Document:

Exhibit 10.4

Exhibit 10.4

	 	 	 
	Western®

Digital

	 	Western Digital Corporation

ID: 95-2657125

P.O. Box 19665

Lake Forest, CA 92630-7741

(949) 672-7000 x 27985/27986

Notice of Grant of Long-Term Cash Award

and Long-Term Cash Award Agreement — Executives

	 	 	 	 	 
	«First» «Last»
	 	 	 	 
	«Address_1»

	 	Plan:
	 	2004 Performance Incentive Plan
	«Address_2»

	 	ID:
	 	«Ee_ID»
	«City», «State» «Zip»
	 	 	 	 

Congratulations! Effective
 _____, you have been granted a Long-Term Cash Award (a “Cash
Award”) of Western Digital Corporation. This Cash Award was granted under the 2004 Performance
Incentive Plan (the “Plan”).

Target Cash Award: «Perf_Cash».

Measurement Period covered by grant: _____  to _____ (”Measurement
Period”).

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

A copy of the Plan and the Standard Terms have been provided to you. If you need another copy of
these documents, or if you would like to confirm that you have the most recent version, please
contact the Law Department.

Long-Term Cash Award (Executives) Sept. 2011

 

 

 

Western®

Digital

Western Digital Corporation 20511 Lake Forest Drive

Lake Forest, California 92630 Telephone 949 672-7000

STANDARD TERMS AND CONDITIONS FOR

LONG-TERM CASH AWARD — EXECUTIVES

1. Long-Term Cash Award Subject to 2004 Performance Incentive Plan

The Long-Term Cash Award (the “Cash Award”) referred to in the attached Notice of Grant of
Long-Term Cash Award and Long-Term Cash Award Agreement — Executives (the “Notice”) is awarded
under the Western Digital Corporation (the “Corporation”) Amended and Restated 2004 Performance
Incentive Plan (the “Plan”). The Cash Award is subject to the terms and provisions of the Notice,
these Standard Terms and Conditions for Long-Term Cash Award — Executives (these “Standard Terms”),
and the Plan. To the extent any information in the Notice or other information provided by the
Corporation conflicts with the Plan and/or these Standard Terms, then the Plan or these Standard
Terms, as applicable, shall control. To the extent any terms and provisions in these Standard Terms
conflict with the terms and provisions of the Plan, the Plan shall control. The Notice and these
Standard Terms, together, constitute the “Agreement” with respect to the Cash Award pursuant to
Section 5.3 of the Plan. The holder of the Cash Award is referred to herein as the “Participant.”
Capitalized terms not defined herein have the meanings set forth in the Plan.

2. Performance Goals

The Compensation Committee of the Board of Directors of the Corporation (the “Committee”)
shall set one or more objective performance goals for Participant for the Measurement Period, in
accordance with Section 5.2 of the Plan (“Performance Goals”). Upon determination by the Committee
of the Performance Goals, the Performance Goals for the Measurement Period shall be attached as
Exhibit A hereto.

3. Determination and Payment of Cash Award Payment Amount

Within a reasonable period of time following the end of the Measurement Period, the Committee
shall determine, in accordance with the Performance Goals and related criteria and methodology
established by the Committee described on Exhibit A hereto, the extent to which the
Performance Goals have been achieved and authorize the cash payment of an award, if any, to
Participant (the “Cash Award Payment Amount”). The Cash Award Payment Amount shall equal the dollar
amount of the Cash Award set forth on the Notice of Grant of Cash Performance Award (“Target Cash
Award”) multiplied by a percentage that shall be determined by the Committee in accordance with the
Performance Goals and related criteria and methodology described on Exhibit A hereto (the
“Cash Award Performance Percentage”), subject to adjustment as described in this Agreement. Subject
to Sections 5, 6 and 13 below, payment of the Cash Award Payment Amount shall be made to
Participant or, in the event of Participant’s death, to Participant’s legal representative, as soon
as practicable after the certification of awards by the Committee (but no later than seventy-four
(74) days following completion of the Measurement Period), net of amounts withheld in satisfaction
of the requirements of Section 8(b) below. The Cash Award Performance Percentage and the Cash
Award Payment Amount are subject to adjustment (which may be a reduction) as provided in this
Agreement.

