Exhibit 10.1**Maxtor Corporation****2005 Performance Incentive Plan**Effective May 13, 2005
 

 
**Contents**     Article 1. Establishment, Purpose, and Duration  1 Article 2. Definitions  1 Article 3. Administration  8 Article 4. Shares Subject to this Plan and Maximum Awards  10 Article 5. Eligibility and Participation  12 Article 6. Stock Options  12 Article 7. Stock Appreciation Rights  14 Article 8. Restricted Stock and Restricted Stock Units  16 Article 9. Performance Awards  18 Article 10. Cash-Based Awards and Other Stock-Based Awards  20 Article 11. Transferability of Awards  21 Article 12. Performance Measures and Performance Goals  22 Article 13. Nonemployee Director Awards  24 Article 14. Dividend Equivalent Rights  24 Article 15. Beneficiary Designation  24 Article 16. Rights of Participants  25 Article 17. Change in Control  25 Article 18. Amendment, Modification, Suspension, and Termination  27 Article 19. Tax Withholding  27 Article 20. Successors  28 Article 21. Compliance with Code Section 409A  28 Article 22. General Provisions  31 
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**Maxtor Corporation****2005 Performance Incentive Plan****Article 1. Establishment, Purpose, and Duration**     **1.1 Establishment**. Maxtor Corporation, a Delaware corporation (hereinafter referred toas the “**Company**”), establishes an incentive compensation plan to be known as the 2005 **Performance**Incentive Plan (hereinafter referred to as the “**Plan**”), as set forth in this document.     This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, StockAppreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, PerformanceUnits, Cash-Based Awards, and Other Stock-Based Awards.     This Plan shall become effective upon stockholder approval (the “**Effective Date**”) and shallremain in effect as provided in Section 1.3 hereof.     **1.2 Purpose of this Plan**. The purpose of this Plan is to provide a means wherebyEmployees, Directors, and Third Party Service Providers of the Company develop a senseof proprietorship and personal involvement in the development and financial success of the Company,and to encourage them to devote their best efforts to the business of the Company, therebyadvancing the interests of the Company and its stockholders. A further purpose of this Plan is toprovide a means through which the Company may attract able individuals to become Employeesor serve as Directors or Third Party Service Providers of the Company and to provide a meanswhereby those individuals upon whom the responsibilities of the successful administration andmanagement of the Company rest can acquire and maintain stock ownership, thereby strengtheningtheir concern for the welfare of the Company.     **1.3 Duration of this Plan**. Unless sooner terminated as provided herein, this Planshall terminate ten (10) years from the Effective Date. After this Plan is terminated, no Awardsmay be granted, but Awards previously granted shall remain outstanding in accordance with theirapplicable terms and conditions and this Plan’s terms and conditions.**Article 2. Definitions**     Whenever used in this Plan, the following terms shall have the meanings set forthbelow, and when the meaning is intended, the initial letter of the word shall be capitalized. **2.1** **“Affiliate”**means (a) an entity that directly, or indirectly through one or moreintermediary entities, controls the Company, (b) an entity that is controlled by theCompany directly, or indirectly through one or more intermediary entities, or (c) exceptfor the offer and sale pursuant to the Plan of securities registered on Form S-8 under theSecurities Act of 1933, an entity that directly, or indirectly through one or moreintermediary entities, is under common control with the Company. For this purpose, theterm “control” (including the terms “controlled by” and “under common control with”) meansthe possession, direct or indirect, of the power to direct or cause the direction of themanagement and policies of the relevant entity, whether through the ownership of votingsecurities, by contract or otherwise.
