Document:

Exhibit 10.3

Exhibit 10.3

SEPARATION AND GENERAL RELEASE AGREEMENT

This Separation and General Release Agreement (this “Agreement”) is entered by and between
Martin Finkbeiner (“Executive”) on the one hand, and Western Digital Corporation (“WDC”), on behalf
of itself and all other corporations or other entities a majority of whose outstanding voting stock
or voting power is beneficially owned directly or indirectly by WDC (each, a “WDC Subsidiary”), on
the other hand. WDC and all WDC Subsidiaries are referred to collectively herein as “Western
Digital.”

WHEREAS, Executive has been employed by Western Digital as an Executive Vice President;

WHEREAS, Executive’s employment with Western Digital will terminate on December 1, 2010; and

WHEREAS, Executive’s execution and non-revocation of this Agreement is a condition of
eligibility for Executive to receive severance benefits under the Western Digital Corporation
Executive Severance Plan (the “Plan”).

NOW, THEREFORE, in consideration of the covenants undertaken and the releases contained in
this Agreement, Executive and Western Digital agree as follows:

I. Separation. Executive and Western Digital hereby agree that Executive’s employment
with Western Digital and his service as Executive Vice President, an officer, employee, and in any
other capacity with Western Digital, shall terminate on December 1, 2010 (“Termination Date”). All
payments due to Executive from Western Digital after the Termination Date shall be determined under
this Agreement.

II. Final Compensation. On or before December 1, 2010, Executive shall receive
payment for his accrued but unused vacation. Executive will continue to vest in outstanding equity
grants through December 1, 2010. Executive shall submit his final expense report, if any, by
December 1, 2010, which Western Digital shall reimburse in the ordinary business course. Executive
is not required to sign this Agreement in order to receive the compensation, vesting and expense
reimbursement described in this Section II.

III. Consideration. In the event that Executive executes (and does not revoke) this
Agreement and complies with all of the terms herein, Executive shall be entitled to receive the
benefits set forth below.

A. Lump Sum Payment. Western Digital shall pay to Executive the amount of One
Hundred Fourteen Thousand Two Hundred Thirty Dollars and Seventy-Six Cents ($114,230.76),
less standard withholding and authorized deductions. This payment shall be paid in one
lump-sum payment within twenty-one (21) days following the expiration of the revocation
period set forth in Section VI below.

 

 

 

B. Salary Continuation. Subject to the terms and conditions of this Agreement,
for a period of twenty-four (24) consecutive months commencing on December 2, 2010 (the
“Salary Continuation Period”), Western Digital shall pay Executive a salary continuation of
Thirty-Seven Thousand Five Hundred Dollars and No Cents ($37,500.00) per month, less standard
withholding and authorized deductions; provided, however, that such salary continuation
obligation shall continue only for so long as Executive is in compliance with all provisions
of this Agreement. Said salary continuation payments will be paid to Executive bi-weekly on
Western Digital’s regular payroll cycle. All salary continuation payments due hereunder
shall be paid by direct deposit to an account determined by Executive. Western Digital shall
cease making any such salary continuation payments and shall have no further obligation to
pay salary continuation to Executive at such time as (i) Executive is in material violation
of any of the terms of this Agreement, or (ii) upon expiration of the twenty-four (24) month
period, whichever occurs first. In addition, Western Digital will cease making any such
salary continuation payments and shall have no further obligation to pay salary continuation
to Executive on and after the date Executive is or becomes any of the following after the
Termination Date: self-employed, or a partner or officer of, joint venturer with, employee
of, or otherwise provides services (whether as a consultant, contractor, director or
otherwise) for compensation (whether current, deferred, contingent or otherwise) to, any
person or entity. Executive agrees to immediately notify Western Digital if he is or becomes
so employed, provides such services, or otherwise has such a position or relationship. In
the event Western Digital ceases salary continuation payments for any of the reasons
specified herein, all other covenants undertaken and the releases contained herein shall
remain in full force and effect. Notwithstanding the foregoing, in the event that a Change
in Control occurs prior to the end of the Salary Continuation Period and Executive would be
entitled to receive any salary continuation payments after the Change in Control date, such
salary continuation payments will be paid to Executive in a single sum within ten (10)
business days following the date of such Change in Control. For these purposes, “Change in
Control” shall have the meaning ascribed to such term in Western Digital Corporation Amended
and Restated Change of Control Severance Plan; provided, however, that a transaction shall
not constitute a Change in Control unless it is a “change in the ownership or effective
control” of WDC, or a change “in the ownership of a substantial portion of the assets” of WDC
within the meaning of Section 409A of the Internal Revenue Code and the regulations
promulgated thereunder.

C. ICP Bonus. Executive acknowledges and agrees that he has been paid all
bonuses he is owed by Western Digital through the Termination Date. For the bonus cycle
comprising the 1st Half of Fiscal Year 2011 (the period of July 1 — December 31, 2010),
Executive shall receive a pro-rated bonus under the ICP in the amount of $159,897.52, less
standard withholding and authorized deductions, which represents a payment equal to a
pro-rata portion of Executive’s bonus opportunity under the ICP for the bonus cycle in which
the Termination Date occurs, with such pro-rata portion based on the number of days in the
applicable bonus cycle during which Executive was employed (153) and assuming 100% of the
performance targets are met regardless of the actual funding by Western Digital. This
payment shall be paid in one lump-sum payment within twenty-one (21) days following the
expiration of the revocation period set forth in Section VI below.

 

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D. Options. On the Termination Date, Executive’s then outstanding stock options
will vest and become exercisable as if Executive had remained employed with Western Digital
through June 1, 2011. Notwithstanding anything to the contrary herein, the exercisability of
Executive’s outstanding stock options shall continue to be governed by the stock incentive
plan and stock option agreement applicable to such options. Notwithstanding anything to the
contrary herein, Executive shall not be entitled to any continued vesting under any stock
option award following the Termination Date, and the Termination Date shall be deemed to be
Executive’s “Severance Date” for purposes of any outstanding stock option award agreements.

E. Restricted Stock Units. On the Termination Date, Executive’s then
outstanding and unvested restricted stock units will vest and become payable as if Executive
had remained employed with Western Digital through June 1, 2011. Notwithstanding anything to
the contrary herein, Executive shall not be entitled to any continued vesting under any
restricted stock unit award following the Termination Date, and the Termination Date shall be
deemed to be Executive’s “Severance Date” for purposes of any outstanding restricted stock
unit award agreements.

F. Benefit Continuation. Provided Executive timely elects COBRA continuation of
his medical, dental, and/or vision coverage existing as of the Termination Date and Executive
complies fully with all terms of this Agreement, Western Digital shall make the applicable
COBRA premium payments for a period of eighteen months beyond the expiration of Executive’s
Company-provided medical, dental, and/or vision coverage existing as of the Termination Date
(“COBRA Continuation”). Notwithstanding the foregoing, in the event Executive becomes
eligible for equivalent coverage under another employer’s plan, Executive must immediately
notify Western Digital of such eligibility and Western Digital’s obligation to continue COBRA
premium payments pursuant to this Section III.F shall cease as of Executive’s benefit
eligibility date. Executive understands that Executive remains responsible for working with
Western Digital’s outside benefits administrator to elect COBRA benefits and must timely
elect in order to be eligible for COBRA benefits.

G. Executive Outplacement. Western Digital shall pay for Executive to receive
outplacement services provided by a vendor chosen by Western Digital for a period of up to
twelve (12) months following the Termination Date, subject to a maximum cost to Western
Digital of $25,000.

IV. General Releases. In consideration of the benefits set forth in this Agreement,
and other good and valuable consideration, Executive on behalf of himself, his descendants,
dependents, heirs, executors, administrators, assigns, and successors, and each of them, hereby
covenants not to sue and fully releases and discharges Western Digital Corporation and each of its
parents, subsidiaries and affiliates, past and present, as well as its and their trustees,
directors, officers, members, managers, partners, agents, attorneys, insurers, employees,
stockholders, representatives, assigns, and successors, past and present, and each of them
(hereinafter together and collectively referred to as the “Releasees”), with respect to and from
any and all claims, wages, demands, rights, liens, agreements, contracts, covenants, actions,
suits, causes of action, obligations, debts, costs, expenses, attorneys’ fees, damages,

 

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judgments,
orders and liabilities of whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected
or unsuspected, and whether or not concealed or hidden, which he now owns or holds or he has at any
time heretofore owned or held or may in the future hold as against any of said Releasees, arising
out of or in any way connected with his service as an employee of any Releasee, his separation from
his position as employee of any Releasee, or any other transactions, occurrences, acts or omissions
or any loss, damage or injury whatever, known or unknown, suspected or unsuspected, resulting from
any act or omission by or on the part of said Releasees, or any of them, committed or omitted prior
to the date of Executive’s execution of this Agreement including, without limiting the generality
of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Americans with
Disabilities Act, the Age Discrimination in Employment Act, the Family and Medical Leave Act of
1993, the Worker Adjustment Retraining Notification Act, the California Fair Employment and Housing
Act, the California Family Rights Act, or any other federal, state or local law, regulation or
ordinance, or any claim for severance pay, bonus, sick leave, holiday pay, vacation pay, life
insurance, health or medical insurance or any other fringe benefit, or disability; provided,
however, that the foregoing release shall not apply to (i) any obligation created by or arising
out of this Agreement for which receipt or satisfaction has not been acknowledged, and (ii) any
claim for defense or indemnity arising under California Labor Code Section 2802, California
Corporations Code Section 317, Western Digital’s by-laws, or any federal or state statute, law,
regulation or provision that confers upon Executive a right to defense or indemnification arising
out of the services he performed for Western Digital or any of the Releasees.

Except for those obligations created by or arising out of this Agreement, Western Digital
hereby releases and discharges and covenants not to sue Executive from and with respect to any and
all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or
unsuspected (collectively “Claims”) resulting from any act or omission by or on Executive’s part
committed or omitted prior to the date of this Agreement; provided, however, that the
foregoing release of Executive shall not apply to any claims, known or unknown, suspected or
unsuspected, arising from Executive’s (i) willful breach of fiduciary duty, (ii) fraud in
connection with the business of Western Digital, or (iii) commission of a crime under any federal,
state, or local statute, law, ordinance or regulation.

V. Waiver of Unknown Claims. It is a further condition of the consideration hereof
and is the intention of Executive and Western Digital in executing this instrument that the same
shall be effective as a bar as to each and every claim, demand and cause of action hereinabove
specified and, in furtherance of this intention, Executive and Western Digital hereby expressly
waive any and all rights or benefits conferred by the provisions of SECTION 1542 OF THE CALIFORNIA
CIVIL CODE and expressly consent that this release shall be given full force and effect according
to each and all of its express terms and conditions, including those relating to unknown and
unsuspected claims, demands and causes of actions, if any, as well as those relating to any other
claims, demands and causes of actions hereinabove specified. SECTION 1542 provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR.”

Executive and Western Digital each acknowledge that they understand the significance and
consequence of such release and such specific waiver of SECTION 1542.

 

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VI. ADEA Waiver. Executive expressly acknowledges and agrees that by entering into
this Agreement, he is waiving any and all rights or claims that he may have arising under the Age
Discrimination in Employment Act of 1967, as amended, which have arisen on or before the date of
execution of this Agreement. Executive further expressly acknowledges and agrees that:

A. In return for this Agreement, he will receive consideration beyond that which he was
already entitled to receive before executing this Agreement;

B. He is hereby advised in writing to consult with an attorney before signing this
Agreement;

C. He was given a copy of this Agreement on November 10, 2010, and informed that he had
twenty-one (21) days within which to consider this Agreement; and

D. He was informed that he had seven (7) days following the date of execution of this
Agreement in which to revoke this Agreement. Any revocation must be received in writing by
Jackie DeMaria within the seven-day period following execution of this Agreement by
Executive.

Executive expressly acknowledges and agrees that this Agreement will become null and void and he
will not be entitled to any of the benefits set forth in the Agreement if he elects to revoke this
Agreement during the revocation period set forth above.