4. Termination at Payment of Cash Award

Unless terminated earlier under Section 5 below, a Participant’s rights under this Agreement
with respect to the Cash Award awarded under this Agreement shall terminate at the time any Cash
Award Payment Amount is paid to Participant or at such time that the Cash Award is no longer
eligible to become paid, as determined by the Administrator or the Committee.

Long-Term
Cash Award (Executives) Sept. 2010

 

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5. Termination of Employment; Change in Control Event

(a) Termination of Employment. Except as expressly provided below in this Section 5
and subject to Section 7.2 or 7.3 of the Plan and subject to adjustment as provided in Section 6
hereof, in the event the Participant ceases to be employed by or to provide services to the
Corporation and its Subsidiaries for any reason (the last day that the Participant is employed by
the Corporation or a Subsidiary prior to a period of non-employment by any such entity is referred
to as the Participant’s “Severance Date”), the Participant’s Cash Award and any right to receive a
Cash Award Payment Amount shall terminate to the extent a Cash Award Payment Amount has not yet
been determined by the Committee as described in Section 3, as of the Severance Date; provided,
however, that in the event of the Participant’s death at a time when the Participant is employed by
or providing services to the Corporation or any of its Subsidiaries, a pro-rata portion of the Cash
Award Payment Amount shall be paid (equal to the Cash Award Payment Amount that the Participant
would have been entitled to had he or she continued to be employed through the applicable payment
date, multiplied by a fraction the numerator of which is the number of days in the Measurement
Period that the Participant was employed by the Corporation or one of its Subsidiaries prior to the
Participant’s death and the denominator of which is the total number of days in the Measurement
Period) to the Participant’s beneficiary at the same time as Cash Award Payment Amounts are paid
generally with respect to the Measurement Period. The Administrator shall be the sole judge, for
purposes of the Cash Award, as to whether the Participant continues to render services to the
Corporation or its Subsidiaries and the date, if any, upon which such services shall be deemed to
have terminated.

(b) Change in Control Event Generally. Upon (or, as may be necessary to effectuate the
purposes of this provision, immediately prior to) the occurrence of a Change in Control Event in
which the Cash Award is to terminate (i.e., the Administrator has not made a provision for the
substitution, assumption, exchange or other continuation of the Cash Award and the Cash Award will
not otherwise continue in accordance with its terms in the circumstances), subject to Section 6
below and Participant then being an Eligible Person (or having died during the Measurement Period
while employed by or providing services to the Corporation or any of its Subsidiaries), the Cash
Award Payment Amount, based on a Cash Award Performance Percentage of 100% (or such greater
percentage as the Committee, in its sole discretion, may deem appropriate in the circumstances, and
subject to pro-ration as provided in Section 5(a) in the event the Participant had died during the
Measurement Period and prior to the Change in Control Event), multiplied by the Target Cash
Award shall become payable hereunder to Participant. Such Cash Award Payment Amount (after
giving effect to the foregoing sentence) shall be paid, net of amounts withheld in satisfaction of
the requirements of Section 8(b) below, to Participant or, in the event of Participant’s death, to
Participant’s legal representative, as soon as practicable following (and in all events no more
than seventy-four (74) days after) the Change in Control Event; provided, however, that if the
Participant has made a deferral election with respect to such payment pursuant to Section 13(a)
that is then in effect, such payment shall be made in accordance with the terms of the
Corporation’s Amended and Restated Deferred Compensation Plan.

(c) Termination in Connection with a Change in Control Event. In the event the
Participant ceases to be employed by the Corporation or any of its Subsidiaries as a result of
either a termination of employment by the Corporation or one of its Subsidiaries without “Cause”
(as defined below) or the resignation of the Participant for “Good Reason” (as defined below), in
either case upon or within the one (1) year period following the occurrence of a Change in Control
Event, subject to Section 6 below and Participant then being an Eligible Person, the Cash Award
Payment Amount, based on a Cash Award Performance Percentage of 100% (or such greater
percentage as the Committee, in its sole discretion, may deem appropriate in the circumstances),
multiplied by the Target Cash Award shall become payable hereunder to Participant. Such
Cash Award Payment Amount (after giving effect to the foregoing sentence) shall be paid, net of
amounts withheld in satisfaction of the requirements of Section 8(b) below, to Participant or, in
the event of Participant’s death, to Participant’s legal representative, as soon as practicable
following (and in all events no more than seventy-four (74) days after) the Severance Date;
provided, however, that if the Participant has made a deferral election with respect to such
payment pursuant to Section 13(a) that is then in effect, such payment shall be made in accordance
with the terms of the Corporation’s Amended and Restated Deferred Compensation Plan.

