Exhibit 10.7






Exhibit 10.7




	 	 	 
	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




	 	 	 	 	 
	«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 Terms and
Conditions for Long-Term Cash Award (the “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
Terms. The Terms and the Plan are each incorporated into (made a part of) this Notice by this
reference. You do not have to accept your award. If you do not agree to the terms of your award,
you should promptly return this Notice to the Western Digital Corporation Stock Plans
Administrator.



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



Long-Term Cash Award (John Coyne) Sept. 2011





 


 









 







Western®

Digital




Western Digital Corporation 20511 Lake Forest Drive

Lake Forest, California 92630 Telephone 949 672-7000



TERMS AND CONDITIONS FOR

LONG-TERM CASH AWARD




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 (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 Terms and
Conditions for Long-Term Cash Award (these “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
Terms, then 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 Notice and these 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 (John Coyne) Sept. 2011






 


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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 in that certain Employment Agreement, dated as of March 7, 2011, by and between the
Participant and the Corporation (the “Employment Agreement”)) 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.



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;



Long-Term Cash Award (John Coyne) Sept. 2011






 


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(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.



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.



Long-Term Cash Award (John Coyne) Sept. 2011






 


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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.



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 (John Coyne) Sept. 2011






 


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11. Arbitration




Any controversy arising out of or relating to this Agreement (including these Terms) and/or
the Plan, their enforcement or interpretation, or because of an alleged breach, default, or
misrepresentation in connection with any of their provisions, or any other controversy arising out
of or related to the 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 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.



Long-Term Cash Award (John Coyne) Sept. 2011






 


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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 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.



15. Entire Agreement




This Agreement (including these 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 (John Coyne) 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.]