VII. No Transferred Claims. Executive warrants and represents that he has not
heretofore assigned or transferred to any person not a party to this Release any released matter or
any part or portion thereof and he shall defend, indemnify and hold Releasees, and each of them,
harmless from and against any claim (including the payment of attorneys’ fees and costs actually
incurred whether or not litigation is commenced) based on or in connection with or arising out of
any such assignment or transfer made, purported or claimed.

VIII. Confidential Information.

A. Confidential Material. Executive, in the performance of Executive’s services
on behalf of Western Digital, has had access to, received and been entrusted with
Confidential Material. In addition, Executive, in the performance of Executive’s consulting
services during the Salary Continuation Period, may continue to receive and be entrusted with
Confidential Material. For purposes of this Agreement, “Confidential Material” includes, but
is not limited to, (a) copyrighted materials, (b) patented materials, (c) lists of Western
Digital’s past, present or prospective customers, suppliers or employees, (d) costs of
materials, manufacturing techniques, component parts or other systems used in Western
Digital’s business, (e) compensation paid to employees and other terms of employment, or (f)
any other information of, about, or concerning the business of Western Digital,

 

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or its manner of operation, or other data of any kind, nature, or
description which is maintained as a trade secret or on a confidential basis. All such
Confidential Material is considered secret and was made or will be made available to
Executive in confidence. Executive represents that he has held all such information
confidential and agrees he will continue to do so. Without limiting the generality of the
foregoing, Executive agrees he will not, at any time, whether during or subsequent to the
term of Executive’s employment with Western Digital, in any fashion, form or manner, unless
specifically consented to in writing by Western Digital, either directly or indirectly, use
or divulge, disclose, or communicate to any person, firm, or entity or corporation, in any
manner whatsoever, any Confidential Material of any kind, nature or description concerning
any matters affecting or relating to the business of Western Digital. Executive understands
and agrees that Executive’s obligations with respect to Western Digital’s Confidential
Material apply to all Confidential Material he received, possessed, or viewed during his
employment with Western Digital, as well as all Confidential Material he receives, possesses
or views during the Salary Continuation Period, including but not limited to Confidential
Material he may have received, possessed, or viewed during his employment with Western
Digital but before Executive signed this Agreement. Executive understands that Confidential
Material is important material and represents confidential trade secrets, proprietary
information and confidential business information of Western Digital and affects the
successful conduct of Western Digital’s business and its goodwill. Executive understands
that any breach of any term of this Section VIII is a material breach of this Agreement.

B. Use and Return of Confidential Material. Executive shall not, directly or
indirectly for any reason whatsoever, disclose or use any such Confidential Material except
in the course and scope of his employment with Western Digital, unless such Confidential
Material ceases (through no fault of Executive’s) to be confidential because it has become
part of the public domain or he is otherwise obligated to disclose such information by the
lawful order of any competent jurisdiction. All records, files, drawings, documents,
equipment and other tangible items, wherever located, relating in any way to the Confidential
Material or otherwise to the business of Western Digital which Executive prepared, used or
encountered, shall be and remain the sole and exclusive property of Western Digital and shall
be included in the Confidential Material. On or before the Termination Date, Executive shall
promptly deliver to Western Digital any and all of the Confidential Material, not previously
delivered to Western Digital, which may be or at any previous time has been in Executive’s
possession or under Executive’s control. Executive further agrees to return all documents,
memoranda, reports, files, samples, books, correspondence, lists, programs, documentation,
and/or other related materials produced as a result of Executive’s employment with Western
Digital, other written or graphic records, and the like, affecting or relating to the
business of Western Digital.

C. Unfair Competition. Executive hereby acknowledges that the sale or
unauthorized use or disclosure of any of the Confidential Material by any means whatsoever
shall constitute “Unfair Competition.” Executive agrees that Executive shall not engage in
Unfair Competition at any time.

 

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IX. Return of Company Property. On or before the Termination Date, Executive shall
return all Western Digital property in his possession to Western Digital, including, but not
limited to, any keys, computers, cell phone, personal data assistants, equipment and notebooks.

X. Consulting Services. During the Salary Continuation Period, Executive agrees to
provide advice and consultation to Western Digital as Western Digital may reasonably request from
time to time on matters with which Executive was familiar and/or about which Executive acquired
knowledge, expertise and/or experience during the time that Executive was employed by Western
Digital. During the Salary Continuation Period, Executive shall report only to Western Digital’s
Chief Executive Officer (“CEO”) or CEO’s designee and shall not initiate any business-related
contact with other employees of Western Digital unless requested by the CEO or CEO’s designee.
This Agreement does not authorize Executive to act for Western Digital as its agent or to make
commitments on behalf of Western Digital. Executive shall not hold himself out as an agent of
Western Digital for any purpose, including reporting to any governmental authority or agency, and
shall have no authority to bind Western Digital to any obligation whatsoever.

XI. Soliciting Employees. Executive promises and agrees that he will not, during the
Salary Continuation Period, directly or indirectly solicit any employee of Western Digital to work
for any business, individual, partnership, firm, or corporation.

XII. Injunctive Relief. It is expressly agreed that Western Digital will or would
suffer irreparable injury if Executive were to breach Section VIII, IX or XI of this Agreement, and
that, therefore, Western Digital shall be entitled to an injunction prohibiting Executive from any
breach or threatened breach of such provisions of this Agreement.

XIII. Non-Disparagement. Executive agrees that he shall not (1) directly or
indirectly, make or ratify any statement, public or private, oral or written, to any person that
disparages, either professionally or personally, Western Digital, as well as its trustees,
directors, officers, members, managers, partners, agents, attorneys, insurers, employees,
stockholders, representatives, assigns, and successors, past and present, and each of them, or (2)
make any statement or engage in any conduct that has the purpose or effect of disrupting the
business of Western Digital. In the event Western Digital receives inquiries from potential
employers regarding Executive, Western Digital will provide only Executive’s dates of employment,
position history, and compensation. Executive agrees that he will direct all reference inquiries
to Western Digital’s third-party verification service, The Work Number. Nothing herein shall in
any way prohibit Executive or Western Digital from disclosing such information as may be required
by law, or by judicial or administrative process or order or the rules of any securities exchange
or similar self-regulatory organization applicable to Executive or Western Digital.

XIV. Workers’ Compensation. Executive acknowledges that Executive has no pending
claim for workers’ compensation benefits against Western Digital. Executive warrants and
represents that he does not have any work related injury or illness arising from his employment at
Western Digital.

 

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XV. Miscellaneous.

A. Successors.

1. This Agreement is personal to Executive and shall not, without the prior written
consent of Western Digital, be assignable by Executive.

2. This Agreement shall inure to the benefit of and be binding upon Western Digital and
its respective successors and assigns and any such successor or assignee shall be deemed
substituted for Western Digital under the terms of this Agreement for all purposes. As used
herein, “successor” and “assignee” shall include any person, firm, corporation or other
business entity which at any time, whether by purchase, merger or otherwise, directly or
indirectly acquires ownership of Western Digital or to which Western Digital assigns this
Agreement by operation of law or otherwise.

B. Waiver. No waiver of any breach of any term or provision of this Agreement
shall be construed to be, nor shall be, a waiver of any other breach of this Agreement. No
waiver shall be binding unless in writing and signed by the party waiving the breach.

C. Modification. This Agreement may not be amended or modified other than by a
written agreement executed by Executive and the Chief Executive Officer of Western Digital.

D. Complete Agreement. This Agreement constitutes and contains the entire
agreement and final understanding concerning Executive’s relationship with Western Digital
and the other subject matters addressed herein between the parties, and supersedes and
replaces all prior negotiations and all agreements proposed or otherwise, whether written or
oral, concerning the subject matters hereof. Any representation, promise or agreement not
specifically included in this Agreement shall not be binding upon or enforceable against
either party. This Agreement constitutes an integrated agreement.

E. Litigation and Investigation Assistance. Executive agrees to cooperate in
the defense of Western Digital against any threatened or pending litigation or in any
investigation or proceeding by any governmental agency or body that relates to any events or
actions which occurred during or prior to the term of Executive’s employment with Western
Digital or during the Salary Continuation Period. Furthermore, Executive agrees to cooperate
in the prosecution of any claims and lawsuits brought by Western Digital that are currently
outstanding or that may in the future be brought relating to matters which occurred during or
prior to the term of Executive’s employment with Western Digital or during the Salary
Continuation Period. Except as requested by Western Digital or as required by law, Executive
shall not comment upon any (i) threatened or pending claim or litigation (including
investigations or arbitrations) involving Western Digital or (ii) threatened or pending
government investigation
involving Western Digital. Western Digital shall reimburse Executive for all reasonable
out of pocket expenses incurred in providing assistance pursuant to this provision.

 

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F. Intellectual Property Assistance. Executive agrees that he shall execute
every lawful document that Western Digital requests him to execute (whether or not during his
employment with Western Digital) in connection with the protection of Western Digital’s
intellectual property rights. Such lawful documents include, but are not limited to,
declarations and assignments including declarations of inventorship for filing and
prosecuting patent applications on inventions, assignments to show title to such inventions
and patent applications in Western Digital or Western Digital’s designee, and assignments to
show title to works of authorship and applications for copyright registration. Executive
agrees that he shall give such further assistance, including but not limited to information
and testimony pursuant to Western Digital’s request (whether or not during the Salary
Continuation Period) in connection with its defense, assertion, or protection of Western
Digital’s intellectual property rights. Western Digital shall reimburse Executive for all
reasonable out of pocket expenses incurred in providing assistance pursuant to this
provision.

G. Severability. If any provision of this Agreement or the application thereof
is held invalid, the invalidity shall not affect other provisions or applications of this
Agreement which can be given effect without the invalid provisions or applications and to
this end the provisions of this Agreement are declared to be severable.

H. Choice of Law. This Agreement shall be deemed to have been executed and
delivered within the State of California, and the rights and obligations of the parties
hereunder shall be construed and enforced in accordance with, and governed by, the laws of
the State of California without regard to principles of conflict of laws.

I. Cooperation in Drafting. Each party has cooperated in the drafting and
preparation of this Agreement. Hence, in any construction to be made of this Agreement, the
same shall not be construed against any party on the basis that the party was the drafter.

J. Counterparts. This Agreement may be executed in counterparts, and each
counterpart, when executed, shall have the efficacy of a signed original. Photographic
copies of such signed counterparts may be used in lieu of the originals for any purpose.

K. Advice of Counsel. In entering this Agreement, the parties represent that
they have had the opportunity to seek the advice of counsel prior to executing this
Agreement.

L. Supplementary Documents. All parties agree to cooperate fully and to execute
any and all supplementary documents and to take all additional actions that may be necessary
or appropriate to give full force to the basic terms and intent of this Agreement and which
are not inconsistent with its terms.

 

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M. Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation of this
Agreement.

N. Taxes. Except for amounts withheld by Western Digital, Executive shall be
solely responsible for any taxes due as a result of any payments or benefits provided by
Western Digital pursuant to this Agreement. Except for amounts withheld by Western Digital,
Executive will defend and indemnify Western Digital from and against any tax liability that
it may have with respect to any such payment and against any and all losses or liabilities,
including defense costs, arising out of Executive’s failure to pay any taxes due with respect
to any such payment or benefits.

O.
Construction. It is intended that the terms of this Agreement will not
result in the imposition of any tax liability pursuant to Section 409A of the Internal
Revenue Code. This Agreement shall be construed and interpreted consistent with that intent.

I have read the foregoing Agreement and I accept and agree to the provisions it contains and
hereby execute it voluntarily with full understanding of its consequences.

EXECUTED this 1st day of December 2010, at Orange County, California.

	 	 	 	 	 
	 	“Executive”

 	 
	 	/s/ Martin Finkbeiner
 	 
	 	Martin Finkbeiner 	 

EXECUTED this 1st day of December 2010, at Orange County, California.

