RESTRICTED STOCK UNIT PLAN
(AS AMENDED AND RESTATED THROUGH SEPTEMBER, 2003)
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENT. The Maxtor Corporation Restricted Stock Unit Plan
(the "PLAN") is hereby established effective as of June 10, 2002 (the "EFFECTIVE
1.2 PURPOSE. The purpose of the Plan is to promote the long-term
interests of the Company and its stockholders by providing an incentive to
motivate and retain executive officers and other members of the Company's senior
management designated for participation in the Plan. The Plan is intended to
accomplish this purpose by providing for the award to its participants of
certain rights, subject to the terms and conditions of the Plan and the
participant's award agreement, to receive a payment determined by the value of
the Company's Common Stock.
1.3 TERM OF PLAN. The Plan shall continue in effect until terminated by
2. DEFINITIONS AND CONSTRUCTION.
2.1 DEFINITIONS. Whenever used herein, the following terms shall have
the respective meanings set forth below:
(a) "AWARD" means an award of one or more Restricted Stock Units
pursuant to the terms and conditions of the Plan and the Participant's Award
(b) "AWARD AGREEMENT" means a written agreement between the Company
and a Participant setting forth the terms and conditions of an Award granted to
(c) "BOARD" means the Board of Directors of the Company.
(d) "CAUSE" means the occurrence of any of the following:
(i) the Participant's theft, material act of dishonesty, fraud,
intentional falsification of any employment or Company records or commission of
any criminal act which impairs the Participant's ability to perform his or her
duties with the Company;
(ii) the Participant's improper disclosure of the Company's
confidential, business or proprietary information; or
(iii) the Participant's conviction (including any plea of guilty
or nolo contendere) for a felony causing material harm to the reputation and
standing of the Company, as determined by the Company in good faith.
(e) "CHANGE IN CONTROL" means the occurrence of any of the
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")),
other than a trustee or other fiduciary holding securities of the Company under
an employee benefit plan of the Company, becomes the "beneficial owner" (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of (A) the
outstanding shares of Common Stock or (B) the combined voting power of the
Company's then-outstanding securities.
(ii) The Company is party to a merger or consolidation which
results in the holders of voting securities of the Company outstanding
immediately prior thereto failing to continue to hold voting securities which
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 50% of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation.
(iii) The occurrence of a change in the composition of the Board
within a two-year period, as a result of which fewer than a majority of the
members of the Board are Incumbent Directors. For purposes of this Agreement, an
Incumbent Director is any member of the Board who is either:
(1) a member of the Board as of the Effective Date; or
(2) elected or nominated for election to the Board with the
affirmative votes of at least a majority of the Incumbent Directors at the time
of such election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company).
(iv) The sale or disposition of all or substantially all of the
Company's assets (or any transaction having similar effect is consummated).
(v) The dissolution or liquidation of the Company.
Notwithstanding any other provision herein to the contrary, for purposes of the
Plan, no Change in Control shall be deemed to have occurred as a result of any
ownership change which may occur as a result of an underwritten public offering
of the Company's stock.
(f) "CODE" means the Internal Revenue Code of 1986, as amended, and
any applicable regulations promulgated thereunder.
(g) "COMMITTEE" means the Compensation Committee or other committee
of the Board duly appointed to administer the Plan and having such powers as
shall be specified by the Board. If no committee of the Board has been appointed
to administer the Plan, the Board shall exercise all of the powers of the
Committee granted herein.
(h) "COMMON STOCK" means the Common Stock of the Company.
(i) "COMPANY" means Maxtor Corporation, a Delaware corporation, or
any successor thereto.
(j) "DISABILITY" means the inability of the Participant, in the
opinion of a qualified physician acceptable to the Company, to perform the major
duties of the Participant's position with a Participating Company because of the
sickness or injury of the Participant.
(k) "EMPLOYEE" means any person treated as an employee in the
records of a Participating Company.
(l) "FAIR MARKET VALUE PER SHARE" means, as of any date, the value
of a single share of Common Stock, determined as follows:
(i) The closing sale price of a share of Common Stock (or the
mean of the closing bid and asked prices of the Common Stock if the Common Stock
is so reported instead) as reported on the New York Stock Exchange or such other
national or regional securities exchange or market system constituting the
primary market for the Common Stock, on such date, or if there are no reported
sales on such date, on the last preceding date on which sales were reported; or
(ii) In the absence of the foregoing, the Fair Market Value per
Share shall be determined by the Committee in its absolute discretion based on
an appraisal of the Common Stock and after giving consideration to the book
value, the revenues, and the earnings prospects of the Company in light of
market conditions generally.