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 **2.2** **“Annual Award Limit”**or **“Annual Award Limits”**have the meaning set forth in Section4.3.  **2.3** **“Award”**means, individually or collectively, a grant under this Plan of NonqualifiedStock Options, Incentive Stock Options, SARs, Restricted Stock, Restricted Stock Units,Performance Shares, Performance Units, Cash-Based Awards, or Other Stock-Based Awards, ineach case subject to the terms of this Plan.  **2.4** **“Award Agreement”**means either (a) a written or electronic agreement entered into bythe Company and a Participant setting forth the terms and conditions applicable to anAward granted under this Plan, or (b) a written or electronic statement issued by theCompany to a Participant describing the terms and conditions of such Award.  **2.5** **“Beneficial Owner”**or **“Beneficial Ownership”**shall have the meaning ascribed to suchterm in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.  **2.6** **“Board”**or **“Board of Directors”**means the Board of Directors of the Company.  **2.7** **“Cash-Based Award”**means an Award granted to a Participant as described in Article10.  **2.8** **“Change in Control”**means the occurrence of any of the following events:  (a) Any Person becomes the Beneficial Owner of more than fifty percent (50%) of thecombined voting power of the then outstanding voting securities of the Company entitled tovote generally in the election of Directors (the “**Outstanding Company Voting Securities**”);provided, however, that for purposes of this Section 2.8, the following acquisitions shallnot constitute a Change in Control: (i) any acquisition by a Person who on the EffectiveDate is the Beneficial Owner of more than fifty percent (50%) of the Outstanding CompanyVoting Securities, (ii) any acquisition directly from the Company, including withoutlimitation, a public offering of securities, (iii) any acquisition by the Company, (iv)any acquisition by any employee benefit plan (or related trust) sponsored or maintained bythe Company or any of its subsidiaries, or (v) any acquisition by any corporation pursuantto a transaction which complies with subparagraphs (i), (ii), and (iii) of Section 2.8(c);  (b) A change in the composition of the Board within any twelve-month period, as a resultof which individuals who constitute the Board as of the Effective Date (the “**IncumbentBoard**”) cease for any reason to constitute at least a majority of the Board, provided thatany individual becoming a Director subsequent to the Effective Date whose election, ornomination for election by the Company’s stockholders, was approved by a vote of at leasta majority of the Directors then comprising the Incumbent Board shall be considered asthough such individual were a member of the Incumbent Board, but excluding, for thispurpose, any such individual whose initial assumption of office is in connection with anactual or threatened election contest relating to the election or removal of the Directorsof the Company or other actual or threatened solicitation of proxies of consents by or onbehalf of a Person other than the Board;
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 (c) Consummation of a reorganization, merger, or consolidation to which the Company is aparty or a sale or other disposition of assets of the Company (the “**Transferred Assets**”)that have a total gross fair market value equal to more than fifty percent (50%) of thetotal gross fair market value of all of the assets of the Company immediately prior tosuch sale or disposition (each such event, a “**Business Combination**”), in each case unless,following such Business Combination: (i) all or substantially all of the individuals andentities who were the Beneficial Owners of Outstanding Company Voting Securitiesimmediately prior to such Business Combination beneficially own, directly or indirectly,more than fifty percent (50%) of the combined voting power of the outstanding votingsecurities entitled to vote generally in the election of directors of the corporationresulting from the Business Combination (including, without limitation, a corporationwhich as a result of such transaction owns the Company or the Transferred Assets eitherdirectly or through one or more subsidiaries) (the “**Successor Entity**”) in substantiallythe same proportions as their ownership immediately prior to such Business Combination ofthe Outstanding Company Voting Securities; and (ii) no Person (excluding any SuccessorEntity or any employee benefit plan, or related trust, of the Company or such SuccessorEntity) beneficially owns, directly or indirectly, more than fifty percent (50%) of thecombined voting power of the then outstanding voting securities of the Successor Entity,except to the extent that such ownership existed prior to the Business Combination; and(iii) at least a majority of the members of the board of directors of the Successor Entitywere members of the Incumbent Board (including persons deemed to be members of theIncumbent Board by reason of the proviso to paragraph (b) of this Section 2.8) at the timeof the execution of the initial agreement or of the action of the Board providing for suchBusiness Combination; or  (d) Approval by the stockholders of the Company of a complete liquidation or dissolutionof the Company.  **2.9** **“Code”**means the U.S. Internal Revenue Code of 1986, as amended from time to time.For purposes of this Plan, references to sections of the Code shall be deemed to includereferences to any applicable regulations thereunder and any successor or similarprovision.  **2.10** **“Committee”**means the Compensation Committee of the Board or a subcommittee thereof,or any other committee designated by the Board to administer this Plan. The members ofthe Committee shall be appointed from time to time by and shall serve at the discretion ofthe Board. If no committee of the Board has been appointed or is qualified to administerthe Plan, the Board shall exercise all of the powers of the Committee granted herein, and,in any event, the Board may in its discretion exercise any or all of such powers.  **2.11** **“Company”**means Maxtor Corporation, a Delaware corporation, and any successor theretoas provided in Article 20.  **2.12** **“Covered Employee”**means any Employee who is or may become a “covered employee,” asdefined in Code Section 162(m), or any successor statute, and who is designated, either asan individual Employee or class of Employees, by the Committee no
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   later than the earlier of (i) the date ninety (90) days after the beginning of thePerformance Period, or (ii) the date on which twenty-five percent (25%) of thePerformance Period has elapsed, as a “Covered Employee” under this Plan for suchapplicable Performance Period.  **2.13** **“Director”**means any individual who is a member of the Board of Directors of theCompany.  **2.14** **“Dividend Equivalent Right”**mean the right of a Participant, granted at thediscretion of the Committee or as otherwise provided by the Plan, to receive a credit forthe account of such Participant in an amount equal to the cash dividends paid on one Sharerepresented by an Award held by such Participant.  **2.15** **“Effective Date”**has the meaning set forth in Section 1.1.  **2.16** **“Employee”**means any person designated as an employee on the payroll records of theCompany or an Affiliate. An Employee shall not include any individual during any periodhe or she is classified or treated by the Company and/or an Affiliate as an independentcontractor, a consultant, or any employee of an employment, consulting, or temporaryagency or any other entity other than the Company or an Affiliate, without regard towhether such individual is subsequently determined to have been, or is subsequentlyretroactively reclassified as a common-law employee of the Company or an Affiliate duringsuch period.  **2.17** **“Exchange Act”**means the Securities Exchange Act of 1934, as amended from time totime, or any successor act thereto.  **2.18** **“Fair Market Value”**or **“FMV”**means a price that is based on the opening, closing,actual, high, low, or average selling prices of a Share reported on the New York StockExchange or other established stock exchange (or exchanges) or market system on theapplicable date, the preceding trading day, the next succeeding trading day, or an averageof trading days, as determined by the Committee in its discretion. Unless the Committeedetermines otherwise, if the Shares are traded on the New York Stock Exchange or theNASDAQ National Market System at the time a determination of the Fair Market Value of aShare is required to be made hereunder, its Fair Market Value shall be deemed to be equalto the closing sale price of a Share on the applicable date (or on the most recent tradingday if the Shares were not traded on the applicable date). In the event Shares are notpublicly traded at the time a determination of their value is required to be madehereunder, the determination of their Fair Market Value shall be made by the Committee insuch manner as it deems appropriate. Such definition(s) of FMV may be specified in eachAward Agreement and may differ depending on whether FMV is in reference to the grant,exercise, vesting, settlement, or payout of an Award. The “Fair Market Value” of propertyother than Shares shall be a value determined by the Committee, in its discretion.  **2.19** **“Freestanding SAR”**means an SAR that is granted independently of any Options, asdescribed in Article 7.