	 	 	 	 	 
	 

	 	“Western Digital”	 	 
	 
	 	 	 	 
	 

	 	Western Digital Corporation, on behalf of
itself and all WDC Subsidiaries	 	 
	 
	 	 	 	 
	 

	 	By: Its Authorized Representative	 	 
	 
	 	 	 	 
	 

	 	/s/ Jackie DeMaria	 	 
	 

	 	 

By: Jackie DeMaria
	 	 
	 

	 	Its: Senior Vice President, Global HR	 	 

 

10Exhibit 10.4

Exhibit 10.4

Western Digital Corporation

Deferred Compensation Plan

Amended and Restated Effective

<September 11, 2008>

 

 

 

	 	 	 	 	 
	Article I
	 	 	 	 
	Establishment and Purpose
	 	 	1	 
	 
	 	 	 	 
	Article II 
	 	 	 	 
	Definitions
	 	 	1	 
	 
	 	 	 	 
	Article III
	 	 	 	 
	Eligibility and Participation
	 	 	10	 
	 
	 	 	 	 
	Article IV
	 	 	 	 
	Deferrals
	 	 	10	 
	 
	 	 	 	 
	Article V
	 	 	 	 
	Company Contributions
	 	 	13	 
	 
	 	 	 	 
	Article VI
	 	 	 	 
	Benefits
	 	 	14	 
	 
	 	 	 	 
	Article VII
	 	 	 	 
	Modifications to Payment Schedules
	 	 	18	 
	 
	 	 	 	 
	Article VIII
	 	 	 	 
	Valuation of Account Balances; Investments
	 	 	19	 
	 
	 	 	 	 
	Article IX
	 	 	 	 
	Administration
	 	 	21	 
	 
	 	 	 	 
	Article X
	 	 	 	 
	Amendment and Termination
	 	 	22	 
	 
	 	 	 	 
	Article XI
	 	 	 	 
	Informal Funding
	 	 	23	 
	 
	 	 	 	 
	Article XII
	 	 	 	 
	Claims
	 	 	23	 
	 
	 	 	 	 
	Article XIII
	 	 	 	 
	General Provisions
	 	 	29	 

 

 

 

Article I

Establishment and Purpose

Western Digital Corporation (the “Company”) hereby amends and restates the Western Digital
Corporation Deferred Compensation Plan (the “Plan”), effective September 11, 2008. The Plan was
further amended on August 11, 2010 and November 10, 2010. The Plan applies only to amounts
deferred under the Plan on or after January 1, 2005, and to amounts deferred prior to January 1,
2005 that were not vested as of December 31, 2004. Amounts deferred under the Plan prior to January
1, 2005 that were vested as of December 31, 2004 (the “Grandfathered Accounts”) shall be subject to
the provisions of the Plan as in effect on October 3, 2004 (the “Grandfathered Plan”), as the same
may be amended from time to time by the Company without material modification, it being expressly
intended that such Grandfathered Accounts are to remain exempt from the requirements of Code
Section 409A. Specified provisions of the Plan applicable to Grandfathered Accounts are reflected
in this document for ease of reference; however, reflection of such provisions shall not modify the
provisions of the Grandfathered Plan.

The purpose of the Plan is to attract and retain key employees and Directors by providing
Participants with an opportunity to defer receipt of a portion of their salary, bonus, and other
specified compensation. The Plan is not intended to meet the qualification requirements of Code
Section 401(a), but is intended to meet the requirements of Code Section 409A so as to avoid the
imputation of any tax, penalty or interest thereunder, and shall be operated and interpreted
consistent with that intent.

The Plan constitutes an unsecured promise by a Participating Employer to pay benefits in the
future. Participants in the Plan shall have the status of general unsecured creditors of the
Company or the Adopting Employer, as applicable. Each Participating Employer shall be solely
responsible for payment of the benefits of its employees and their beneficiaries. The Plan is
unfunded for Federal tax purposes and is intended to be an unfunded arrangement for eligible
employees who are part of a select group of management or highly compensated employees of the
Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. Any amounts set
aside to defray the liabilities assumed by the Company or an Adopting Employer will remain the
general assets of the Company or the Adopting Employer and shall remain subject to the claims of
the Company’s or the Adopting Employer’s creditors until such amounts are distributed to the
Participants.

Article II

Definitions

	2.1	 	Account. Account means a bookkeeping account maintained by the Committee to record
the payment obligation of a Participating Employer to a Participant as determined under the
terms of the Plan. The Committee may maintain an Account to record the total obligation to a
Participant and component Accounts to reflect amounts payable at different times and in
different forms. Reference to an Account means any such Account established by the Committee,
as the context requires. Accounts are intended to constitute unfunded obligations within the
meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

 

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	2.2	 	Account Balance. Account Balance means, with respect to any Account, the total
payment obligation owed to a Participant from such Account as of the most recent Valuation
Date.

	2.3	 	Adopting Employer. Adopting Employer means an Affiliate who, with the consent of the
Company, has adopted the Plan for the benefit of its Eligible Employees.

	2.4	 	Affiliate. Affiliate means a corporation, trade or business that, together with the
Company, is treated as a single employer under Code Section 414(b) or (c).

	2.5	 	Beneficiary. Beneficiary means a natural person, estate, or trust designated by a
Participant to receive payments to which a Beneficiary is entitled in accordance with
provisions of the Plan. If someone other than the Participant’s spouse is designated as
Beneficiary, a spousal consent, in the form designated by the Committee, must be signed by
that Participant’s spouse and returned to the Committee. If the Participant has failed to
properly designate a Beneficiary, or if all designated Beneficiaries have predeceased the
Participant, then the Beneficiary shall be the Participant’s spouse, if living, otherwise the
Participant’s estate.

A former spouse shall have no interest under the Plan, as Beneficiary or otherwise, unless
the Participant designates such person as a Beneficiary after dissolution of the marriage,
except to the extent provided under the terms of a domestic relations order as described in
Code Section 414(p)(1)(B).

	2.6	 	Business Day. Business Day means each day on which the New York Stock Exchange is
open for business.

	2.7	 	Change in Control. Change in Control means, with respect to a Participating Employer
that is organized as a corporation, any of the following events: (i) a change in the ownership
of the Participating Employer, (ii) a change in the effective control of the Participating
Employer, or (iii) a change in the ownership of a substantial portion of the assets of the
Participating Employer.

For purposes of this Section, a change in the ownership of the Participating Employer occurs
on the date on which any one person, or more than one person acting as a group, acquires
ownership of stock of the Participating Employer that, together with stock held by such
person or group constitutes more than 50% of the total fair market value or total voting
power of the stock of the Participating Employer. A change in the effective control of the
Participating Employer occurs on the date on which either: (i) a person, or more than one
person acting as a group, acquires ownership of stock of the Participating Employer
possessing 30% or more of the total voting power of the stock of the Participating Employer,
taking into account all such stock acquired during the 12-month period ending on the date of
the most recent acquisition, or (ii) a majority of the members of the Participating
Employer’s Board of Directors is replaced during any 12-month period by directors whose
appointment or election is not endorsed by a majority of the members of such Board of
Directors prior to the date of the appointment or election, but only if no other corporation
is a majority shareholder of the Participating Employer. A
change in the ownership of a substantial portion of assets occurs on the date on which any
one person, or more than one person acting as a group, other than a person or group of
persons that is related to the Participating Employer, acquires assets from the
Participating Employer that have a total gross fair market value equal to or more than 40%
of the total gross fair market value of all of the assets of the Participating Employer
immediately prior to such acquisition or acquisitions, taking into account all such assets
acquired during the 12-month period ending on the date of the most recent acquisition.

 

2

 

An event constitutes a Change in Control with respect to a Participant only if the
Participant performs services for the Participating Employer that has experienced the Change
in Control, or the Participant’s relationship to the affected Participating Employer
otherwise satisfies the requirements of Treasury Regulation Section 1.409A-3(i)(5)(ii) (or
any successor provision).

Notwithstanding anything to the contrary herein, with respect to a Participating Employer
that is a partnership, Change in Control means only a change in the ownership of the
partnership or a change in the ownership of a substantial portion of the assets of the
partnership, and the provisions set forth above respecting such changes relative to a
corporation shall be applied by analogy.

The determination as to the occurrence of a Change in Control shall be based on objective
facts and in accordance with the requirements of Code Section 409A.

	2.8	 	Claimant. Claimant means a Participant or Beneficiary filing a claim under Article
XII of this Plan.

	2.9	 	Code. Code means the Internal Revenue Code of 1986, as amended from time to time.

	2.10	 	Code Section 409A. Code Section 409A means section 409A of the Code, and regulations
and other guidance issued by the Treasury Department and Internal Revenue Service thereunder.

	2.11	 	Committee. Committee means the committee appointed by the Board of Directors of the
Company (or the appropriate committee of such board) to administer the Plan. Members of the
Committee may be Participants and/or Employees; provided, however, that any member of the
Committee who is a Participant shall not vote or act on any matter relating solely to himself
or herself. If no designation is made, the Board of Directors of the Company shall have and
exercise the powers of the Committee.

	2.12	 	Company. Company means Western Digital Corporation, a Delaware corporation, and any
successor to all or substantially all of the Company’s assets or business.

	2.13	 	Company Contribution. Company Contribution means a credit by a Participating Employer
to a Participant’s Account(s) in accordance with the provisions of Article V of the Plan.
Company Contributions are credited at the sole discretion of the Participating Employer and
the fact that a Company Contribution is credited in one year shall not obligate the
Participating Employer to continue to make such Company Contribution in
subsequent years. Unless the context clearly indicates otherwise, a reference to Company
Contribution shall include Earnings attributable to such contribution.

 

3

 

	2.14	 	Company Stock. Company Stock means shares of common stock issued by the Company.

	2.15	 	Compensation. Compensation means a Participant’s base salary, bonus, commission,
Director fees, and such other cash or equity-based compensation (if any) approved by the
Committee as Compensation that may be deferred under this Plan. Compensation shall not include
any compensation that has been previously deferred under this Plan or any other arrangement
subject to Code Section 409A.

	2.16	 	Compensation Deferral Agreement. Compensation Deferral Agreement means an agreement
between a Participant and a Participating Employer that specifies: (i) the amount of each
component of Compensation that the Participant has elected to defer to the Plan in accordance
with the provisions of Article IV, and (ii) the Payment Schedule applicable to one or more
Accounts. The Committee may permit different deferral amounts for each component of
Compensation and may establish a minimum or maximum deferral amount for each such component.
Unless otherwise specified by the Committee in the Compensation Deferral Agreement,
Participants may defer up to 80% of Compensation payable in the form of cash and up to 100% of
other types of Compensation for a Plan Year. A Compensation Deferral Agreement may also
specify the investment allocation described in Section 8.4.

	2.17	 	Death Benefit. Death Benefit means the benefit payable under the Plan to a
Participant’s Beneficiary(ies) upon the Participant’s death as provided in Section 6.1 of the
Plan.

	2.18	 	Deferral. Deferral means a credit to a Participant’s Account(s) that records that
portion of the Participant’s Compensation that the Participant has elected to defer to the
Plan in accordance with the provisions of Article IV. Unless the context of the Plan clearly
indicates otherwise, a reference to Deferrals includes Earnings attributable to such
Deferrals.

Deferrals shall be calculated with respect to the gross cash Compensation payable to the
Participant prior to any deductions or withholdings, but shall be reduced by the Committee
as necessary so that it does not exceed 100% of the cash Compensation of the Participant
remaining after deduction of all required income and employment taxes, 401(k) and other
employee benefit deductions, and other deductions required by law. Changes to payroll
withholdings that affect the amount of Compensation being deferred to the Plan shall be
allowed only to the extent permissible under Code Section 409A.

	2.19	 	Director. Director means a member of the Board of Directors of the Company.

	2.20	 	Disability Benefit. Disability Benefit means the benefit payable under the Plan to a
Participant in the event such Participant is determined to be Disabled.

 

4

 

	2.21	 	Disabled. Disabled means that a Participant is, by reason of any
medically-determinable physical or mental impairment which can be expected to result in death
or can be
expected to last for a continuous period of not less than 12 months: (i) unable to engage in
any substantial gainful activity, or (ii) receiving income replacement benefits for a period
of not less than three months under an accident and health plan covering employees of the
Participant’s employer. The Committee shall determine whether a Participant is Disabled in
accordance with Code Section 409A provided; however, that a Participant shall be deemed to
be Disabled if determined to be totally disabled by the Social Security Administration or
the Railroad Retirement Board.

	2.22	 	Earnings. Earnings means an adjustment to the value of an Account in accordance with
Article VIII.

	2.23	 	Effective Date. Effective Date means September 11, 2008.

	2.24	 	Eligible Employee. Eligible Employee means a member of a “select group of management
or highly compensated employees” of a Participating Employer within the meaning of Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA, as determined by the Committee from time to time in
its sole discretion.