The Fair Market Value per Share determined under one of the preceding paragraphs
shall be final, binding and conclusive on all parties for the purposes of this
(m) "GRANT DATE" means the effective date of the grant of an Award
as specified by the Committee.
(n) "PARENT CORPORATION" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.
(o) "PARTICIPANT" means a person to whom an Award has been granted.
(p) "PARTICIPATING COMPANY" means the Company or any Parent
Corporation or Subsidiary Corporation.
(q) "RESTRICTED STOCK UNIT" means a bookkeeping entry representing
the right of a Participant to receive from the Company payment in cash in an
amount determined in relationship to the Fair Market Value per Share of the
Common Stock, as adjusted from time to time pursuant to Section 5.8, and on a
date determined in accordance with the terms of the Plan and the Participant's
Award Agreement. A Restricted Stock Unit represents an unfunded and unsecured
promise by the Company to pay money; it does not represent an ownership interest
in Common Stock.
(r) "RETIREMENT" means a Participant's voluntary resignation from
Service following the date of the Participant's sixty-fifth (65th) birthday.
(s) "SERVICE" means a Participant's employment with a Participating
Company as an Employee. A Participant's Service shall not be deemed to have
terminated merely because of a change in the Participating Company for which the
Participant renders such Service, provided that there is no interruption or
termination of the Participant's Service. Furthermore, a Participant's Service
shall not be deemed to have terminated if the Participant takes any bona fide
leave of absence approved by the Company; provided, however, that the Committee,
in its discretion, may extend the vesting period of the Award by a period equal
to the period of such leave. The Participant's Service shall be deemed to have
terminated either upon an actual termination of Service or upon the company for
which the Participant performs Service ceasing to be a Participating Company.
Subject to the foregoing, the Company, in its discretion, shall determine
whether the Participant's Service has terminated and the effective date of such
(t) "SUBSIDIARY CORPORATION" means any present or future "subsidiary
corporation" of the Company, as defined in Section 424(f) of the Code.
(u) "TRADING DAY" means a day on which the New York Stock Exchange
or such other national or regional securities exchange or market system
constituting the primary market for the Common Stock is open for trading.
2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
3.1 ADMINISTRATION BY THE COMMITTEE. The Plan shall be administered by
the Committee. All questions of interpretation of the Plan or of any Award shall
be determined by the Committee, and such determinations shall be final and
binding upon all persons having an interest in the Plan or such Award.
3.2 AUTHORITY OF OFFICERS. Any officer of the Company shall have the
authority to act on behalf of the Company with respect to any matter, right,
obligation, determination or election which is the responsibility of or which is
allocated to the Company herein, provided the officer has apparent authority
with respect to such matter, right, obligation, determination or election.
3.3 POWERS OF THE COMMITTEE. In addition to any other powers set forth
in the Plan and subject to the provisions of the Plan, the Committee shall have
the full and final power and authority, in its discretion:
(a) to determine the persons to whom, and the time or times at
which, Awards shall be granted and the number of Restricted Stock Units to be
subject to each Award;
(b) to determine the terms and conditions applicable to each Award
(which need not be identical);
(c) to approve one or more forms of Award Agreement;
(d) to amend, modify, extend, cancel or renew any Award or to waive
any restrictions or conditions applicable to any Award;
(e) to accelerate, continue, extend or defer the vesting of any
Award, including with respect to the period following a Participant's
termination of Service;
(f) to prescribe, amend or rescind rules, guidelines and policies
relating to the Plan, or to adopt supplements to, or alternative versions of,
the Plan, including, without limitation, as the Committee deems necessary or
desirable to comply with the laws of, or to accommodate the tax policy or custom
of, foreign jurisdictions whose citizens may be granted Awards; and
(g) to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award Agreement and to make all other
determinations and take such other actions with respect to the Plan or any Award
as the Committee may deem advisable to the extent not inconsistent with the
provisions of the Plan or applicable law.
3.4 INDEMNIFICATION. In addition to such other rights of
indemnification as they may have, members of the Board and any officers or
employees of any Participating Company to whom authority to act on behalf of the
Board is delegated shall be indemnified by the Company against the reasonable
expenses, including court costs and reasonable attorneys' fees, actually
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Award granted hereunder, and against all amounts paid by them in
settlement thereof or paid by them in satisfaction of a judgment in any such
action, suit or proceeding, except where such indemnification is expressly
prohibited by applicable law.
