall
be subject to the tax withholding provisions of the Deferred Compensation Plan.

11. Nontransferability

Neither the Award, nor any interest therein or amount or shares payable in respect thereof may be
sold, assigned, transferred, pledged or otherwise disposed of, alienated, encumbered, either
voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply
to (a) transfers to the Corporation, or (b) transfers by will or the laws of descent and
distribution.

12. No Right to Employment

Nothing contained in this Award Agreement or the Plan constitutes an employment or service
commitment by the Corporation or any of its Subsidiaries, affects the Participant’s status, if he
or she is an employee, as an employee at will who is subject to termination without cause, confers
upon the Participant any right to remain employed by or 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 employment or service, or affects the right of the Corporation or any Subsidiary
to increase or decrease the Participant’s other compensation.

13. Rights as a Stockholder

Subject to the provisions of the Plan, the Notice and these Standard Terms, the Participant
shall have no rights as a stockholder of the Corporation, no dividend rights (except as expressly
provided in Section 5 with respect to dividend equivalent rights) and no voting rights with respect
to Stock Units awarded to the Participant and any shares of Common Stock underlying or issuable in
respect of such Stock Units until such shares of Common Stock are actually issued to and held of
record by the Participant. No adjustments will be made for dividends or other rights of a holder
for which the record date is prior to the date of issuance of the stock certificate.

14. Notices

Any notice to be given under the terms of this Award 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 payroll 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 employed by the Corporation or a
Subsidiary, shall be deemed to have been duly given five business days after the date mailed in
accordance with the foregoing provisions of this Section 14.

 

5

 

15. Arbitration

Any controversy arising out of or relating to this Award Agreement (including these Standard Terms)
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 arising out
of or related to the Award, 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 §§ 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 Award 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 Award, the Participant consents to all of the terms and conditions
of this Award Agreement (including, without limitation, this Section 15).

16. Governing Law

This Award Agreement, including these Standard Terms, 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.

17. Severability

If the arbitrator selected in accordance with Section 15 or a court of competent jurisdiction
determines that any portion of this Award Agreement (including these Standard Terms) or the Plan is
in violation of any statute or public policy, then only the portions of this Award Agreement or the
Plan, as applicable, which are found to violate such statute or public policy shall be stricken,
and all portions of this Award Agreement 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 Award Agreement 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.

18. Entire Agreement

This Award Agreement (including these Standard Terms) 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 and this Award 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.

 

6

 

19. Section Headings

The section headings of this Award Agreement are for convenience of reference only and shall not be
deemed to alter or affect any provision hereof.

 

7

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