Long-Term Cash Award (Executives) Sept. 2011

 

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For purposes of this Section 5(c), the term “Cause” shall mean the occurrence or existence of any
of the following with respect to the Participant, as determined by a majority of the disinterested
directors of the Board:

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

(B) whether prior or subsequent to the date hereof, the Participant’s willful engaging
in dishonest or fraudulent actions or omissions which results directly or indirectly in any
demonstrable material financial or economic harm to the Corporation, one or more of its
Subsidiaries, or any of their respective affiliates;

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

(D) gross negligence, insubordination, material violation by the Participant of any
duty of loyalty to the Corporation, one or more of its Subsidiaries, or any of their
respective affiliates, or any other material misconduct on the part of the Participant,
provided that the Participant shall have first received written notice from the Corporation
stating with specificity the nature of such action or violation and affording the
Participant at least five (5) days to correct such action or violation;

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

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

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

(H) improper disclosure of confidential information;

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

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

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

For purposes of this Section 5(c), the term “Good Reason” shall mean any of the following without
the Participant’s express written consent:

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

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

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

Long-Term Cash Award (Executives) Sept. 2011

 

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

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

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

6. Adjustments; Performance-Based Compensation

(a) Adjustments. In determining the Cash Award Performance Percentage and the Cash
Award Payment Amount with respect to the Measurement Period, the Committee shall (to the extent
necessary and without duplication, and to the extent not taken into account in setting the
applicable Performance Goal(s), as applicable) adjust the Performance Goals as follows:

(i) to eliminate the financial statement impact of acquisitions and costs associated
with such acquisitions and the costs incurred in connection with potential acquisitions that
are required to be expensed under Generally Accepted Accounting Principles (GAAP);

(ii) to eliminate the financial statement impact of divestitures and costs associated
with such divestitures and the costs incurred in connection with potential divestitures that
are required to be expensed under GAAP;

(iii) to eliminate the financial statement impact of any new changes in accounting
standards announced during the year that are required to be applied during the year in
accordance with GAAP;

(iv) to eliminate the financial statement impact of restructuring charges that are
required to be expensed (or reversed) under GAAP;

(v) to eliminate the financial statement impact of goodwill and intangible asset
impairment charges that are required to be recorded under GAAP; and

(vi) to eliminate the financial statement impact of legal settlements that have an
impact on revenues or expenses under GAAP.

The Committee’s determination of whether, and the extent to which, any such adjustment is necessary
shall be final and binding.

(b) Reduction of Cash Award Payment Amount. Notwithstanding Section 3 or any other
term of this Agreement, the Committee may in its sole and absolute discretion reduce the Cash Award
Payment Amount, if the Committee determines that such reduction is necessary or advisable due to
current business conditions or for any other reason, including the Committee’s judgment that the
Performance Goals have become an inappropriate measure of achievement, a change in the employment
status, position or duties of the Participant, unsatisfactory performance of the Participant, or
based on the Participant’s services and contributions for the Measurement Period.

(c) Performance-Based Compensation. Cash Awards are intended to be Performance-Based
Awards based on Business Criteria, as described in Section 5.2 of the Plan. Compensation
attributable to the Agreement is
intended to constitute qualified performance-based compensation under Section 162(m) of the
Code and the regulations thereunder. This Agreement shall be construed and administered by the
Committee in a manner consistent with this intent.

Long-Term Cash Award (Executives) Sept. 2011

 

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7. Acknowledgment of Nature of Plan and Cash Awards

In accepting the Cash Award, Participant acknowledges that:

(a) the Plan is established voluntarily by the Corporation, it is discretionary in nature and
may be modified, amended, suspended or terminated by the Corporation at any time, as provided in
the Plan;

(b) the Award of this Cash Award is voluntary and occasional and does not create any
contractual or other right to receive future awards of Cash Awards, or benefits in lieu of Cash
Awards even if Cash Awards have been awarded repeatedly in the past;

(c) all decisions with respect to future awards, if any, will be at the sole discretion of the
Corporation; and

(d) Participant’s participation in the Plan is voluntary.