4. ELIGIBILITY AND GRANT OF AWARDS.
4.1 ELIGIBILITY. Awards may be granted only to Employees who have been
designated by Board as executive officers of the Company or who are members of
senior management of a Participating Company designated by the Committee for
participation. Eligible persons may be granted more than one Award. However,
eligibility in accordance with this Section shall not entitle any person to be
granted an Award, or, having been granted an Award to be granted an additional
4.2 GRANT OF AWARDS. Awards may be granted to such eligible persons at
such time or times and for such numbers of Restricted Stock Units as determined
by the Committee in its discretion. No Participant shall be required to pay any
monetary consideration as a condition to the receipt of an Award. Each
Participant granted an Award shall be notified of such grant in writing as soon
as practicable following the date of grant of the Award. The Restricted Stock
Units subject to a Participant's Award shall be credited to a bookkeeping
account to be maintained for such Participant.
5. TERMS AND CONDITIONS OF AWARDS.
Awards shall be evidenced by Award Agreements specifying the number of
Restricted Stock Units covered thereby, in such form as the Committee shall from
time to time establish. No Award or purported Award shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Award Agreement.
Award Agreements may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and
5.1 VESTING OF AWARDS. Each Award shall become vested at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria, and restrictions as shall be determined by the Committee
and set forth in the Award Agreement evidencing such Award. The vesting
provisions of individual Awards may vary; provided, however, that except as
otherwise determined by the Committee in its discretion and set forth in the
Award Agreement evidencing the Award, each Award shall become vested as follows:
(a) REGULAR VESTING. The Award shall vest in full on the third (3rd)
anniversary of the Grant Date with respect to such Award, provided that the
Participant's Service has not terminated prior to such anniversary.
(b) CHANGE IN CONTROL. Notwithstanding the foregoing, each Award
shall vest in full upon the date of the consummation of a Change in Control,
provided that the Participant's Service has not terminated prior to such date.
5.2 EFFECT OF TERMINATION OF SERVICE. Except as otherwise provided
below, if a Participant's Service terminates for any reason, any portion of the
Restricted Stock Units subject to the Participant's Award which have not vested
in accordance with the Award Agreement as of the date of such termination shall
be forfeited and automatically canceled
effective as of such date. That portion, if any, of the Restricted Stock Units
subject to the Award which have vested as of the date of the Participant's
termination of Service shall be settled as provided by Section 5.3.
(a) RETIREMENT, DEATH OR DISABILITY. If the Participant's Service
terminates because of the Retirement, death or Disability of the Participant,
the Participant's Award shall vest in accordance with Section 5.1 as if the
Participant's Service had not terminated prior to the applicable vesting date.
(b) INVOLUNTARY TERMINATION OTHER THAN FOR CAUSE. If the
Participant's Service is terminated by the Company other than for Cause, the
Participant's Award shall vest in full effective as of the date of termination
5.3 SETTLEMENT OF AWARDS. Except as otherwise determined by the
Committee in its discretion and set forth in the Award Agreement evidencing an
Award or as otherwise provided pursuant to Section 5.4(d), the Company shall pay
to the Participant in cash on the date on which Restricted Stock Units subject
to the Award vest the value of such vested Restricted Stock Units as determined
in accordance with Section 5.4 and subject to the withholding of taxes pursuant
to Section 5.6. Notwithstanding the foregoing, a Participant who is eligible to
participate in the Company's Executive Deferred Compensation Plan (or any
successor thereto) may elect in accordance with the terms of such plan to defer
receipt of all or any portion of amounts payable to the Participant pursuant to
5.4 VALUE OF VESTED RESTRICTED STOCK UNITS. Except as otherwise
determined by the Committee in its discretion and set forth in the Award
Agreement evidencing an Award, the value of each vested Restricted Stock Unit
shall be determined as follows:
(a) REGULAR VESTING. The value of each Restricted Stock Unit which
vests in accordance with Section 5.1(a) shall be the average Fair Market Value
per Share during the twenty (20) consecutive Trading Days ending on or
immediately before the vesting date.
(b) RETIREMENT, DEATH OR DISABILITY. The value of each Restricted
Stock Unit which vests in accordance with Section 5.2(a) shall be determined in
accordance with Section 5.4(a).