	2.25	 	Employee. Employee means a common-law employee of an Employer.

	2.26	 	Employer. Employer means, with respect to Employees it employs, the Company and each
Affiliate.

	2.27	 	ERISA. ERISA means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

	2.28	 	Fiscal Year Compensation. Fiscal Year Compensation means Compensation earned during
one or more consecutive fiscal years of a Participating Employer, all of which is paid after
the last day of such fiscal year or years.

	2.29	 	Grandfathered Account. Grandfathered Account means amounts deferred under the Plan
prior to January 1, 2005 that were vested as of December 31, 2004.

	2.30	 	Participant. Participant means an Eligible Employee or a Director who has received
notification of his or her eligibility to defer Compensation under the Plan under Section 3.1
and any other person with an Account Balance greater than zero, regardless of whether such
individual continues to be an Eligible Employee or a Director. A Participant’s continued
participation in the Plan shall be governed by Section 3.2 of the Plan.

	2.31	 	Participating Employer. Participating Employer means the Company and each Adopting
Employer.

	2.32	 	Payment Schedule. Payment Schedule means the date as of which payment of an Account
under the Plan will commence and the form in which payment of such Account will be made.

 

5

 

	2.33	 	Performance-Based Compensation. Performance-Based Compensation means Compensation
where the amount of, or entitlement to, the Compensation is contingent on the satisfaction of
pre-established organizational or individual performance criteria relating to a performance
period of at least 12 consecutive months. Organizational or individual performance criteria
are considered pre-established if established in writing by not later than 90 days after the
commencement of the period of service to which the criteria relate, provided that the outcome
is substantially uncertain at the time the criteria are established. The determination of
whether Compensation qualifies as “Performance-Based Compensation” will be made in accordance
with Treas. Reg. Section 1.409A-1(e) and subsequent guidance.

	2.34	 	Plan. Generally, the term Plan means the “Western Digital Corporation Deferred
Compensation Plan” as documented herein and as may be amended from time to time hereafter.
However, to the extent permitted or required under Code Section 409A, the term Plan may in the
appropriate context also mean a portion of the Plan that is treated as a single plan under
Treas. Reg. Section 1.409A-1(c), or the Plan or portion of the Plan and any other nonqualified
deferred compensation plan or portion thereof that is treated as a single plan under such
section.

	2.35	 	Plan Year. Plan Year means January 1 through December 31.

	2.36	 	Retirement. Retirement means a Participant’s Separation from Service for reasons
other than Disability or death after attainment of age 55; provided, however, that in the case
of a non-Employee Director, Retirement means severance of all directorships with the Employer
for reasons other than Disability or death after attainment of age 70 (or, with respect to a
Grandfathered Account, severance of all directorships with the Employer for reasons other than
Disability or death after attainment of age 70 or such later age as the Committee shall
specify).

	2.37	 	Retirement Benefit. Retirement Benefit means the benefit payable to a Participant
under the Plan following the Retirement of the Participant.

	2.38	 	Retirement/Termination Account. Retirement/Termination Account means an Account
established by the Committee to record the amounts payable to a Participant upon Retirement or
other Separation from Service. Unless the Participant has established a Specified Date
Account, all Deferrals and Company Contributions shall be allocated to a
Retirement/Termination Account on behalf of the Participant.

 

6

 

	2.39	 	Separation from Service. Separation from Service means a termination of services
provided by a Participant to his or her Employer, whether voluntarily or involuntarily, other
than by reason of death or Disability, as determined by the Committee in accordance with
Treas. Reg. §1.409A-1(h). In determining whether a Participant has experienced a Separation
from Service, the following provisions shall apply:

	 	(a)	 	For a Participant who provides services to an Employer as an Employee, except
as otherwise provided in part (c) of this Section, a Separation from Service shall
occur when such Participant has experienced a termination of employment with
such Employer. A Participant shall be considered to have experienced a termination
of employment when the facts and circumstances indicate that the Participant and his
or her Employer reasonably anticipate that either (i) no further services will be
performed for the Employer after a certain date, or (ii) that the level of bona fide
services the Participant will perform for the Employer after such date (whether as
an Employee or as an independent contractor) will permanently decrease to no more
than 20% of the average level of bona fide services performed by such Participant
(whether as an Employee or an independent contractor) over the immediately preceding
36-month period (or the full period of services to the Employer if the Participant
has been providing services to the Employer less than 36 months).

If a Participant is on military leave, sick leave, or other bona fide leave of
absence, the employment relationship between the Participant and the Employer shall
be treated as continuing intact, provided that the period of such leave does not
exceed 6 months, or if longer, so long as the Participant retains a right to
reemployment with the Employer under an applicable statute or by contract. If the
period of a military leave, sick leave, or other bona fide leave of absence exceeds
6 months and the Participant does not retain a right to reemployment under an
applicable statute or by contract, the employment relationship shall be considered
to be terminated for purposes of this Plan as of the first day immediately following
the end of such 6-month period. In applying the provisions of this paragraph, a
leave of absence shall be considered a bona fide leave of absence only if there is a
reasonable expectation that the Participant will return to perform services for the
Employer.

	 	(b)	 	For a Participant who provides services to an Employer as an independent
contractor, except as otherwise provided in part (c) of this Section, a Separation from
Service shall occur upon the expiration of the contract (or in the case of more than
one contract, all contracts) under which services are performed for such Employer,
provided that the expiration of such contract(s) is determined by the Committee to
constitute a good-faith and complete termination of the contractual relationship
between the Participant and such Employer.

	 	(c)	 	For a Participant who provides services to an Employer as both an Employee and
an independent contractor, a Separation from Service generally shall not occur until
the Participant has ceased providing services for such Employer as both as an Employee
and as an independent contractor, as determined in accordance with the provisions set
forth in parts (a) and (b) of this Section, respectively. Similarly, if a Participant
either (i) ceases providing services for an Employer as an independent contractor and
begins providing services for such Employer as an Employee, or (ii) ceases providing
services for an Employer as an Employee and begins providing services for such Employer
as an independent contractor, the Participant will not be considered to have
experienced a Separation from Service until the Participant has ceased providing
services for such Employer in both capacities, as determined in accordance with the
applicable provisions set forth in parts (a) and (b) of this Section.

 

7

 

Notwithstanding the foregoing provisions in this part (c), if a Participant provides
services for an Employer as both an Employee and as a Director, to the extent
permitted by Treas. Reg. §1.409A-1(h)(5) the services provided by such Participant
as a Director shall not be taken into account in determining whether the Participant
has experienced a Separation from Service as an Employee, and the services provided
by such Participant as an Employee shall not be taken into account in determining
whether the Participant has experienced a Separation from Service as a Director.

	2.40	 	Specified Date Account. Specified Date Account means an Account established by the
Committee to record the amounts payable at a future date as specified in the Participant’s
Compensation Deferral Agreement. Unless otherwise determined by the Committee, a Participant
may maintain no more than five Specified Date Accounts with respect to Deferrals not
attributable to a Grandfathered Account. A Specified Date Account may be identified in
enrollment materials as an “In-Service Account” or such other name as established by the
Committee without affecting the meaning thereof. Any Short-Term Payout (as defined in the
Grandfathered Plan) elected by a Participant with respect to Deferrals attributable to a
Grandfathered Account shall be maintained in separate Specified Date Accounts.

	2.41	 	Specified Date Benefit. Specified Date Benefit means the benefit payable to a
Participant under the Plan in accordance with Section 6.1(c).

	2.42	 	Specified Employee. Specified Employee means an Employee who, as of the date of his
or her Separation from Service, is a “key employee” of the Company or any Affiliate, any stock
of which is actively traded on an established securities market or otherwise.

An Employee is a key employee if he or she meets the requirements of Code Section
416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with applicable regulations
thereunder and without regard to Code Section 416(i)(5)) at any time during the 12-month
period ending on the Specified Employee Identification Date. Such Employee shall be treated
as a key employee for the entire 12-month period beginning on the Specified Employee
Effective Date.

For purposes of determining whether an Employee is a Specified Employee, the compensation of
the Employee shall be determined in accordance with the definition of compensation provided
under Treas. Reg. Section 1.415(c)-2(d)(2) (wages, salaries, fees for professional services,
and other amounts received for personal services actually rendered in the course of
employment with the employer maintaining the plan, to the extent such amounts are includible
in gross income or would be includible but for an election under section 125(a), 132(f)(4),
402(e)(3), 402(h)(1)(B), 402(k) or 457(b), including the earned income of a self-employed
individual); provided, however, that, with respect to a nonresident alien who is not a
Participant in the Plan, compensation shall not include compensation that is not includible
in the gross income of the Employee under Code Sections 872, 893, 894, 911, 931 and 933,
provided such compensation is not effectively connected with the conduct of a trade or
business within the United States.

 

8

 

Notwithstanding anything in this paragraph to the contrary: (i) if a different definition of
compensation has been designated by the Company with respect to another nonqualified
deferred compensation plan in which a key employee participates, the definition of
compensation shall be the definition provided in Treas. Reg. Section 1.409A-1(i)(2), and
(ii) the Company may through action that is legally binding with respect to all nonqualified
deferred compensation plans maintained by the Company, elect to use a different definition
of compensation.

In the event of corporate transactions described in Treas. Reg. Section 1.409A-1(i)6), the
identification of Specified Employees shall be determined in accordance with the default
rules described therein, unless the Employer elects to utilize the available alternative
methodology through designations made within the timeframes specified therein.

	2.43	 	Specified Employee Identification Date. Specified Employee Identification Date means
December 31, unless the Employer has elected a different date through action that is legally
binding with respect to all nonqualified deferred compensation plans maintained by the
Employer.

	2.44	 	Specified Employee Effective Date. Specified Employee Effective Date means the first
day of the fourth month following the Specified Employee Identification Date, or such earlier
date as is selected by the Committee.

	2.45	 	Substantial Risk of Forfeiture. Substantial Risk of Forfeiture means the description
specified in Treas. Reg. Section 1.409A-1(d).

	2.46	 	Termination Benefit. Termination Benefit means the benefit payable to a Participant
under the Plan following the Participant’s Separation from Service prior to Retirement.

	2.47	 	Unforeseeable Emergency. Unforeseeable Emergency means a severe financial hardship to
the Participant resulting from an illness or accident of the Participant, the Participant’s
spouse, the Participant’s dependent (as defined in Code section 152, without regard to section
152(b)(1), (b)(2), and (d)(1)(B)), or a Beneficiary; loss of the Participant’s property due to
casualty (including the need to rebuild a home following damage to a home not otherwise
covered by insurance, for example, as a result of a natural disaster); or other similar
extraordinary and unforeseeable circumstances arising as a result of events beyond the control
of the Participant. Whether an Unforeseeable Emergency has occurred shall be determined by
the Committee in accordance with Code Section 409A. The types of events which may qualify as
an Unforeseeable Emergency may be limited by the Committee.

	2.48	 	Valuation Date. Valuation Date means each Business Day.

	2.49	 	Year of Service. Year of Service means each 12-month period of continuous service
with the Employer.

 

9

 

Article III

Eligibility and Participation

	3.1	 	Eligibility and Participation. An Eligible Employee or a Director becomes a
Participant upon the earlier to occur of: (i) a credit of Company Contributions under Article
V, or (ii) receipt of notification of eligibility to participate.

	3.2	 	Duration. A Participant shall be eligible to defer Compensation and receive
allocations of Company Contributions, subject to the terms of the Plan, for as long as such
Participant remains an Eligible Employee or a Director. A Participant who is no longer an
Eligible Employee or a Director but has not Separated from Service may not defer Compensation
under the Plan beyond the Plan Year in which he or she became ineligible but may otherwise
exercise all of the rights of a Participant under the Plan with respect to his or her
Account(s). On and after a Separation from Service, a Participant shall remain a Participant
as long as his or her Account Balance is greater than zero (0), and during such time may
continue to make allocation elections as provided in Section 8.4. An individual shall cease
being a Participant in the Plan when all benefits under the Plan to which he or she is
entitled have been paid.