8. Taxes

(a) Responsibility for Tax-Related Items. Regardless of any action the Corporation or
Participant’s actual employer takes with respect to any or all income tax (including federal, state
and local taxes), social insurance, payroll tax or other tax-related withholding (“Tax Related
Items”), Participant acknowledges that the ultimate liability for all Tax Related Items legally due
by Participant is and remains Participant’s responsibility and that the Corporation and/or the
Participant’s actual employer (i) make no representations or undertakings regarding the treatment
of any Tax Related Items in connection with any aspect of the Cash Award, including the grant of
the Cash Award, the determination of the Cash Award Payment Amount or the payment of the Cash Award
Payment Amount; and (ii) do not commit to structure the terms of the grant or any aspect of the
Cash Award to reduce or eliminate the Participant’s liability for Tax Related Items.

(b) Withholding Taxes. The Corporation (or any of its Subsidiaries last employing the
Participant) shall be entitled to withhold from any Cash Award Payment Amount an amount
necessary to satisfy any withholding obligations of the Corporation or any Subsidiary with
respect to such payment.

9. Nontransferability

Prior to the time that a Cash Award Payment Amount is paid to Participant, no Cash Award or
right to receive a Cash Award Payment Amount, any interest therein, nor any amount payable in
respect thereof, may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or
encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding
sentence shall not apply to (a) transfers to the Corporation, or (b) subject to Section 5(a),
transfers by will or the laws of descent and distribution.

10. No Right to Employment

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

Long-Term Cash Award (Executives) Sept. 2011

 

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11. Arbitration

Any controversy arising out of or relating to this Agreement (including these Standard Terms)
and/or the Plan, their enforcement or interpretation, or because of an alleged breach, default, or
misrepresentation in connection
with any of their provisions, or any other controversy arising out of or related to the Cash
Award, including, but not limited to, any state or federal statutory claims, shall be submitted to
arbitration in Orange County, California, before a sole arbitrator selected from Judicial
Arbitration and Mediation Services, Inc., Orange, California, or its successor (“JAMS”), or if JAMS
is no longer able to supply the arbitrator, such arbitrator shall be selected from the American
Arbitration Association, and shall be conducted in accordance with the provisions of California
Code of Civil Procedure §§ 1280 et seq. as the exclusive forum for the resolution of such dispute;
provided, however, that provisional injunctive relief may, but need not, be sought by either party
to this Agreement in a court of law while arbitration proceedings are pending, and any provisional
injunctive relief granted by such court shall remain effective until the matter is finally
determined by the arbitrator. Final resolution of any dispute through arbitration may include any
remedy or relief which the arbitrator deems just and equitable, including any and all remedies
provided by applicable state or federal statutes. At the conclusion of the arbitration, the
arbitrator shall issue a written decision that sets forth the essential findings and conclusions
upon which the arbitrator’s award or decision is based. Any award or relief granted by the
arbitrator hereunder shall be final and binding on the parties hereto and may be enforced by any
court of competent jurisdiction. The parties acknowledge and agree that they are hereby waiving any
rights to trial by jury in any action, proceeding or counterclaim brought by either of the parties
against the other in connection with any matter whatsoever arising out of or in any way connected
with any of the matters referenced in the first sentence above. The parties agree that Corporation
shall be responsible for payment of the forum costs of any arbitration hereunder, including the
arbitrator’s fee. The parties further agree that in any proceeding with respect to such matters,
each party shall bear its own attorney’s fees and costs (other than forum costs associated with the
arbitration) incurred by it or him or her in connection with the resolution of the dispute. By
accepting the Cash Award, the Participant consents to all of the terms and conditions of this
Agreement (including, without limitation, this Section 11).

12. Governing Law

This Agreement, including these Standard Terms, shall be interpreted and construed in
accordance with the laws of the State of Delaware (without regard to conflict of law principles
thereunder) and applicable federal law.