(c) INVOLUNTARY TERMINATION OTHER THAN FOR CAUSE. The value of each
Restricted Stock Unit which vests in accordance with Section 5.2(b) shall be
determined in accordance with Section 5.4(a).
(d) CHANGE IN CONTROL. The value of each Restricted Stock Unit which
vests in accordance with Section 5.1(b) shall be the greater of:
(i) the Fair Market Value per Share on the vesting date; or
(ii) the value of the consideration, if any, payable to a holder
of a share of Common Stock pursuant to the transaction constituting a Change in
If any portion of the consideration payable to a holder of a share of Common
Stock pursuant to the transaction constituting a Change in Control is subject to
any earn-out, escrow or other delayed or contingent payment provision pursuant
to an agreement between the Company and an acquiror of the Company (such portion
being hereinafter referred to as the "CONTINGENT CONSIDERATION"), then the
Committee, in its discretion, may either (1) determine the value of each vested
Restricted Stock Unit taking into account the Committee's good faith estimate of
the present value of the probable future payment of the Contingent Consideration
or (2) provide for delayed determination and payment to Participants of that
portion of the value of the vested Restricted Stock Units which relates to the
Contingent Consideration. If the Committee elects as provided in clause (2) of
the preceding sentence, then that portion of the value of vested Restricted
Stock Units which relates to the Contingent Consideration shall be determined in
accordance with Section 5.4(d)(ii) as of and become payable to the Participant
on the date on which the Contingent Consideration, if any, becomes payable to
holders of Common Stock.
5.5 DIVIDEND EQUIVALENTS. In its discretion, the Committee may provide
in any Award that the Participant's account under the Award shall be credited on
each cash dividend payment date with a number of additional Restricted Stock
Units (rounded to the nearest whole number) determined by dividing (a) the
amount of cash dividends paid on such date with respect to the number of shares
of Common Stock represented by the Restricted Stock Units previously credited to
the Participant's account by (b) the Fair Market Value per Share on such date.
5.6 TAX WITHHOLDING. The Company shall have the right to withhold from
payroll and from any and all amounts payable to a Participant pursuant to the
Plan, or require the Participant to remit to the Company, any and all federal,
state, local and foreign taxes, if any, required by law to be withheld by a
Participating Company with respect to any Award granted to such Participant.
5.7 NONTRANSFERABILITY OF AWARDS. Prior to payment in settlement of the
Award, an Award granted to a Participant shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Participant or the Participant's beneficiary,
except by will or by the laws of descent and distribution.
5.8 ADJUSTMENTS TO AWARDS FOR CHANGES IN CAPITAL STRUCTURE. In the
event of any change in the Common Stock effected without receipt of
consideration by the Company, whether through merger, consolidation,
reorganization, reincorporation, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares, or similar change in the capital
structure of the Company, or in the event of payment of a dividend or
distribution to the stockholders of the Company in a form other than Common
Stock (excepting normal cash dividends) that has a material effect on the Fair
Market Value per Share, appropriate and proportionate adjustments shall be made
in the number of Restricted Stock Units subject to each Award, the class of
shares to which a Restricted Stock Unit relates, and in each applicable Fair
Market Value per Share in order to prevent dilution or enlargement of a
Participant's rights under the Plan. For purposes of
the foregoing, conversion of any convertible securities of the Company shall not
be treated as "effected without receipt of consideration by the Company." Any
fractional Restricted Stock Unit resulting from an adjustment pursuant to this
Section 5.8 shall be rounded to the nearest whole number. Such adjustments shall
be determined by the Committee, and its determination shall be final, binding
5.9 PARACHUTE PAYMENT. If any payment or benefit received or to be
received by a Participant pursuant to the Plan or otherwise would subject the
Participant to any excise tax due to characterization of such payment or benefit
as an excess parachute payment pursuant to Section 4999 of the Code, the Company
shall offer to the Participant the option of (a) receiving the full parachute
payment subject to the excise tax, or (b) receiving a reduced parachute payment
that would not be subject to the excise tax (which in some circumstances may
maximize the net benefit to the Participant). Unless the Company and the
Participant otherwise agree in writing, any calculation required under this
Section 5.9 shall be made in writing by independent public accountants agreed to
by the Company and the Participant, whose calculation shall be conclusive and
binding upon the Participant and the Company for all purposes. For purposes of
calculating the Participant's options under this Section 5.9, the accountants
may rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Company and the Participant shall
furnish to the accountants such information and documents as the accountants may
reasonably request in order to make a determination under this Section 5.9. The
Company shall bear all fees and costs the accountants may reasonably charge in
connection with any calculations contemplated by this Section 5.9.