Article IV

Deferrals

	4.1	 	Deferral Elections, Generally.

	 	(a)	 	A Participant may elect to defer Compensation by submitting a Compensation
Deferral Agreement during the enrollment periods established by the Committee and in
the manner specified by the Committee, but in any event, in accordance with Section
4.2. A Compensation Deferral Agreement that is not timely filed with respect to a
service period or component of Compensation shall be considered void and shall have no
effect with respect to such service period or Compensation. The Committee may modify
any Compensation Deferral Agreement prior to the date the election becomes irrevocable
under the rules of Section 4.2.

	 	(b)	 	The Participant shall specify on his or her Compensation Deferral Agreement the
amount of Deferrals and whether to allocate Deferrals to a Retirement/Termination
Account or to a Specified Date Account. If no designation is made, Deferrals shall be
allocated to the Retirement/Termination Account. A Participant may also specify in his
or her Compensation Deferral Agreement the Payment Schedule applicable to his or her
Plan Accounts. If the Payment Schedule is not specified in a Compensation Deferral
Agreement, the Payment Schedule shall be the Payment Schedule specified in Section 6.2.

 

10

 

	4.2	 	Timing Requirements for Compensation Deferral Agreements.

	 	(a)	 	First Year of Eligibility. In the case of the first year in which an Eligible
Employee or a Director becomes eligible to participate in the Plan (as determined under
Section 3.1), he or she has up to 30 days following his or her initial
eligibility to submit a Compensation Deferral Agreement with respect to Compensation
to be earned during such year. The Compensation Deferral Agreement described in this
paragraph becomes irrevocable upon receipt and acceptance by the Company prior to
the end of such 30-day period. The determination of whether an Eligible Employee or
a Director may file a Compensation Deferral Agreement under this paragraph shall be
determined in accordance with the rules of Code Section 409A, including the
provisions of Treas. Reg. Section 1.409A-2(a)(7).

A Compensation Deferral Agreement filed under this paragraph applies to Compensation
earned on and after the date the Compensation Deferral Agreement becomes
irrevocable.

	 	(b)	 	Prior Year Election. Except as otherwise provided in this Section 4.2,
Participants may defer Compensation by filing a Compensation Deferral Agreement no
later than December 31 of the year prior to the year in which the Compensation to be
deferred is earned. A Compensation Deferral Agreement described in this paragraph shall
become irrevocable with respect to such Compensation as of January 1 of the year in
which such Compensation is earned.

	 	(c)	 	Performance-Based Compensation. Participants may file a Compensation Deferral
Agreement with respect to Performance-Based Compensation no later than the date that is
six months before the end of the performance period, provided that:

	 	(i)	 	the Participant performs services continuously from the later
of the beginning of the performance period or the date the criteria are
established through the date the Compensation Deferral Agreement is submitted;
and

	 	(ii)	 	the Compensation is not readily ascertainable as of the date
the Compensation Deferral Agreement is filed.

A Compensation Deferral Agreement becomes irrevocable with respect to
Performance-Based Compensation as of the day immediately following the latest date
for filing such election.

	 	(d)	 	Sales Commissions. Sales commissions (as defined in Treas. Reg. Section
1.409A-2(a)(12)(i)) are considered to be earned by the Participant in the taxable year
of the Participant in which the customer remits payment to the Employer. The
Compensation Deferral Agreement must be filed before the last day of the year preceding
the year in which the sales commissions are earned, and becomes irrevocable after that
date.

	 	(e)	 	Fiscal Year Compensation. A Participant may defer Fiscal Year Compensation by
filing a Compensation Deferral Agreement prior to the first day of the fiscal year or
years in which such Fiscal Year Compensation is earned. The Compensation Deferral
Agreement described in this paragraph becomes irrevocable on the first day of the
fiscal year or years to which it applies.

 

11

 

	 	(f)	 	Short-Term Deferrals. Compensation that meets the definition of a “short-term
deferral” described in Treas. Reg. Section 1.409A-1(b)(4) may be deferred in accordance
with the rules of Article VII, applied as if the date the Substantial Risk of
Forfeiture lapses is the date payments were originally scheduled to commence; provided,
however, that the provisions of Section 7.3 shall not apply to payments attributable to
a Change in Control (as defined in Treas. Reg. Section 1.409A-3(i)(5)).

	 	(g)	 	Certain Forfeitable Rights. With respect to a legally binding right to a
payment in a subsequent year that is subject to a forfeiture condition requiring the
Participant’s continued services for a period of at least 12 months from the date the
Participant obtains the legally binding right, an election to defer such Compensation
may be made on or before the 30th day after the Participant obtains the
legally binding right to the Compensation, provided that the election is made at least
12 months in advance of the earliest date at which the forfeiture condition could
lapse. The Compensation Deferral Agreement described in this paragraph becomes
irrevocable upon receipt and acceptance by the Company prior to the end of such 30-day
period. If the forfeiture condition applicable to the payment lapses before the end of
the required service period as a result of the Participant’s death or disability (as
defined in Treas. Reg. Section 1.409A-3(i)(4)) or upon a Change in Control (as defined
in Treas. Reg. Section 1.409A-3(i)(5)), the Compensation Deferral Agreement will be
void unless it would be considered timely under another rule described in this Section.

	 	(h)	 	Company Awards. Participating Employers may unilaterally provide for deferrals
of Company awards prior to the date of such awards. Deferrals of Company awards (such
as sign-on, retention, or severance pay) may be negotiated with a Participant prior to
the date the Participant has a legally binding right to such Compensation.

	 	(i)	 	“Evergreen” Deferral Elections. Compensation Deferral Agreements will continue
in effect for each subsequent year or performance period. Such “evergreen” Compensation
Deferral Agreements will become effective with respect to an item of Compensation on
the date such election becomes irrevocable under this Section 4.2. An evergreen
Compensation Deferral Agreement may be terminated or modified prospectively with
respect to Compensation for which such election remains revocable under this Section
4.2. A Participant whose Compensation Deferral Agreement is cancelled in accordance
with Section 4.6 will be required to file a new Compensation Deferral Agreement under
this Article IV in order to recommence Deferrals under the Plan.

	4.3	 	Allocation of Deferrals. A Compensation Deferral Agreement may allocate Deferrals to
one or more Specified Date Accounts and/or to the Retirement/Termination Account. If a
Participant allocates Deferrals to a Specified Date Account, the Participant shall designate
the Plan Year in which such Deferrals are to be paid pursuant to Section 6.1(c); provided,
however that, unless otherwise established by the Committee, the Plan Year so
designated may not be earlier than the second Plan Year that follows the Plan Year in which
such Compensation is credited to an Account.

 

12

 

	4.4	 	Deductions from Pay. The Committee has the authority to determine the payroll
practices under which any component of Compensation subject to a Compensation Deferral
Agreement will be deducted from a Participant’s Compensation.

	4.5	 	Vesting. Participant Deferrals shall be 100% vested at all times; provided, however,
that in the event a Participant forfeits any amount under a Long-Term Retention Agreement
between the Participant and the Company, any portion of which was deferred under this Plan,
the corresponding portion of the Participant’s Account Balance hereunder (including any
Earnings thereon) shall be subject to forfeiture on the same terms and conditions set forth in
such Long-Term Retention Agreement.

	4.6	 	Cancellation of Deferrals. The Committee may permit a Participant to cancel the
Participant’s Deferrals: (i) for the balance of the Plan Year in which an Unforeseeable
Emergency occurs, (ii) if the Participant receives a hardship distribution under the
Employer’s qualified 401(k) plan, through the end of the Plan Year in which the six month
anniversary of the hardship distribution falls, and (iii) during periods in which the
Participant is unable to perform the duties of his or her position or any substantially
similar position due to a mental or physical impairment that can be expected to result in
death or last for a continuous period of at least six months, provided cancellation occurs by
the later of the end of the taxable year of the Participant or the 15th day of the
third month following the date the Participant incurs the disability (as defined in this
paragraph).

Article V

Company Contributions

	5.1	 	Discretionary Company Contributions. The Participating Employer may, from time to
time in its sole and absolute discretion, credit Company Contributions for a Plan Year to any
Participant in any amount determined by the Participating Employer. Such contributions will be
credited to a Participant’s Retirement/Termination Account as of the last day of the Plan
Year. A Participant must be actively employed on the last day of a Plan Year (or have
Separated from Service due to death or Retirement) in order to receive a Company Contribution
for such Plan Year.

	5.2	 	Vesting. Company Contributions described in Section 5.1, above, and the Earnings
thereon, shall vest in accordance with the vesting schedule(s) governing employer
contributions under the Company’s qualified 401(k) plan. All Company Contributions shall
become 100% vested upon the occurrence of the earliest of: (i) the Disability of the
Participant while actively employed, (ii) the Retirement of the Participant, or (iii) a Change
in Control. The Participating Employer may, at any time, in its sole discretion, increase a
Participant’s vested interest in a Company Contribution. The portion of a
Participant’s Accounts that remains unvested upon his or her Separation from Service after
the application of the terms of this Section 5.2 shall be forfeited.

 

13

 

Article VI

Benefits

	6.1	 	Benefits, Generally. A Participant shall be entitled to the following benefits under
the Plan:

	 	(a)	 	Retirement Benefit. Upon the Participant’s Separation from Service due to
Retirement, he or she shall be entitled to a Retirement Benefit. The Retirement Benefit
shall be equal to the vested portion of the Retirement/Termination Account and the
unpaid balances of any Specified Date Accounts. The Retirement Benefit shall be based
on the value of that Account(s) as of the end of the Plan Year in which Separation from
Service occurs or such later date as the Committee, in its sole discretion, shall
determine. Payment of the Retirement Benefit will be made or begin during the first 60
days of the Plan Year following the Plan Year in which Separation from Service occurs,
provided, however, that with respect to a Participant who is a Specified Employee as of
the date such Participant incurs a Separation from Service, (1) the Retirement Benefit
shall be based on the value of that Account(s) as of the date specified above or, if
later, the end of the sixth month following the month in which Separation from Service
occurs; and (2) payment will be made on (or as soon as administratively practicable
following) the date specified above or, if later, on (or as soon as administratively
practicable following) the first day of the seventh month following the month in which
such Separation from Service occurs. If the Retirement Benefit is to be paid in the
form of installments, any subsequent installment payments to a Specified Employee will
be paid during the first 60 days of each Plan Year following the Plan Year in which the
first installment was made.

	 	(b)	 	Termination Benefit. Upon the Participant’s Separation from Service for reasons
other than death, Disability or Retirement, he or she shall be entitled to a
Termination Benefit. The Termination Benefit shall be equal to the vested portion of
the Retirement/Termination Account and the unpaid balances of any Specified Date
Accounts. The Termination Benefit shall be based on the value of that Account(s) as of
the end of the month in which Separation from Service occurs or such later date as the
Committee, in its sole discretion, shall determine. Payment of the Termination Benefit
will be made on (or as soon as administratively practicable following) the first day of
the month following the month in which Separation from Service occurs; provided,
however, that with respect to a Participant who is a Specified Employee as of the date
such Participant incurs a Separation from Service, the Termination Benefit shall be
based on the value of that Account(s) as of the end of the sixth month following the
month in which Separation from Service occurs and payment will be made on (or as soon
as
administratively practicable following) the first day of the seventh month following
the month in which such Separation from Service occurs.

 

14

 

	 	(c)	 	Specified Date Benefit. If the Participant has established one or more
Specified Date Accounts, he or she shall be entitled to a Specified Date Benefit with
respect to each such Specified Date Account. The Specified Date Benefit shall be equal
to the vested portion of the Specified Date Account, based on the value of that Account
as of the end of the Plan Year immediately preceding the designated Plan Year. Payment
of the Specified Date Benefit will be made or begin within the first 60 days of the
designated Plan Year.

	 	(d)	 	Disability Benefit. Upon a determination by the Committee that a Participant is
Disabled, he or she shall be entitled to a Disability Benefit. The Disability Benefit
shall be equal to the vested portion of the Retirement/Termination Account and the
unpaid balances of any Specified Date Accounts. If the Participant is eligible to
Retire, the Disability Benefit shall be based on the value of the Accounts as of the
last day of the Plan Year in which Disability occurs and will be paid within the first
60 days of the following Plan Year. If the Participant is not eligible to Retire, the
Disability Benefit shall be based on the value of the Accounts as of the last day of
the month in which Disability occurs and will be paid within 60 days following the
Committee’s determination.

