Document:

<PAGE>

                                                                    EXHIBIT 10.2

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WESTERN(R)                                          WESTERN DIGITAL CORPORATION
DIGITAL                                             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

JOHN COYNE                              AWARD NUMBER: <<NBR>>
<<AD1>>                                 PLAN:         <<PLN>>
<<AD2>>                                 ID:           <<ID>>
<<CTY>>, <<ST>> <<Z>>

--------------------------------------------------------------------------------

Congratulations! Effective January 31, 2007, 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:

<Table>
<Caption>

         Units                Vest Date
         -----                ---------
        <S>                <C>
        110,000            January 1, 2008
        110,000            January 1, 2009
        330,000            January 1, 2010
        110,000            January 1, 2011
        440,000            January 1, 2012
</Table>

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Your stock unit award is subject to the terms and conditions of this Notice, the
attached Terms and Conditions for Stock Unit Awards (the "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 Terms. The 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 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 7
of the attached Terms and Conditions for Stock Unit Awards.

<PAGE>

[WESTERN DIGITAL LOGO]

Western Digital Corporation   20511 Lake Forest Drive
Lake Forest, California 92630   Telephone 949 672-7000

                            TERMS AND CONDITIONS FOR
                                STOCK UNIT AWARDS
              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
Terms and Conditions for Stock Unit Awards (these "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
Terms, the Plan or these Terms, as applicable, shall control. To the extent any
terms and provisions in these 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 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, 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.

<PAGE>

An Award may vest and become payable in connection with the occurrence of
certain events involving the Corporation as provided for in Section 7 of the
Plan. Without limiting the foregoing but subject to Sections 7.5, 7.6 and 7.7 of
the Plan, to the extent that the Award is outstanding and otherwise unvested
immediately prior to the occurrence of a Change in Control Event, the Award
shall vest and become payable as to the outstanding and otherwise unvested Stock
Units upon the occurrence of the Change in Control Event. Notwithstanding the
foregoing or anything in this Award Agreement or the Plan, if the event giving
rise to any accelerated vesting pursuant to Section 7 of the Plan is not also a
"change in control event" of the Corporation for purposes of Section 409A of the
Code, then payment with respect to the Award shall not be made until such Stock
Units would have become vested and payable without regard to this Section 4 or
Section 7 of the Plan.

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.
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.      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 Section 3 or 4 above, 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 or Section 7 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 7
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.      TERMINATION OF EMPLOYMENT

Except as otherwise expressly provided in this Section 7 and subject to earlier
vesting as provided in Section 4 and Section 8 hereof, if the Participant ceases
to be employed by or to provide services to the Corporation or its Subsidiaries
(regardless of the reason for such termination, whether with or without cause,
voluntarily or involuntarily, or due to disability), the Participant's Stock
Units shall be forfeited to the Corporation to the extent

                                       2
<PAGE>

such Stock Units have not become vested upon the date the Participant's
employment or services terminate. Notwithstanding anything to the contrary
contained herein, in the event the Participant's employment by or services to
the Corporation or any of its Subsidiaries is terminated (i) on account of the
Participant's death or (ii) by the Corporation or any of its Subsidiaries
without Cause (as such term is defined in that certain Employment Agreement,
dated as of the date hereof, by and between the Participant and the Corporation
(the "Employment Agreement") (and not on account of the Participant's death or
Disability (as such term is defined in the Employment Agreement)), a portion of
the outstanding and otherwise unvested Stock Units shall automatically become
vested as of such date of death or termination, as the case may be, as set forth
in the remaining provisions of this Section 7, 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 total number of Stock Units subject to the
Award multiplied by a fraction (not greater than one), the numerator of which is
the total number of calendar days during the period commencing on the date
hereof through and including the date of the Participant's death (but not less
than 182 days), and the denominator of which is the total number of calendar
days during the period commencing with the date hereof through and including
January 1, 2012, less (b) the total number of Stock Units subject to the Award
that otherwise vested on or before the date of the Participant's death. In the
event the Participant's employment is terminated by the Corporation or any of
its Subsidiaries without Cause (and not on account of the Participant's death or
Disability), the number of Stock Units that shall become vested on the date of
such termination equals the number of Stock Units that are then scheduled to
vest (assuming the Participant's employment did not terminate) during the
six-month period following the date of such termination. The provisions of this
Section 7 are not intended to supersede any rights or benefits to which the
Participant may become entitled under the Corporation's Executive Severance Plan
or Amended and Restated Change of Control Severance Plan (collectively, the
"Severance Plans"); provided, however, that in no event shall the Participant
become entitled to any duplication of benefits under the Award Agreement and
under the Severance Plans.

8.      ADJUSTMENTS

The Administrator may accelerate payment and vesting of the Stock Units in such
circumstances as it, in its sole discretion, may determine. In addition, 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.

9.      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.

10.     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.

                                       3
<PAGE>

11.     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.

12.     RIGHTS AS A STOCKHOLDER

        Subject to the provisions of the Plan, the Notice and these 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.

13.     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 13.

14.     ARBITRATION

Any controversy arising out of or relating to this Award Agreement (including
these 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 Sections 1280 et seq. as the exclusive forum
for the resolution of such dispute; provided, however, that provisional
injunctive relief may, but need not, be sought by either party to this 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 14).

                                       4
<PAGE>

15.     GOVERNING LAW

This Award Agreement, including these 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.

16.     SEVERABILITY

If the arbitrator selected in accordance with Section 14 or a court of competent
jurisdiction determines that any portion of this Award Agreement (including
these 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.