13. Deferrals; Construction

(a) Notwithstanding anything to the contrary contained herein, the Participant may elect, on a
form and in a manner provided by the Corporation and by any applicable deferral election deadline,
to defer receipt of any or all Cash Award Payment Amounts that become payable pursuant to this
Agreement under the Corporation’s Deferred Compensation Plan (the “Deferred Compensation Plan”),
provided that any such election must be made in accordance with the provisions of the Deferred
Compensation Plan. If the Participant makes such a deferral election, the deferred amounts will be
paid in accordance with the payment provisions of the Deferred Compensation Plan (including without
limitation the provisions requiring a six-month payment delay for any payment on account of a
separation from service if the Participant is a “specified employee” for purposes of Section 409A
of the Code), which are incorporated herein by this reference, and any applicable distribution
election made by the Participant under and in accordance with the rules of the Deferred
Compensation Plan.

(b) It is intended that the terms of the Cash Award will not result in the imposition of any
tax liability pursuant to Section 409A of the Code. This Award Agreement shall be construed and
interpreted consistent with that intent.

14. Severability

If the arbitrator selected in accordance with Section 11 or a court of competent jurisdiction
determines that any portion of this Agreement (including these Standard Terms) or the Plan is in
violation of any statute or public policy, then only the portions of this Agreement or the Plan, as
applicable, which are found to violate such statute or public policy shall be stricken, and all
portions of this Agreement and the Plan which are not found to violate any statute or public policy
shall continue in full force and effect. Furthermore, it is the parties’ intent that any order
striking any portion of this Agreement and/or the Plan should modify the stricken terms as narrowly
as possible to give as much effect as possible to the intentions of the parties hereunder.

Long-Term Cash Award (Executives) Sept. 2011

 

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15. Entire Agreement

This Agreement (including these Standard Terms) and the Plan together constitute the entire
agreement and supersede all prior understandings and agreements, written or oral, of the parties
hereto with respect to the subject matter hereof. The Plan and this Agreement may be amended
pursuant to Section 8.6 of the Plan. Such amendment must be in writing and signed by the
Corporation. The Corporation may, however, unilaterally waive any provision hereof in writing to
the extent such waiver does not adversely affect the interests of the Participant hereunder, but no
such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a
waiver of any other provision hereof.

16. Section Headings

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

Long-Term Cash Award (Executives) Sept. 2011

 

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EXHIBIT A

LONG-TERM CASH AWARD — EMPLOYEES

Performance Goals

[Performance Goals shall be expressed in terms of one or more of the following corporate measures
(or such other measures that may be defined as “Business Criteria” pursuant to the Plan): earnings
per share, cash flow (which means cash and cash equivalents derived from either net cash flow from
operations or net cash flow from operations, financing and investing activities), total stockholder
return, gross revenue, revenue growth, operating income (before or after taxes), net earnings
(before or after interest, taxes, depreciation and/or amortization), return on equity or on assets
or on net investment, cost containment or reduction, or any combination thereof. Each such
Performance Goal may be expressed on an absolute and/or relative basis, may employ comparisons with
past performance of the Corporation (including one or more divisions) and/or the current or past
performance of other companies, and in the case of earnings-based measures, may employ comparisons
to capital, stockholders’ equity and shares outstanding.]Exhibit 10.5

Exhibit 10.5

	 	 	 
	

	 	Western Digital
Corporation

ID: 95-2647125

20511 Lake Forest Drive

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

and Option Agreement
	 	 

	 	 	 
	Name

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

	 	Plan: 2004 Performance Incentive Plan
	City, State Zip

	 	ID: ####

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

Vesting:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Shares1	 	Vest Type	 	 	Full Vesting	 	 	Expiration Date2	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

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

A copy of the Plan, the Prospectus for the Plan, and the Terms have been provided to you. If you
need another copy of any of these documents, or if you would like to confirm that you have the most
recent version, you may obtain another copy in the Company Library on the E*TRADE web site. These
documents are also available on the Western Digital Intranet site under Legal.

	 	 	 
	1.	 	The number of shares subject to the option and the per-share exercise price of the option are
subject to adjustment under Section 7.1 of the Plan (for example, and without limitation, in
connection with stock splits).
	 
	2.	 	The option is subject to early termination under Section 5 of the attached Terms and
Conditions for Stock Options.

 

 

Western Digital Corporation 20511 Lake Forest Drive

Lake Forest, California 92630 Telephone 949 672-7000

TERMS AND CONDITIONS FOR STOCK OPTIONS

Amended and Restated 2004 Performance Incentive Plan

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

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

Unless otherwise expressly provided in other sections of these Terms, provisions of the Plan that
confer discretionary authority on the Board or the Administrator do not and shall not be deemed to
create any rights in the Participant unless such rights are expressly set forth herein or are
otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate
action of the Board or the Administrator under the Plan after the grant date of the Option.