	 	(e)	 	Death Benefit. In the event of the Participant’s death, his or her designated
Beneficiary(ies) shall be entitled to a Death Benefit. The Death Benefit shall be equal
to the vested portion of the Retirement/Termination Account and the unpaid balances of
any Specified Date Accounts. If payments from the Retirement/Termination Account had
not commenced as of the date of death, the Death Benefit shall be based on the value of
the Accounts as of the end of the Plan Year in which death occurred, with payment made
during the first 60 days of the following Plan Year.

	 	(f)	 	Unforeseeable Emergency Payments. A Participant who experiences an
Unforeseeable Emergency may submit a written request to the Committee to receive
payment of all or any portion of his or her vested Accounts. Whether a Participant or
Beneficiary is faced with an Unforeseeable Emergency permitting an emergency payment
shall be determined by the Committee based on the relevant facts and circumstances of
each case, but, in any case, a distribution on account of Unforeseeable Emergency may
not be made to the extent that such emergency is or may be reimbursed through insurance
or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation
of such assets would not cause severe financial hardship, or by cessation of Deferrals
under this Plan. If an emergency payment is approved by the Committee, the amount of
the payment shall not exceed the amount reasonably necessary to satisfy the need,
taking into account the additional compensation that is available to the Participant as
the result of cancellation of deferrals to the Plan, including amounts necessary to pay
any taxes or penalties that the Participant reasonably anticipates will result from the
payment. The amount of the emergency payment shall be subtracted first
from the vested portion of the Participant’s Retirement/Termination Account until
depleted and then from the vested Specified Date Accounts, beginning with the
Specified Date Account with the latest payment commencement date. Emergency payments
shall be paid in a single lump sum within the 90-day period following the date the
payment is approved by the Committee.

 

15

 

	 	(g)	 	Voluntary Withdrawals of Grandfathered Accounts. A Participant or Beneficiary
may elect at any time to voluntarily withdraw all of the vested amounts credited to his
or her Grandfathered Account. If such a withdrawal is requested, an amount equal to 10%
of the vested balance of the Grandfathered Account shall be forfeited, and the
Participant shall not be permitted to make Deferrals to the Plan in any Plan Year
following the Plan Year in which the withdrawal is made.

	6.2	 	Form of Payment.

	 	(a)	 	Retirement Benefit. A Participant who is entitled to receive a Retirement
Benefit shall receive payment of such benefit in a single lump sum, unless the
Participant elects on his or her initial Compensation Deferral Agreement to have such
benefit paid in one of the following alternative forms of payment (i) substantially
equal annual installments over five, ten, 15 or 20 years, as elected by the
Participant, or (ii) a lump sum payment of a percentage of the balance in the
Retirement/ Termination Account, with the balance paid in substantially equal annual
installments over a period of five, ten, 15 or 20 years, as elected by the Participant.

	 	(b)	 	Termination Benefit. A Participant who is entitled to receive a Termination
Benefit shall receive payment of such benefit in a single lump sum.

	 	(c)	 	Specified Date Benefit. The Specified Date Benefit shall be paid in a single
lump sum, unless the Participant elects on the Compensation Deferral Agreement with
which the account was established to have the Specified Date Account paid in
substantially equal annual installments over a period of two to five years, as elected
by the Participant.

Notwithstanding any election of a form of payment by the Participant, upon the
Participant’s death, Disability, Retirement or Separation from Service, the unpaid
balance of a Specified Date Account shall be paid in accordance with the provisions
applicable to the Retirement, Termination, Disability or Death Benefit, as
applicable.

	 	(d)	 	Disability Benefit. A Participant who is entitled to receive a Disability
Benefit shall receive payment of such benefit in a single lump sum, and any election
hereunder to receive payment in any other form shall be disregarded.

 

16

 

	 	(e)	 	Death Benefit. A designated Beneficiary who is entitled to receive a Death
Benefit shall receive payment of such benefit in accordance with the Payment Schedule
applicable to the Retirement, Termination or Disability Benefit, as
applicable, if death occurs after distribution of such benefits have commenced. If
death occurs prior to the Participant’s Retirement, Separation from Service or
Disability, the Death Benefit shall be paid in a lump sum, unless the Participant
had elected to have the Death Benefit paid in annual installments over five, ten, 15
or 20 years.

	 	(f)	 	Change in Control. Notwithstanding anything to the contrary contained herein, a
Participant will receive his or her Retirement or Termination Benefit in a single lump
sum payment equal to the unpaid balance of all of his or her Accounts if Separation
from Service occurs within 24 months following a Change in Control.

A Participant or Beneficiary receiving installment payments when a Change in Control
occurs, will receive the remaining account balance in a single lump sum within 90
days following the Change in Control.

	 	(g)	 	Small Account Balances. The Committee shall pay the value of the Participant’s
Accounts upon a Separation from Service in a single lump sum if the balance of such
Accounts is not greater than the applicable dollar amount under Code Section
402(g)(1)(B), provided the payment represents the complete liquidation of the
Participant’s interest in the Plan.

	 	(h)	 	Rules Applicable to Installment Payments. If a Payment Schedule specifies
installment payments, annual payments will be made beginning as of the payment
commencement date for such installments and shall continue on each anniversary thereof
until the number of installment payments specified in the Payment Schedule has been
paid. The amount of each installment payment shall be determined by dividing (a) by
(b), where (a) equals the Account Balance as of the Valuation Date and (b) equals the
remaining number of installment payments.

For purposes of Article VII, installment payments will be treated as a single form
of payment. If a lump sum equal to less than 100% of the Retirement/Termination
Account is paid, the payment commencement date for the installment form of payment
will be the first anniversary of the payment of the lump sum.

	 	(i)	 	Amounts allocated to Company Stock. Any portion of a Participant’s
Account that is payable in Company Stock in accordance with Section 8.6 shall be
paid in a single lump sum in an equivalent number of shares of Company Stock at the
time distribution is otherwise scheduled to commence hereunder.

 

17

 

	 	(j)	 	Payments from Grandfathered Accounts. The forms of payment from
Grandfathered Accounts are the same as the forms of payment set forth above, except
as noted below:

	 	a.	 	Deferrals allocated to a Grandfathered In-Service Account shall
be paid in a single lump sum.

	 	b.	 	In the event of the death of the Participant after payment of
the Retirement, Termination or Disability Benefit has commenced, the Committee
may in its discretion pay the remaining vested balance to the Beneficiary in a
single lump sum. In the event of the death of the Participant prior to his or
her Retirement, Separation from Service, or Disability, the Committee may elect
in its sole discretion to pay the Death Benefit in a single lump sum or in
annual installments over not more than five years, if the vested Account
balance at the time of death is less than $25,000.

	 	c.	 	Disability is defined in accordance with the terms of the
Grandfathered Plan and results in entitlement to a benefit only if the
Participant is otherwise eligible to Retire or if the Committee in its
discretion determines to treat the Participant as having Separated from
Service.

	6.3	 	Acceleration of or Delay in Payments. The Committee, in its sole and absolute
discretion, may elect to accelerate the time or form of payment of a benefit owed to the
Participant hereunder, provided such acceleration is permitted under Treas. Reg. Section
1.409A-3(j)(4). The Committee may also, in its sole and absolute discretion, delay the time
for payment of a benefit owed to the Participant hereunder, to the extent permitted under
Treas. Reg. Section 1.409A-2(b)(7). If the Plan receives a domestic relations order (within
the meaning of Code Section 414(p)(1)(B)) directing that all or a portion of a Participant’s
Accounts be paid to an “alternate payee,” any amounts to be paid to the alternate payee(s)
shall be paid in a single lump sum.

Article VII

Modifications to Payment Schedules

	7.1	 	Participant’s Right to Modify. A Participant may modify any or all of the
alternative Payment Schedules with respect to an Account, consistent with the permissible
Payment Schedules available under the Plan, provided such modification complies with the
requirements of this Article VII. Notwithstanding the foregoing, prior to January 1, 2009, the
Committee may permit a Participant to modify any or all of the alternative Payment Schedules
with respect to an Account, consistent with the permissible Payment Schedules available under
the Plan, and without regard to Sections 7.2, 7.3 and 7.4 hereof, provided such modification
complies with the requirements of IRS Notice 2007-86.

	7.2	 	Time of Election. The date on which a modification election is submitted to the
Committee must be at least 12 months prior to the date on which payment is scheduled to
commence under the Payment Schedule in effect prior to the modification.

	7.3	 	Date of Payment under Modified Payment Schedule. Except with respect to modifications
that relate to the payment of a Death Benefit or a Disability Benefit, the date payments are
to commence under the modified Payment Schedule must be no earlier than five years after the
date payment would have commenced under the original Payment Schedule. Under no circumstances
may a modification election result in an acceleration of payments in violation of Code Section
409A.

 

18

 

	7.4	 	Effective Date. A modification election submitted in accordance with this Article VII
is irrevocable upon receipt by the Committee and becomes effective 12 months after such date.

	7.5	 	Effect on Accounts. An election to modify a Payment Schedule is specific to the
Account or payment event to which it applies, and shall not be construed to affect the Payment
Schedules of any other Accounts.

	7.6	 	Modifications to Grandfathered Accounts. Notwithstanding the preceding provisions of
this Article VII, a Participant may modify the time at which payment of Deferrals attributable
to a Grandfathered In-Service Account will be made only if the election is made no later than
the first day of the Plan Year immediately preceding the Plan Year in which the In-Service
Account would otherwise be paid and the new distribution date is at least two Plan Years after
the Plan Year in which the Grandfathered In-Service Account would otherwise be paid. A
Participant may modify the Payment Schedule applicable to a Grandfathered Retirement Benefit
annually, provided the form is submitted at least three years prior to the Participant’s
Retirement.

Article VIII

Valuation of Account Balances; Investments

	8.1	 	Valuation. Deferrals shall be credited to appropriate Accounts on the date such
Compensation would have been paid to the Participant absent the Compensation Deferral
Agreement. Company Contributions shall be credited to the Retirement/Termination Account at
the times determined by the Committee. Valuation of Accounts shall be performed under
procedures approved by the Committee.

	8.2	 	Earnings Credit. Each Account will be credited with Earnings on each Business Day,
based upon the Participant’s investment allocation among a menu of investment options selected
in advance by the Committee, in accordance with the provisions of this Article VIII
(“investment allocation”).

	8.3	 	Investment Options. Investment options will be determined by the Committee, and may
include a “Declared Rate Fund” which shall be credited with interest at a fixed rate declared
annually by the Company prior to the beginning of each Plan Year. The Committee, in its sole
discretion, shall be permitted to add or remove investment options from the Plan menu from
time to time, provided that any such additions or removals of investment options shall not be
effective with respect to any period prior to the effective date of such change.

	8.4	 	Investment Allocations. A Participant’s investment allocation constitutes a deemed,
not actual, investment among the investment options comprising the investment menu. At no time
shall a Participant have any real or beneficial ownership in any investment option included in
the investment menu, nor shall the Participating Employer or any trustee acting on its behalf
have any obligation to purchase actual securities as a result of a Participant’s investment
allocation. A Participant’s investment allocation shall be used
solely for purposes of adjusting the value of a Participant’s Account Balances.

 

19

 

A Participant shall specify an investment allocation for each of his Accounts in accordance
with procedures established by the Committee. Allocation among the investment options must
be designated in increments of 1%. The Participant’s investment allocation will become
effective on the same Business Day or, in the case of investment allocations received after
a time specified by the Committee, the next Business Day.

A Participant may change an investment allocation on any Business Day, both with respect to
future credits to the Plan and with respect to existing Account Balances, in accordance with
procedures adopted by the Committee. Changes shall become effective on the same Business Day
or, in the case of investment allocations received after a time specified by the Committee,
the next Business Day, and shall be applied prospectively.

The Committee may require that a minimum percentage of a Participant’s Account be allocated
to any Declared Rate Fund.

	8.5	 	Unallocated Deferrals and Accounts. If the Participant fails to make an investment
allocation with respect to an Account, such Account shall be invested in an investment option,
the primary objective of which is the preservation of capital, as determined by the Committee.