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 **2.20** **“Full Value Award”**means an Award other than in the form of an ISO, NQSO, or SAR, andwhich is settled by the issuance of Shares.  **2.21** **“Grant Price”**means the price established at the time of grant of an SAR and used todetermine whether there is any payment due upon exercise of the SAR.  **2.22** **“Incentive Stock Option”**or **“ISO”**means an Option to purchase Shares granted underArticle 6 to an Employee, that is designated as an Incentive Stock Option and that isintended to meet the requirements of Code Section 422.  **2.23** **“Insider”**means an individual who is, on the relevant date, an officer, or Directorof the Company, or a more than ten percent (10%) Beneficial Owner of any class of theCompany’s equity securities that is registered pursuant to Section 12 of the Exchange Act,as determined by the Board in accordance with Section 16 of the Exchange Act.  **2.24** **“Nonemployee Director”**means a Director who is not an Employee.  **2.25** **“Nonemployee Director Award”**means any NQSO, SAR, or Full Value Award grantedpursuant to Article 13, whether singly, in combination, or in tandem, to a Participant whois a Nonemployee Director pursuant to such applicable terms, conditions, and limitationsas the Board or Committee may establish in accordance with this Plan.  **2.26** **“Nonqualified Stock Option”**or **“NQSO”**means an Option that is not intended to meetthe requirements of Code Section 422 or that otherwise does not meet such requirements.  **2.27** **“Option”**means an Incentive Stock Option or a Nonqualified Stock Option, as describedin Article 6.  **2.28** **“Option Price”**means the price at which a Share may be purchased by a Participantpursuant to an Option.  **2.29** **“Other Stock-Based Award”**means an equity-based or equity-related Award not otherwisedescribed by the terms of this Plan, granted pursuant to Article 10.  **2.30** **“Participant”**means any eligible individual as set forth in Article 5 to whom anAward is granted.  **2.31** **“Performance Award”**means an Award of Performance Units or Performance Shares.  **2.32** **“Performance Award Formula”**means, for any Performance Award, a formula or tableestablished by the Committee pursuant to Article 9 which provides the basis for computingthe value of a Performance Award at one or more threshold levels of attainment of theapplicable performance goal(s) measured as of the end of the applicable PerformancePeriod.
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 **2.33** **“Performance-Based Compensation”**means compensation under an Award that satisfies therequirements of Code Section 162(m) for certain performance-based compensation paid toCovered Employees.  **2.34** **“Performance Measures”**mean one or more measures of business or financial performancedescribed in Article 12 which are approved by the Company’s stockholders pursuant to thisPlan in order to qualify compensation payable under Awards based upon the attainment ofperformance goals established with respect to such Performance Measures asPerformance-Based Compensation.  **2.35** **“Performance Period”**means the period of time at the end of which the attainment ofone or more performance goals is measured in order to determine the extent of the vestingof an Award or the amount of the payment to be made upon the settlement of an Award.  **2.36** **“Performance Share”**means a bookkeeping unit granted to a Participant pursuant to anAward described in Article 9, representing the right to receive a value denominated inShares and in an amount, determined at the time such unit becomes payable, which is afunction of the extent to which one or more performance goals established with respect tothe Award have been achieved.  **2.37** **“Performance Unit”**means a bookkeeping unit granted to a Participant pursuant to anAward described in Article 9, representing the right to receive a value denominated inmoney and in an amount, determined at the time such unit becomes payable, which is afunction of the extent to which one or more performance goals established with respect tothe Award have been achieved.  **2.38** **“Period of Restriction”**means the period when Restricted Stock or Restricted StockUnits are subject to a substantial risk of forfeiture (based on the passage of time, theachievement of performance goals, or upon the occurrence of other events as determined bythe Committee, in its discretion), as provided in Article 8.  **2.39** **“Person”**shall have the meaning ascribed to such term in Section 3(a)(9) of theExchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as definedin Section 13(d) thereof.  **2.40** **“Plan”**means the Maxtor Corporation 2005 Performance Incentive Plan.  **2.41** **“Plan Year”**means the Company’s fiscal year, as adopted from time to time.  **2.42** **“Predecessor Plans”**mean the Company’s Amended and Restated 1996 Stock Option Plan,1998 Restricted Stock Plan and the options granted by Quantum Corporation and assumed bythe Company in connection with its acquisition in 2001 of the Quantum Corporation harddrive business.  **2.43** **“Restricted Stock**” means one or more Shares granted to a Participant pursuant to anAward described in Article 8.
