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.
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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.
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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.
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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
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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.
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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.
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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.
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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.
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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.]