17.     ENTIRE AGREEMENT

This Award Agreement (including these Terms), the Plan and the Employment
Agreement 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.

18.     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.

                                       5<PAGE>

                                                                    EXHIBIT 10.3

[WESTERN DIGITAL LOGO]                               WESTERN DIGITAL CORPORATION
                                                     20511 Lake Forest Drive
                                                     Lake Forest, CA 92630-7741

                         NOTICE OF GRANT OF STOCK OPTION
                              AND OPTION AGREEMENT

ID: 95-2647125

JOHN COYNE                                OPTION NO.:  #######
ADDRESS LINE 1                            PLAN:  2004 PERFORMANCE INCENTIVE PLAN
CITY, STATE ZIP                           ID:  ####

Congratulations! Effective January 31, 2007, you have been granted a
nonqualified stock option to buy 120,000 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:

<TABLE>
<CAPTION>
        Shares1       Vest Type     Full Vesting   Expiration Date2
        -------       ---------     ------------   ----------------
        <S>           <C>           <C>            <C>
        30,000        On Vest Date  01/31/2008     01/31/2017
        90,000        Quarterly     01/31/2011     01/31/2017
</TABLE>

Your option is subject to the terms and conditions of this Notice, the attached
Terms and Conditions for Stock Options (the "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 Terms.
The 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 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
    Terms and Conditions for Stock Options.

                                       1
<PAGE>

[WESTERN DIGITAL LOGO]

Western Digital Corporation   20511 Lake Forest Drive
Lake Forest, California 92630   Telephone 949 672-7000

                     TERMS AND CONDITIONS FOR STOCK OPTIONS
              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 Terms and Conditions for Stock Options (these "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 Terms, the Plan or these Terms, as applicable, shall control. To
the extent any terms and provisions in these 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 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 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.

                                       1
<PAGE>

Notwithstanding the foregoing but subject to Sections 7.5, 7.6 and 7.7 of the
Plan, to the extent that the Option is outstanding and otherwise unvested
immediately prior to the occurrence of a Change in Control Event, the Option
shall vest and become exercisable upon the occurrence of the Change in Control
Event. This acceleration provision shall not in any way limit the Corporation's
ability to terminate the Option in connection with a Change in Control Event as
provided in Section 7.4 of the Plan; provided that, in any such circumstances,
the Optionee is 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
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).

The Option may be exercised only to the extent it is vested and exercisable. To
the extent that the Option is vested and exercisable, the Participant has the
right to exercise the Option (to the extent not previously exercised), and such
right shall continue, until the expiration or earlier termination of the Option
as provided in Section 5. Fractional share interests shall be disregarded, but
may be cumulated.

The vesting schedule requires continued 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. 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 6 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 6 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.      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 6. Except as provided in
Section 6(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. In the event the Participant ceases to
be an employee of the Corporation or any of its Subsidiaries for any reason
(other than a termination of employment by the Corporation or one of its
Subsidiaries for Cause (as such term is defined in that certain Employment
Agreement, dated as of October 31, 2006, by and between the Participant and the
Corporation (the "Employment Agreement")), due to the Participant's death or
Retirement (as defined below), or at a time when the Participant is Totally
Disabled (as defined below)), the Option, to the extent then otherwise scheduled
to vest (assuming the Participant's employment by the Corporation did not
terminate) in the six-month period following the Participant's termination,
shall become vested on the Participant's Severance Date. In addition, in the
event of such a termination, the Option shall terminate on the Participant's
Severance Date to the extent that it is not vested and exercisable on that date
(after giving effect to the preceding sentence) 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.

(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

                                       2
<PAGE>

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 6, 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.

(f) Special Incentive Vesting and Exercisability. In the event the Participant
remains employed by the Corporation as its President and Chief Executive Officer
through January 1, 2012, thereafter upon the termination of

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the Participant's employment with the Corporation or any of its Subsidiaries
(for any reason other than a termination by the Corporation or any of its
Subsidiaries for Cause), the Option (and any other stock options granted to the
Participant during the Employment Period (as defined in the Employment
Agreement)) shall become fully vested as of the Participant's Severance Date,
and it may be exercised by the Participant at any time within three years
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.

(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.

(i) No Duplication of Benefits. The provisions of this Section 7 are not
intended to supersede any rights or benefits to which the Participant may become
entitled under the Corporation's Executive Severance Plan or Amended and
Restated Change of Control Severance Plan (collectively, the "Severance Plans");
provided, however, that in no event shall the Participant become entitled to any
duplication of benefits under the Option Agreement and under the Severance
Plans.

7.      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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<PAGE>

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.

8.      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.

9.      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.

10.     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.

11.     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 11.

12.     ARBITRATION

Any controversy arising out of or relating to this Option Agreement (including
these 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 Sections
1280 et seq. as the exclusive forum for the resolution of such dispute;
provided, however, that provisional injunctive relief may, but need not, be
sought by either party to this Option Agreement in a court of law while
arbitration proceedings are pending, and any provisional injunctive relief

                                       5
<PAGE>

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 12).

13.     GOVERNING LAW

This Option Agreement, including these 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.

14.     SEVERABILITY

If the arbitrator selected in accordance with Section 12 or a court of competent
jurisdiction determines that any portion of this Option Agreement (including
these 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.

15.     ENTIRE AGREEMENT

This Option Agreement (including these Terms), the Plan and the Employment
Agreement 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.

16.     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.

                                       6

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