6. STANDARD FORM OF AWARD AGREEMENT.
6.1 AWARD AGREEMENT. Unless otherwise provided by the Committee at the
time an Award is granted, the Award shall comply with and be subject to the
terms and conditions set forth in the form of Award Agreement approved by the
Board concurrently with its adoption of the Plan and as amended from time to
6.2 AUTHORITY TO VARY TERMS. The Committee shall have the authority
from time to time to vary the terms of any standard form of Award Agreement
described in this Section 6 either in connection with the grant or amendment of
an individual Award or in connection with the authorization of a new standard
form or forms; provided, however, that the terms and conditions of any such new,
revised or amended standard form or forms of Award Agreement are not
inconsistent with the terms of the Plan.
7. MISCELLANEOUS PROVISIONS.
7.1 BENEFICIARY DESIGNATION. Each Participant may name, from time to
time, a beneficiary to whom any benefit under the Plan is to be paid in case of
such Participant's death before he or she receives any or all of such benefit.
If a married Participant designates a beneficiary other than the Participant's
spouse, the effectiveness of such designation shall be subject to the consent of
the Participant's spouse. Each designation will revoke all prior designations by
the same Participant, shall be in a form prescribed by the Company, and will be
effective only when filed by the Participant in writing with the Company during
lifetime. In the absence of any such designation, benefits remaining unpaid at
the Participant's death shall be paid to his or her estate.
7.2 RIGHTS AS AN EMPLOYEE. No Employee or other person shall have any
claim or right to be granted an Award under the Plan. Nothing in the Plan or any
Award Agreement shall confer upon any Participant any right to continue as an
Employee or in any other capacity, or interfere in any way with any right of a
Participating Company to terminate the Participant's Service at any time.
7.3 NO RIGHTS AS A STOCKHOLDER. Nothing in the Plan or any Award
Agreement shall confer upon any Participant any rights as a stockholder of the
Company, and, except as provided by Sections 5.5 and 5.8, no payment or
adjustment shall be made for dividends or other distributions paid with respect
to shares of Common Stock.
7.4 UNFUNDED OBLIGATION. Any amounts payable to Participants pursuant
to the Plan shall be unfunded obligations for all purposes, including, without
limitation, Title I of the Employee Retirement Income Security Act of 1974. No
Participating Company shall be required to segregate any monies from its general
funds, or to create any trusts, or establish any special accounts with respect
to such obligations. The Company shall retain at all times beneficial ownership
of any investments, including trust investments, which the Company may make to
fulfill its payment obligations hereunder. Any investments or the creation or
maintenance of any trust or any Participant account shall not create or
constitute a trust or fiduciary relationship between the Board or any
Participating Company and a Participant, or otherwise create any vested or
beneficial interest in any Participant or the Participant's creditors in any
assets of any Participating Company. The Participants shall have no claim
against any Participating Company for any changes in the value of any assets
which may be invested or reinvested by the Company with respect to the Plan.
7.5 TERMINATION OR AMENDMENT OF THE PLAN OR ANY AWARD. The Committee
may terminate or amend the Plan or any Award Agreement at any time. However, no
termination or amendment of the Plan shall affect any then outstanding Award
unless expressly provided by the Committee. In any event, no termination or
amendment of the Plan or any Award Agreement may adversely affect any then
outstanding Award without the consent of the Participant, unless such
termination or amendment is necessary to comply with any applicable law,
regulation or rule.
7.6 BINDING EFFECT. Subject to the restrictions on transfer set forth
herein, the terms of the Plan and a Participant's Award Agreement shall inure to
the benefit of and be binding upon the Company, the Participant and their
respective heirs, executors, administrators, successors and assigns. The terms
of the Plan and a Participant's Award Agreement shall supersede all prior
arrangements, whether written or oral, and understandings regarding the subject
matter of the Plan and such Award Agreement.
7.7 NOTICES. Any notice required or permitted under the Plan or any
Award Agreement shall be given in writing and shall be deemed effectively given
upon personal delivery or upon deposit in the United States Post Office, by
registered or certified mail, withpostage and fees prepaid, addressed to the other party at the address shown
below that party's signature on the Award Agreement or at such other address as
such party may designate in writing from time to time to the other party.
7.8 CHOICE OF LAW. The validity, interpretation, construction and
performance of the Plan and each Award Agreement shall be governed by the laws
of the State of California.