2. Option Agreement.

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

3. Type of Stock Option

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

4. Vesting

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

 

1

 

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

Except as expressly provided in Sections 6 and 7 below, the vesting schedule requires continued
employment or service through each applicable vesting date as a condition to the vesting of the
applicable installment of the Option and the rights and benefits under this Option Agreement.
Except as expressly provided in Sections 6 and 7 below, employment or service for only a portion of
the vesting period, even if a substantial portion, will not entitle the Participant to any
proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a
termination of employment or services as provided in Section 7 below or under the Plan.

5. Expiration of Option

The Option shall expire and the Participant shall have no further rights with respect
thereto upon the earliest to occur of (a) the termination of the Option as provided in
Section 7 below, (b) the termination of the Option as provided in Section 7.4 of the Plan,
or (c) the Expiration Date set forth in the Notice. The Option may not be exercised at any
time after a termination or expiration of the Option.

6. Change in Control Event Generally

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

7. Termination of Employment, Total Disability or Death

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

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

 

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

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

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

(e) Termination for Cause. Notwithstanding the foregoing provisions of this Section 7, if
the Participant’s employment with the Corporation or any of its Subsidiaries is terminated by the
Corporation or one of its Subsidiaries for Cause (as such term is defined in that certain
Employment Agreement, dated as of March 7, 2011, by and between the Participant and the Corporation
(the “Employment Agreement”)), the Option (whether or not all or any portion of such Option is then
vested and exercisable) shall immediately terminate on the Participant’s Severance Date.

 

3

 

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

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

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

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

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

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

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

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

(g) Special Incentive Vesting and Exercisability. In the event the Participant remains
employed by the Corporation as its Chief Executive Officer through January 1, 2012, thereafter upon
the termination of the Participant’s employment with the Corporation or any of its Subsidiaries
(for any reason other than a termination by the Corporation or any of its Subsidiaries for Cause),
the Option (and any other stock options granted to the Participant during the Employment Period (as
defined in the Employment Agreement)) shall become fully vested as of the Participant’s Severance
Date, and it may be exercised by the Participant at any time within three years following the
Participant’s Severance Date. The Option, to the extent exercisable for the three-year period
following the Participant’s Severance Date and not exercised during such period, shall terminate at
the close of business on the last day of the three-year period.

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

 

4

 

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

8. Exercise of Option

The Option shall be exercisable by the delivery to the Secretary of the Corporation (or such other
person as the Administrator may require pursuant to such administrative exercise procedures as the
Administrator may implement from time to time) of:

	 	•	 	a written notice stating the number of shares of Common Stock to be purchased
pursuant to the Option or by the completion of such other administrative exercise
procedures as the Administrator may require from time to time;

	 	•	 	payment in full for the purchase price (the per-share exercise price of the Option
multiplied by the number of shares to be purchased) in cash, check or by electronic
funds transfer to the Corporation, or (subject to compliance with all applicable laws,
rules, regulations and listing requirements and further subject to such rules as the
Administrator may adopt as to any non-cash payment) in shares of Common Stock already
owned by the Participant, valued at their fair market value on the exercise date,
provided, however, that any shares initially acquired upon exercise of
a stock option or otherwise from the Corporation must have been owned by the
Participant for at least six (6) months before the date of such exercise;

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

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

The Administrator also may, but is not required to, authorize a non-cash payment alternative by
notice and third party payment in such manner as may be authorized by the Administrator.

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

9. Nontransferability

The Option and any other rights of the Participant under this Option Agreement or the Plan are
nontransferable and exercisable only by the Participant, except as set forth in Section 5.7 of the
Plan. For purposes of clarity, the Administrator has not authorized any transfer exceptions as
contemplated by Section 5.7.2 of the Plan.

10. No Right to Employment

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

 

5

 

11. Rights as a Stockholder

Neither the Participant nor any beneficiary or other person claiming under or through the
Participant shall have any right, title, interest or privilege in or to any shares of Common Stock
subject to the Option except as to such shares, if any, as shall have been actually issued to such
person and recorded in such person’s name following the exercise of the Option or any portion
thereof.