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 **2.44** **“Restricted Stock Unit”**means a bookkeeping unit granted to a Participant pursuant toan Award described in Article 8, representing the right to receive one Share or itsequivalent in cash at a date following the date of grant.  **2.45** **“Service”**means a Participant’s employment or service with the Company or anAffiliate as an Employee, a Nonemployee Director or a Third Party Service Provider,whichever such capacity the Participant held on the date of grant of the applicable Awardor, if later, the date on which the Participant’s Service commenced. Except as otherwisedetermined by the Committee, a Participant’s Service shall be deemed to have terminated ifthe Participant ceases to render Service in such initial capacity. A Participant’sService shall not be deemed to have terminated merely because of a change in the entitywithin the group consisting of the Company and its Affiliates described in clauses (a) and(b) of Section 2.1 for which the Participant renders Service in such initial capacity,provided that there is no interruption or termination of the Participant’s Service.However, except as otherwise determined by the Committee, a Participant’s Service shall bedeemed to have terminated if the Participant ceases to render Service to an entitydescribed in clauses (a) and (b) of Section 2.1 and commences rendering Service to anentity described in clause (c) of Section 2.1. A Participant’s Service shall not bedeemed to have terminated if the Participant takes any military leave, sick leave, orother bona fide leave of absence approved by the Company. However, if any such leavetaken by a Participant exceeds ninety (90) days, then on the ninety-first (91st) dayfollowing the commencement of such leave the Participant’s Service shall be deemed to haveterminated unless the Participant’s right to return to Service is guaranteed by statute orcontract. Notwithstanding the foregoing, unless otherwise designated by the Company orrequired by law, a leave of absence shall not be treated as Service for purposes ofdetermining vesting under the Participant’s Award Agreement. A Participant’s Serviceshall be deemed to have terminated either upon an actual termination of Service or uponthe entity to which the Participant renders Service ceasing to be within the groupconsisting of the Company and its Affiliates described in clauses (a) and (b) of Section2.1. Subject to the foregoing, the Company, in its discretion, shall determine whetherthe Participant’s Service has terminated and the effective date of such termination.  **2.46** **“Share”**means a share of common stock of the Company.  **2.47** **“Stock Appreciation Right”**or “**SAR**” means a bookkeeping unit granted to a Participantpursuant to an Award described in Article 7, representing the right to receive payment ofan amount equal to the excess, if any, of the Fair Market Value of a Share on the date ofexercise of such Award over the Grant Price with respect to such Award.  **2.48** **“Tandem SAR”**means an SAR that is granted in connection with a related Optionpursuant to Article 7, the exercise of which shall require forfeiture of the right topurchase a Share under the related Option (and when a Share is purchased under the Option,the Tandem SAR shall similarly be canceled).  **2.49** **“Ten Percent Owner”**means a Participant who, at the time an Option is granted to theParticipant, owns stock possessing more than ten percent (10%) of the total combinedvoting power of all classes of stock of the Company or of any parent or subsidiarycorporation within the meaning of Code Section 422(b)(6).
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 **2.50** **“Third Party Service Provider”**means any consultant, agent, advisor, or independentcontractor who renders Service to the Company or an Affiliate that (a) is not inconnection with the offer and sale of the Company’s securities in a capital raisingtransaction and (b) does not directly or indirectly promote or maintain a market for theCompany’s securities.**Article 3. Administration**     **3.1 General**. The Committee shall be responsible for administering this Plan, subjectto this Article 3 and the other provisions of this Plan. The Committee may employ attorneys,consultants, accountants, agents, and other individuals, any of whom may be an Employee, and theCommittee, the Company, and its officers and Directors shall be entitled to rely upon the advice,opinions, or valuations of any such individuals. The Committee shall have full and exclusivediscretionary power to interpret the terms and the intent of this Plan and any Award Agreement orother agreement or document ancillary to or in connection with this Plan. All actions taken andall interpretations and determinations made by the Committee shall be final and binding upon theParticipants, the Company, and all other interested individuals.     **3.2 Authority of the Committee**. In addition to any other powers set forth in the Plan andsubject to the provisions of the Plan, the Committee shall have the full and final power andauthority, in its discretion: (a) to determine eligibility for Awards, the persons to whom, and the time or times atwhich, Awards shall be granted and the number of Shares, units or monetary value to besubject to each Award;  (b) to determine the type of Award granted;  (c) to determine the Fair Market Value of Shares or other property;  (d) to determine the terms, conditions and restrictions applicable to each Award (whichneed not be identical) and any Shares acquired pursuant thereto, including, withoutlimitation, (i) the Grant Price, Option Price or purchase price of Shares pursuant to anyAward, (ii) the method of payment for Shares purchased pursuant to any Award, (iii) themethod for satisfaction of any tax withholding obligation arising in connection withAward, including by the withholding or delivery of Shares, (iv) the timing, terms andconditions of the exercisability or vesting of any Award or any Shares acquired pursuantthereto, (v) the Performance Measures, Performance Period, Performance Award Formula andperformance goals applicable to any Award and the extent to which such performance goalshave been attained, (vi) the time of the expiration of any Award, (vii) the effect of theParticipant’s termination of Service on any of the foregoing, and (viii) all other terms,conditions and restrictions applicable to any Award or Shares acquired pursuant theretonot inconsistent with the terms of the Plan;
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 (e) to determine whether an Award will be settled in Shares, cash, or in any combinationthereof;  (f) to approve one or more forms of Award Agreement;  (g) to amend, modify, extend, cancel or renew any Award or to waive any restrictions orconditions applicable to any Award or any Shares acquired pursuant thereto;  (h) to accelerate, continue, extend or defer the exercisability or vesting of any Awardor any shares acquired pursuant thereto, including with respect to the period following aParticipant’s termination of Service;  (i) without the consent of the affected Participant and notwithstanding the provisions ofany Award Agreement to the contrary, to unilaterally substitute at any time an SARproviding for settlement solely in Shares in place of any outstanding Option, providedthat such SAR covers the same number of Shares and provides for the same exercise price(subject in each case to adjustment in accordance with Section 4.4) as the replaced Optionand otherwise provides substantially equivalent terms and conditions as the replacedOption, as determined by the Committee;  (j) to prescribe, amend or rescind rules, guidelines and policies relating to the Plan,or to adopt sub-plans or supplements to, or alternative versions of, the Plan, including,without limitation, as the Committee deems necessary or desirable to comply with the lawsor regulations of or to accommodate the tax policy, accounting principles or custom of,foreign jurisdictions whose citizens may be granted Awards; and  (k) to correct any defect, supply any omission or reconcile any inconsistency in the Planor any Award Agreement and to make all other determinations and take such other actionswith respect to the Plan or any Award as the Committee may deem advisable to the extentnot inconsistent with the provisions of the Plan or applicable law.     **3.3 Delegation.**The Committee may delegate to one or more of its members or to one or moreofficers of the Company or its Affiliates or to one or more agents or advisors such administrativeduties or powers as it may deem advisable, and the Committee or any individuals to whom it hasdelegated duties or powers as aforesaid may employ one or more individuals to render advice withrespect to any responsibility the Committee or such individuals may have under this Plan.     **3.4 Option or SAR Repricing.**Without the affirmative vote of holders of a majority of theShares cast in person or by proxy at a meeting of the stockholders of the Company at which a quorumrepresenting a majority of all outstanding Shares is present or represented by proxy, the Committeeshall not approve a program providing for either (a) the cancellation of outstanding Options orSARs and the grant in substitution therefore of new Options or SARs having a lower Option Price orGrant Price, respectively, or (b) the amendment of outstanding Options or SARs to reduce the OptionPrice or Grant Price, respectively, thereof. This Section shall not be construed to apply to“issuing or assuming a stock option in a transaction to which section 424(a) applies,” within themeaning of Code Section 424.
