Exhibit 10.3






Exhibit 10.3




	 	 	 
	Western®

Digital

	 	Western Digital Corporation



ID: 95-2657125

P.O. Box 19665

Lake Forest, CA 92630-7741

(949) 672-7000 x 27985/27986






Notice of Grant of Stock Units

and Stock Unit Award Agreement — Executives




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



Vesting2:




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



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




 





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





 


 









 













Western Digital Corporation 20511 Lake Forest Drive

Lake Forest, California 92630 Telephone 949 672-7000



STANDARD TERMS AND CONDITIONS FOR

STOCK UNIT AWARDS — EXECUTIVES

Amended and Restated 2004 Performance Incentive Plan




1. Stock Units Subject to 2004 Performance Incentive Plan




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



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



2. Award Agreement




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



3. Deferral of Stock Units




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



4. Vesting




Except as otherwise provided in this Award Agreement, the Award shall vest and become
nonforfeitable in percentage installments of the aggregate number of Stock Units as set forth in
the Notice. Except as expressly provided in Sections 7 and 8 below, the vesting schedule requires
continued employment or service through each
applicable vesting date as a condition to the vesting of the applicable installment of the Award
and the rights and benefits under this Award Agreement. Except as expressly provided in Sections 7
and 8 below, employment or service for only a portion of the vesting period, even if a substantial
portion, will not entitle the Participant to any proportionate vesting or avoid or mitigate a
termination of rights and benefits upon or following a termination of employment or services as
provided in Section 8 below or under the Plan.


 


 









 





5. Dividend Equivalent Rights Distributions




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



6. Timing and Manner of Payment of Stock Units




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



7. Change in Control Event Generally




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


 


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8. Termination of Employment




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



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



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




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




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




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




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




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


 


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




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




(H) improper disclosure of confidential information;




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




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




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



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




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




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




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




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




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



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



9. Adjustments




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


 


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10. Withholding Taxes




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



11. Nontransferability




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



12. No Right to Employment




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



13. Rights as a Stockholder




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



14. Notices




Any notice to be given under the terms of this Award Agreement shall be in writing and addressed to
the Corporation at its principal office to the attention of the Secretary, and to the Participant
at the address last reflected on the Corporation’s payroll records, or at such other address as
either party may hereafter designate in writing to the other. Any such notice shall be delivered
in person or shall be enclosed in a properly sealed envelope addressed as aforesaid, registered or
certified, and deposited (postage and registry or certification fee prepaid) in a post office or
branch post office regularly maintained by the United States Government. Any such notice shall be
given only when received, but if the Participant is no longer employed by the Corporation or a
Subsidiary, shall be deemed to have been duly given five business days after the date mailed in
accordance with the foregoing provisions of this Section 14.


 


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15. Arbitration




Any controversy arising out of or relating to this Award Agreement (including these Standard Terms)
and/or the Plan, their enforcement or interpretation, or because of an alleged breach, default, or
misrepresentation in connection with any of their provisions, or any other controversy arising out
of or related to the Award, including, but not limited to, any state or federal statutory claims,
shall be submitted to arbitration in Orange County, California, before a sole arbitrator selected
from Judicial Arbitration and Mediation Services, Inc., Orange, California, or its successor
(“JAMS”), or if JAMS is no longer able to supply the arbitrator, such arbitrator shall be selected
from the American Arbitration Association, and shall be conducted in accordance with the provisions
of California Code of Civil Procedure §§ 1280 et seq. as the exclusive forum for the resolution of
such dispute; provided, however, that provisional injunctive relief may, but need not, be sought by
either party to this Award Agreement in a court of law while arbitration proceedings are pending,
and any provisional injunctive relief granted by such court shall remain effective until the matter
is finally determined by the arbitrator. Final resolution of any dispute through arbitration may
include any remedy or relief which the arbitrator deems just and equitable, including any and all
remedies provided by applicable state or federal statutes. At the conclusion of the arbitration,
the arbitrator shall issue a written decision that sets forth the essential findings and
conclusions upon which the arbitrator’s award or decision is based. Any award or relief granted by
the arbitrator hereunder shall be final and binding on the parties hereto and may be enforced by
any court of competent jurisdiction. The parties acknowledge and agree that they are hereby
waiving any rights to trial by jury in any action, proceeding or counterclaim brought by either of
the parties against the other in connection with any matter whatsoever arising out of or in any way
connected with any of the matters referenced in the first sentence above. The parties agree that
Corporation shall be responsible for payment of the forum costs of any arbitration hereunder,
including the arbitrator’s fee. The parties further agree that in any proceeding with respect to
such matters, each party shall bear its own attorney’s fees and costs (other than forum costs
associated with the arbitration) incurred by it or him or her in connection with the resolution of
the dispute. By accepting the Award, the Participant consents to all of the terms and conditions
of this Award Agreement (including, without limitation, this Section 15).



16. Governing Law




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



17. Severability




If the arbitrator selected in accordance with Section 15 or a court of competent jurisdiction
determines that any portion of this Award Agreement (including these Standard Terms) or the Plan is
in violation of any statute or public policy, then only the portions of this Award Agreement or the
Plan, as applicable, which are found to violate such statute or public policy shall be stricken,
and all portions of this Award Agreement and the Plan which are not found to violate any statute or
public policy shall continue in full force and effect. Furthermore, it is the parties’ intent that
any order striking any portion of this Award Agreement and/or the Plan should modify the stricken
terms as narrowly as possible to give as much effect as possible to the intentions of the parties
hereunder.



18. Entire Agreement




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


 


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19. Section Headings




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


 


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