12. Notices

Any notice to be given under the terms of this Option Agreement shall be in writing and addressed
to the Corporation at its principal office to the attention of the Secretary, and to the
Participant at the address last reflected on the Corporation’s payroll records, or at such other
address as either party may hereafter designate in writing to the other. Any such notice shall be
delivered in person or shall be enclosed in a properly sealed envelope addressed as aforesaid,
registered or certified, and deposited (postage and registry or certification fee prepaid) in a
post office or branch post office regularly maintained by the United States Government. Any such
notice shall be given only when received, but if the Participant is no longer employed by the
Corporation or a Subsidiary, shall be deemed to have been duly given five business days after the
date mailed in accordance with the foregoing provisions of this Section 12.

13. Arbitration

Any controversy arising out of or relating to this Option Agreement (including these Terms) and/or
the Plan, their enforcement or interpretation, or because of an alleged breach, default, or
misrepresentation in connection with any of their provisions, or any other controversy or claim
arising out of or related to the Option or the Participant’s employment, including, but not limited
to, any state or federal statutory claims, shall be submitted to arbitration in Orange County,
California, before a sole arbitrator selected from Judicial Arbitration and Mediation Services,
Inc., Orange, California, or its successor (“JAMS”), or if JAMS is no longer able to supply the
arbitrator, such arbitrator shall be selected from the American Arbitration Association, and shall
be conducted in accordance with the provisions of California Code of Civil Procedure §§ 1280 et
seq. as the exclusive forum for the resolution of such dispute; provided, however, that provisional
injunctive relief may, but need not, be sought by either party to this Option Agreement in a court
of law while arbitration proceedings are pending, and any provisional injunctive relief granted by
such court shall remain effective until the matter is finally determined by the arbitrator. Final
resolution of any dispute through arbitration may include any remedy or relief which the arbitrator
deems just and equitable, including any and all remedies provided by applicable state or federal
statutes. At the conclusion of the arbitration, the arbitrator shall issue a written decision that
sets forth the essential findings and conclusions upon which the arbitrator’s award or decision is
based. Any award or relief granted by the arbitrator hereunder shall be final and binding on the
parties hereto and may be enforced by any court of competent jurisdiction. The parties acknowledge
and agree that they are hereby waiving any rights to trial by jury in any action, proceeding or
counterclaim brought by either of the parties against the other in connection with any matter
whatsoever arising out of or in any way connected with any of the matters referenced in the first
sentence above. The parties agree that Corporation shall be responsible for payment of the forum
costs of any arbitration hereunder, including the arbitrator’s fee. The parties further agree that
in any proceeding with respect to such matters, each party shall bear its own attorney’s fees and
costs (other than forum costs associated with the arbitration) incurred by it or him or her in
connection with the resolution of the dispute. By accepting the Option, the Participant consents
to all of the terms and conditions of this Option Agreement (including, without limitation, this
Section 13).

 

6

 

14. Governing Law

This Option Agreement, including these Terms, shall be interpreted and construed in accordance with
the laws of the State of Delaware (without regard to conflict of law principles thereunder) and
applicable federal law.

15. Severability

If the arbitrator selected in accordance with Section 13 or a court of competent jurisdiction
determines that any portion of this Option Agreement (including these Terms) or the Plan is in
violation of any statute or public policy, then only the portions of this Option Agreement or the
Plan, as applicable, which are found to violate such statute or public policy shall be stricken,
and all portions of this Option Agreement and the Plan which are not found to violate any statute
or public policy shall continue in full force and effect. Furthermore, it is the parties’ intent
that any order striking any portion of this Option Agreement and/or the Plan should modify the
stricken terms as narrowly as possible to give as much effect as possible to the intentions of the
parties hereunder.

16. Entire Agreement

This Option Agreement (including these Terms), the Plan and the Employment Agreement together
constitute the entire agreement and supersede all prior understandings and agreements, written or
oral, of the parties hereto with respect to the subject matter hereof. The Plan and this Option
Agreement may be amended pursuant to Section 8.6 of the Plan. Such amendment must be in writing
and signed by the Corporation. The Corporation may, however, unilaterally waive any provision
hereof in writing to the extent such waiver does not adversely affect the interests of the
Participant hereunder, but no such waiver shall operate as or be construed to be a subsequent
waiver of the same provision or a waiver of any other provision hereof.

17. Section Headings

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

 

7

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