	8.6	 	Company Stock. Notwithstanding any provision herein to the contrary, if a Participant
elects to defer payment under the Plan of an award that by its terms is payable in Company
Stock, such payment shall be made in shares of Company Stock at the time and in the manner
prescribed under the Plan. The award will continue to be subject to the adjustment provisions
of the applicable plan and/or award agreement. In the event that the Company Stock is no
longer publicly traded, the Committee may make reasonable provision for such award to be paid
in cash or other property as appropriate in the circumstances. In no event shall any portion
of any such deferral be allocated to any investment option offered under the Plan.

	8.7	 	Dividend Equivalents. Dividend equivalents with respect to Company Stock will be
credited to the applicable Accounts in the form of additional shares or units of Company
Stock.

 

20

 

Article IX

Administration

	9.1	 	Plan Administration. This Plan shall be administered by the Committee which shall
have discretionary authority to make, amend, interpret and enforce all appropriate rules and
regulations for the administration of this Plan and to utilize its discretion to decide or
resolve any and all questions, including but not limited to eligibility for benefits and
interpretations of this Plan and its terms, as may arise in connection with the Plan. Claims
for benefits shall be filed with the Committee and resolved in accordance with the claims
procedures in Article XII.

	9.2	 	Administration Upon Change in Control. Upon a Change in Control, the Committee, as
constituted immediately prior to such Change in Control, shall continue to act as the
Committee. The individual who was the Chief Executive Officer of the Company (or if such
person is unable or unwilling to act, the next highest ranking officer) prior to the Change in
Control shall have the authority (but shall not be obligated) to appoint an independent third
party to act as the Committee.

Upon such Change in Control, the Company may not remove the Committee, unless 2/3rds of the
members of the Board of Directors of the Company and a majority of Participants and
Beneficiaries with Account Balances consent to the removal and replacement of the Committee.
Notwithstanding the foregoing, upon or after a Change in Control, neither the Committee nor
the officer described above shall have authority to direct investment of trust assets under
any rabbi trust described in Section 11.2 (which authority shall be exercised by the trustee
of any such trust in accordance with the terms of the trust agreement).

The Participating Employer shall, with respect to the Committee identified under this
Section: (i) pay all reasonable expenses and fees of the Committee, (ii) indemnify the
Committee (including individuals serving as Committee members) against any costs, expenses
and liabilities including, without limitation, attorneys’ fees and expenses arising in
connection with the performance of the Committee’s duties hereunder, except with respect to
matters resulting from the Committee’s gross negligence or willful misconduct, and (iii)
supply full and timely information to the Committee on all matters related to the Plan, any
rabbi trust, Participants, Beneficiaries and Accounts as the Committee may reasonably
require.

	9.3	 	Withholding. The Participating Employer shall have the right to withhold from any
payment due under the Plan (or with respect to any amounts credited to the Plan) any taxes
required by law to be withheld in respect of such payment (or credit). Withholdings with
respect to amounts credited to the Plan shall be deducted from Compensation that has not been
deferred to the Plan.

 

21

 

	9.4	 	Indemnification. The Participating Employers shall indemnify and hold harmless each
employee, officer, director, agent or organization, to whom or to which are delegated duties,
responsibilities, and authority under the Plan or otherwise with respect to administration of
the Plan, including, without limitation, the Committee and its agents, against all claims,
liabilities, fines and penalties, and all expenses reasonably incurred by
or imposed upon him or it (including but not limited to reasonable attorney fees) which
arise as a result of his or its actions or failure to act in connection with the operation
and administration of the Plan to the extent lawfully allowable and to the extent that such
claim, liability, fine, penalty, or expense is not paid for by liability insurance purchased
or paid for by the Participating Employer. Notwithstanding the foregoing, the Participating
Employer shall not indemnify any person or organization if his or its actions or failure to
act are due to gross negligence or willful misconduct or for any such amount incurred
through any settlement or compromise of any action unless the Participating Employer
consents in writing to such settlement or compromise.

	9.5	 	Delegation of Authority. In the administration of this Plan, the Committee may, from
time to time, employ agents and delegate to them such administrative duties as it sees fit,
and may from time to time consult with legal counsel who shall be legal counsel to the
Company.

	9.6	 	Binding Decisions or Actions. The decision or action of the Committee in respect of
any question arising out of or in connection with the administration, interpretation and
application of the Plan and the rules and regulations thereunder shall be final and conclusive
and binding upon all persons having any interest in the Plan.

Article X

Amendment and Termination

	10.1	 	Amendment and Termination. The Company may at any time and from time to time amend
the Plan or may terminate the Plan as provided in this Article X. Each Participating Employer
may also terminate its participation in the Plan.

	10.2	 	Amendments. The Company, by action taken by its Board of Directors, may amend the
Plan at any time and for any reason, provided that any such amendment shall not reduce the
vested Account Balances of any Participant accrued as of the date of any such amendment or
restatement (as if the Participant had incurred a voluntary Separation from Service on such
date) or reduce any rights of a Participant under the Plan or other Plan features with respect
to Deferrals made prior to the date of any such amendment or restatement without the consent
of the Participant.

	10.3	 	Termination. The Company, by action taken by its Board of Directors, may terminate
the Plan and pay Participants and Beneficiaries their Account Balances in a single lump sum at
any time, to the extent and in accordance with Treas. Reg. Section 1.409A-3(j)(4)(ix). If a
Participating Employer terminates its participation in the Plan, the benefits of affected
Employees shall be paid at the time provided in Article VI.

	10.4	 	Accounts Taxable Under Code Section 409A. The Plan is intended to constitute a plan
of deferred compensation that meets the requirements for deferral of income taxation under
Code Section 409A. The Committee, pursuant to its authority to interpret the Plan, may sever
from the Plan or any Compensation Deferral Agreement any provision or exercise of a right that
otherwise would result in a violation of Code Section 409A.

 

22

 

Article XI

Informal Funding

	11.1	 	General Assets. Obligations established under the terms of the Plan may be satisfied
from the general funds of the Participating Employers, or a trust described in this Article
XI. No Participant, spouse or Beneficiary shall have any right, title or interest whatever in
assets of the Participating Employers. Nothing contained in this Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship, between the Participating Employers and any Employee, spouse, or
Beneficiary. To the extent that any person acquires a right to receive payments hereunder,
such rights are no greater than the right of an unsecured general creditor of the
Participating Employer.

	11.2	 	Rabbi Trust. A Participating Employer may, in its sole discretion, establish a
grantor trust, commonly known as a rabbi trust, as a vehicle for accumulating assets to pay
benefits under the Plan. Payments under the Plan may be paid from the general assets of the
Participating Employer or from the assets of any such rabbi trust. Payment from any such
source shall reduce the obligation owed to the Participant or Beneficiary under the Plan.

Article XII

Claims

	12.1	 	Filing a Claim. Any controversy or claim arising out of or relating to the Plan shall
be filed in writing with the Committee which shall make all determinations concerning such
claim. Any claim filed with the Committee and any decision by the Committee denying such claim
shall be in writing and shall be delivered to the Participant or Beneficiary filing the claim
(the “Claimant”).

	 	(a)	 	In General. Notice of a denial of benefits (other than Disability benefits)
will be provided within 90 days of the Committee’s receipt of the Claimant’s claim for
benefits. If the Committee determines that it needs additional time to review the
claim, the Committee will provide the Claimant with a notice of the extension before
the end of the initial 90-day period. The extension will not be more than 90 days from
the end of the initial 90-day period and the notice of extension will explain the
special circumstances that require the extension and the date by which the Committee
expects to make a decision.

	 	(b)	 	Disability Benefits. Notice of denial of Disability benefits will be provided
within forty-five (45) days of the Committee’s receipt of the Claimant’s claim for
Disability benefits. If the Committee determines that it needs additional time to
review the Disability claim, the Committee will provide the Claimant with a notice of
the extension before the end of the initial 45-day period. If the Committee determines
that a decision cannot be made within the first extension period due to matters beyond
the control of the Committee, the time period for making a determination may be further
extended for an additional 30 days. If such
an additional extension is necessary, the Committee shall notify the Claimant prior
to the expiration of the initial 30-day extension. Any notice of extension shall
indicate the circumstances necessitating the extension of time, the date by which
the Committee expects to furnish a notice of decision, the specific standards on
which such entitlement to a benefit is based, the unresolved issues that prevent a
decision on the claim and any additional information needed to resolve those issues.
A Claimant will be provided a minimum of 45 days to submit any necessary additional
information to the Committee. In the event that a 30-day extension is necessary due
to a Claimant’s failure to submit information necessary to decide a claim, the
period for furnishing a notice of decision shall be tolled from the date on which
the notice of the extension is sent to the Claimant until the earlier of the date
the Claimant responds to the request for additional information or the response
deadline.

 

23

 

	 	(c)	 	Contents of Notice. If a claim for benefits is completely or partially denied,
notice of such denial shall be in writing and shall set forth the reasons for denial in
plain language. The notice shall: (i) cite the pertinent provisions of the Plan
document, and (ii) explain, where appropriate, how the Claimant can perfect the claim,
including a description of any additional material or information necessary to complete
the claim and why such material or information is necessary. The claim denial also
shall include an explanation of the claims review procedures and the time limits
applicable to such procedures, including a statement of the Claimant’s right to bring a
civil action under Section 502(a) of ERISA following an adverse decision on review. In
the case of a complete or partial denial of a Disability benefit claim, the notice
shall provide a statement that the Committee will provide to the Claimant, upon request
and free of charge, a copy of any internal rule, guideline, protocol, or other similar
criterion that was relied upon in making the decision.

	12.2	 	Appeal of Denied Claims. A Claimant whose claim has been completely or partially
denied shall be entitled to appeal the claim denial by filing a written appeal with a
committee designated to hear such appeals (the “Appeals Committee”). A Claimant who timely
requests a review of the denied claim (or his or her authorized representative) may review,
upon request and free of charge, copies of all documents, records and other information
relevant to the denial and may submit written comments, documents, records and other
information relevant to the claim to the Appeals Committee. All written comments, documents,
records, and other information shall be considered “relevant” if the information: (i) was
relied upon in making a benefits determination, (ii) was submitted, considered or generated in
the course of making a benefits decision regardless of whether it was relied upon to make the
decision, or (iii) demonstrates compliance with administrative processes and safeguards
established for making benefit decisions. The Appeals Committee may, in its sole discretion
and if it deems appropriate or necessary, decide to hold a hearing with respect to the claim
appeal.

	 	(a)	 	In General. Appeal of a denied benefits claim (other than a Disability benefits
claim) must be filed in writing with the Appeals Committee no later than 60 days after
receipt of the written notification of such claim denial. The Appeals
Committee shall make its decision regarding the merits of the denied claim within 60
days following receipt of the appeal (or within 120 days after such receipt, in a
case where there are special circumstances requiring extension of time for reviewing
the appealed claim). If an extension of time for reviewing the appeal is required
because of special circumstances, written notice of the extension shall be furnished
to the Claimant prior to the commencement of the extension. The notice will indicate
the special circumstances requiring the extension of time and the date by which the
Appeals Committee expects to render the determination on review. The review will
take into account comments, documents, records and other information submitted by
the Claimant relating to the claim without regard to whether such information was
submitted or considered in the initial benefit determination.

 

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	 	(b)	 	Disability Benefits. Appeal of a denied Disability benefits claim must be filed
in writing with the Appeals Committee no later than 180 days after receipt of the
written notification of such claim denial. The review shall be conducted by the Appeals
Committee (exclusive of the person who made the initial adverse decision or such
person’s subordinate). In reviewing the appeal, the Appeals Committee shall: (i) not
afford deference to the initial denial of the claim, (ii) consult a medical
professional who has appropriate training and experience in the field of medicine
relating to the Claimant’s disability and who was neither consulted as part of the
initial denial nor is the subordinate of such individual, and (iii) identify the
medical or vocational experts whose advice was obtained with respect to the initial
benefit denial, without regard to whether the advice was relied upon in making the
decision. The Appeals Committee shall make its decision regarding the merits of the
denied claim within 45 days following receipt of the appeal (or within 90 days after
such receipt, in a case where there are special circumstances requiring extension of
time for reviewing the appealed claim). If an extension of time for reviewing the
appeal is required because of special circumstances, written notice of the extension
shall be furnished to the Claimant prior to the commencement of the extension. The
notice will indicate the special circumstances requiring the extension of time and the
date by which the Appeals Committee expects to render the determination on review.
Following its review of any additional information submitted by the Claimant, the
Appeals Committee shall render a decision on its review of the denied claim.

	 	(c)	 	Contents of Notice. If a benefits claim is completely or partially denied on
review, notice of such denial shall be in writing and shall set forth the reasons for
denial in plain language.

The decision on review shall set forth: (i) the specific reason or reasons for the
denial, (ii) specific references to the pertinent Plan provisions on which the
denial is based, (iii) a statement that the Claimant is entitled to receive, upon
request and free of charge, reasonable access to and copies of all documents,
records, or other information relevant (as defined above) to the Claimant’s claim,
and (iv) a statement describing any voluntary appeal procedures offered by the plan
and a
statement of the Claimant’s right to bring an action under Section 502(a) of ERISA.

	 	(d)	 	For the denial of a Disability benefit, the notice will also include a
statement that the Appeals Committee will provide, upon request and free of charge: (i)
any internal rule, guideline, protocol or other similar criterion relied upon in making
the decision, (ii) any medical opinion relied upon to make the decision, and (iii) the
required statement under Section 2560.503-1(j)(5)(iii) of the Department of Labor
regulations.

 

25

 

	12.3	 	Claims Appeals Upon Change in Control. Upon a Change in Control, the Appeals
Committee, as constituted immediately prior to such Change in Control, shall continue to act
as the Appeals Committee. Upon such Change in Control, the Company may not remove any member
of the Appeals Committee, but may replace resigning members if 2/3rds of the members of the
Board of Directors of the Company and a majority of Participants and Beneficiaries with
Account Balances consent to the replacement.

The Appeals Committee shall have the exclusive authority at the appeals stage to interpret
the terms of the Plan and resolve appeals under the Claims Procedure.

Each Participating Employer shall, with respect to the Committee identified under this
Section: (i) pay its proportionate share of all reasonable expenses and fees of the Appeals
Committee, (ii) indemnify the Appeals Committee (including individual committee members)
against any costs, expenses and liabilities including, without limitation, attorneys’ fees
and expenses arising in connection with the performance of the Appeals Committee hereunder,
except with respect to matters resulting from the Appeals Committee’s gross negligence or
willful misconduct, and (iii) supply full and timely information to the Appeals Committee on
all matters related to the Plan, any rabbi trust, Participants, Beneficiaries and Accounts
as the Appeals Committee may reasonably require.

	12.4	 	Legal Action. A Claimant may not bring any legal action, including commencement of
any arbitration, relating to a claim for benefits under the Plan unless and until the Claimant
has followed the claims procedures under the Plan and exhausted his or her administrative
remedies under such claims procedures.

If a Participant or Beneficiary prevails in a legal proceeding brought under the Plan to
enforce the rights of such Participant or any other similarly situated Participant or
Beneficiary, in whole or in part, the Participating Employer shall reimburse such
Participant or Beneficiary for all legal costs, expenses, attorneys’ fees and such other
liabilities incurred as a result of such proceedings. If the legal proceeding is brought in
connection with a Change in Control, or a “change in control” as defined in a rabbi trust
described in Section 11.2, the Participant or Beneficiary may file a claim directly with the
trustee for reimbursement of such costs, expenses and fees. For purposes of the preceding
sentence, the amount of the claim shall be treated as if it were an addition to the
Participant’s or Beneficiary’s Account Balance.

 

26

 

	12.5	 	Discretion of Appeals Committee. All interpretations, determinations and decisions of
the Appeals Committee with respect to any claim shall be made in its sole discretion, and
shall be final and conclusive.

	12.6	 	Arbitration.

	 	(a)	 	Prior to Change in Control. If, prior to a Change in Control, any claim or
controversy between a Participating Employer and a Participant or Beneficiary is not
resolved through the claims procedure set forth in Article XII, such claim shall be
submitted to and resolved exclusively by expedited binding arbitration by a panel of
three (3) arbitrators. Arbitration shall be conducted in accordance with the following
procedures:

The complaining party shall promptly send written notice to the other party
identifying the matter in dispute and the proposed remedy. Following the giving of
such notice, the parties shall meet and attempt in good faith to resolve the matter.
In the event the parties are unable to resolve the matter within 21 days, the
parties shall meet and each select an arbitrator, and such arbitrators shall jointly
select a third arbitrator, who shall together shall comprise the panel of three (3)
arbitrators. The arbitration shall be administered exclusively in Orange County,
California, by the American Arbitration Association in accordance with its
Commercial Arbitration Rules.

Unless the parties agree otherwise, within 60 days of the selection of the
arbitrators, a hearing shall be conducted before such arbitrators at a time and a
place agreed upon by the parties. In the event the parties are unable to agree upon
the time or place of the arbitration, the time and place shall be designated by the
arbitrators after consultation with the parties. Within 30 days of the conclusion of
the arbitration hearing, the arbitrators shall issue an award, accompanied by a
written decision explaining the basis for the arbitrators’ award.

In any arbitration hereunder, the Participating Employer shall pay all
administrative fees of the arbitration and all fees of the arbitrators, except that
the Participant or Beneficiary may, if he/she/it wishes, pay up to one-half of those
amounts. Each party shall pay its own attorneys’ fees, costs, and expenses. The
arbitrators shall have no authority to add to or to modify this Plan, shall apply
all applicable law, and shall have no lesser and no greater remedial authority than
would a court of law resolving the same claim or controversy. The arbitrators shall,
upon an appropriate motion, dismiss any claim without an evidentiary hearing if the
party bringing the motion establishes that it would be entitled to summary judgment
if the matter had been pursued in court litigation.

The parties shall be entitled to discovery as follows: Each party may take no more
than three depositions. The Participating Employer may depose the Participant or
Beneficiary plus two other witnesses, and the Participant or Beneficiary may depose
the Participating Employer, pursuant to Rule 30(b)(6) of the Federal Rules of Civil
Procedure, plus two other witnesses. Each party may make such
reasonable document discovery requests as are allowed in the discretion of the
arbitrator.

 

27

 

The decision of the arbitrators shall be final, binding, and non-appealable, and may
be enforced as a final judgment in any court of competent jurisdiction.

This arbitration provision of the Plan shall extend to claims against any parent,
subsidiary, or affiliate of each party, and, when acting within such capacity, any
officer, director, shareholder, Participant, Beneficiary, or agent of any party, or
of any of the above, and shall apply as well to claims arising out of state and
federal statutes and local ordinances as well as to claims arising under the common
law or under this Plan.

Notwithstanding the foregoing, and unless otherwise agreed between the parties,
either party may apply to a court for provisional relief, including a temporary
restraining order or preliminary injunction, on the ground that the arbitration
award to which the applicant may be entitled may be rendered ineffectual without
provisional relief.

Any arbitration hereunder shall be conducted in accordance with the Federal
Arbitration Act: provided, however, that, in the event of any inconsistency between
the rules and procedures of the Act and the terms of this Plan, the terms of this
Plan shall prevail.

If any of the provisions of this Section 12.6(a) are determined to be unlawful or
otherwise unenforceable, in the whole part, such determination shall not affect the
validity of the remainder of this section and this section shall be reformed to the
extent necessary to carry out its provisions to the greatest extent possible and to
insure that the resolution of all conflicts between the parties, including those
arising out of statutory claims, shall be resolved by neutral, binding arbitration.
If a court should find that the provisions of this Section 12.6(a) are not
absolutely binding, then the parties intend any arbitration decision and award to be
fully admissible in evidence in any subsequent action, given great weight by any
finder of fact and treated as determinative to the maximum extent permitted by law.

The parties do not agree to arbitrate any putative class action or any other
representative action. The parties agree to arbitrate only the claims(s) of a single
Participant or Beneficiary.

	 	(b)	 	Upon Change in Control. If, upon the occurrence of a Change in Control, any
dispute, controversy or claim arises between a Participant or Beneficiary and the
Participating Employer out of or relating to or concerning the provisions of the Plan,
such dispute, controversy or claim shall be finally settled by a court of competent
jurisdiction which, notwithstanding any other provision of the Plan, shall apply a de
novo standard of review to any determination made by the Company or its Board of
Directors, a Participating Employer, the Committee, or the Appeals Committee.

 

28

 

Article XIII

General Provisions

	13.1	 	Assignment. No interest of any Participant, spouse or Beneficiary under this Plan and
no benefit payable hereunder shall be assigned as security for a loan, and any such purported
assignment shall be null, void and of no effect, nor shall any such interest or any such
benefit be subject in any manner, either voluntarily or involuntarily, to anticipation, sale,
transfer, assignment or encumbrance by or through any Participant, spouse or Beneficiary.
Notwithstanding anything to the contrary herein, however, the Committee has the discretion to
make payments to an alternate payee in accordance with the terms of a domestic relations order
(as defined in Code Section 414(p)(1)(B)).

The Company may assign any or all of its liabilities under this Plan in connection with any
restructuring, recapitalization, sale of assets or other similar transactions affecting a
Participating Employer without the consent of the Participant.

	13.2	 	No Legal or Equitable Rights or Interest. No Participant or other person shall have
any legal or equitable rights or interest in this Plan that are not expressly granted in this
Plan. Participation in this Plan does not give any person any right to be retained in the
service of the Participating Employer. The right and power of a Participating Employer to
dismiss or discharge an Employee is expressly reserved. The Participating Employers make no
representations or warranties as to the tax consequences to a Participant or a Participant’s
beneficiaries resulting from a deferral of income pursuant to the Plan.

	13.3	 	No Employment Contract. Nothing contained herein shall be construed to constitute a
contract of employment between an Employee and a Participating Employer.

	13.4	 	Notice. Any notice or filing required or permitted to be delivered to the Committee
under this Plan shall be delivered in writing, in person, or through such electronic means as
is established by the Committee. Notice shall be deemed given as of the date of delivery or,
if delivery is made by mail, as of the date shown on the postmark on the receipt for
registration or certification. Written transmission shall be sent by certified mail to:

RETIREMENT, SEVERANCE, AND ADMINISTRATIVE COMMITTEE

WESTERN DIGITAL CORPORATION

20511 LAKE FOREST DRIVE

LAKE FOREST, CA 92630

Any notice or filing required or permitted to be given to a Participant under this Plan
shall be sufficient if in writing or hand-delivered, or sent by mail to the last known
address of the Participant.

 

29

 

	13.5	 	Headings. The headings of Sections are included solely for convenience of reference,
and if there is any conflict between such headings and the text of this Plan, the text shall
control.

	13.6	 	Invalid or Unenforceable Provisions. If any provision of this Plan shall be held
invalid or unenforceable, such invalidity or unenforceability shall not affect any other
provisions hereof and the Committee may elect in its sole discretion to construe such invalid
or unenforceable provisions in a manner that conforms to applicable law or as if such
provisions, to the extent invalid or unenforceable, had not been included.

	13.7	 	Lost Participants or Beneficiaries. Any Participant or Beneficiary who is entitled to
a benefit from the Plan has the duty to keep the Committee advised of his or her current
mailing address. If benefit payments are returned to the Plan or are not presented for payment
after a reasonable amount of time, the Committee shall presume that the payee is missing. The
Committee, after making such efforts as in its discretion it deems reasonable and appropriate
to locate the payee, shall stop payment on any uncashed checks and may discontinue making
future payments until contact with the payee is restored.

	13.8	 	Facility of Payment to a Minor. If a distribution is to be made to a minor, or to a
person who is otherwise incompetent, then the Committee may, in its discretion, make such
distribution: (i) to the legal guardian, or if none, to a parent of a minor payee with whom
the payee maintains his or her residence, or (ii) to the conservator or committee or, if none,
to the person having custody of an incompetent payee. Any such distribution shall fully
discharge the Committee, the Company, and the Plan from further liability on account thereof.

	13.9	 	Governing Law. To the extent not preempted by ERISA, the laws of the State of
California shall govern the construction and administration of the Plan.

 

30

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