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**Article 4. Shares Subject to this Plan and Maximum Awards**     **4.1 Number of Shares Available for Awards**. (a) Subject to adjustment as provided in Section 4.4, the maximum number of authorizedbut unissued or reacquired Shares available for issuance to Participants under this Planon or after the Effective Date (the “**Share Authorization**”) shall be the sum of: (i) Twenty-two million (22,000,000) Shares,  (ii) the number of Shares (not to exceed 5,800,000) which remained availablefor grant under the Predecessor Plans as of the Effective Date,  (iii) the number of Shares (not to exceed 22,000,000) subject to thatportion of any option or other award outstanding pusuant to the Predecessor Plansas of the Effective Date which, on or after such date, expires or is terminated orcanceled for any reason without having been exercised or settled, and (b) Subject to the Share Authorization, the maximum number of Shares that may be issuedpursuant to ISOs shall be 27,800,000 Shares**.**  (c) Subject to adjustment as provided in Section 4.4 and subject to the ShareAuthorization: (i) the number of Shares subject to Nonemployee Director Awards grantedpursuant to Article 13 during the term of the Plan shall not exceed 2,500,000Shares; and  (ii) no Nonemployee Director may be granted a Nonemployee Director Awardcovering more than 120,000 Shares in any Plan Year; provided, however, that (x)this annual limit on Nonemployee Director Awards shall be increased to 180,000Shares for any Nonemployee Director serving as Chairman or Lead Director of theBoard and (y) in the Plan Year in which an individual is first appointed or electedto the Board as a Nonemployee Director, such individual may be granted aNonemployee Director Award covering up to an additional 60,000 Shares (a “**NewNonemployee Director Award**”). (d) Except with respect to a maximum of five percent (5%) of the Share Authorization, anyFull Value Awards which vest on the basis of the Participant’s continued Service shall notprovide for vesting which is any more rapid than over a three (3) year period and any FullValue Awards which vest upon the attainment of performance goals shall provide for aperformance period of at least twelve (12) months.     **4.2 Share Usage.**Shares covered by an Award shall only be counted as used to the extent theyare actually issued and are not forfeited. Any Shares subject to an Award which terminates byexpiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, is settledin cash in lieu of Shares, or is exchanged with the Committee’s permission, prior to the issuanceof Shares, for an Award not involving Shares, shall be available again for issuance under thisPlan. Moreover, if the Option Price of any Option granted under this Plan or the tax withholdingrequirements with respect to any Award granted under this Plan are satisfied by tendering Shares to
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the Company (by either actual delivery or by attestation), or if an SAR is exercised, only thenumber of Shares issued, net of the Shares tendered, if any, will be deemed delivered for purposesof determining the maximum number of Shares remaining available for issuance under this Plan.     **4.3 Annual Award Limits.**To the extent the Committee determines that an Award to a CoveredEmployee shall be designed to qualify as Performance-Based Compensation, the following limits (eachan “**Annual Award Limit**” and, collectively, “**Annual Award Limits**”) shall apply to grants of suchAwards under this Plan: (a) **Options**: The maximum aggregate number of Shares subject to Options granted in any onePlan Year to any one Participant shall not exceed two million (2,000,000).  (b) **Stock Appreciation Rights**: The maximum aggregate number of Shares subject to SARsgranted in any one Plan Year to any one Participant shall not exceed two million(2,000,000).  (c) **Restricted Stock or Restricted Stock Units**: The maximum aggregate number of Sharessubject to Awards of Restricted Stock or Restricted Stock Units granted in any one PlanYear to any one Participant shall not exceed one million (1,000,000).  (d) **Performance Awards**: The maximum aggregate number of Shares, or equal Fair MarketValue of such number of Shares determined as of the date of grant, subject to Awards ofPerformance Units or Performance Shares granted to any one Participant for each Plan Yearcontained in the Performance Period(s) applicable to such Award(s) shall not exceed onemillion (1,000,000).  (e) **Cash-Based Awards**: The maximum aggregate amount awarded or credited with respect toCash-Based Awards granted to any one Participant for each Plan Year contained in thePerformance Period(s) applicable to such Award(s) shall not exceed five million dollars($5,000,000).  (f) **Other Stock-Based Awards.**The maximum aggregate number of Shares subject to OtherStock-Based Awards granted in any one Plan Year to any one Participant shall not exceedone million (1,000,000).     **4.4 Adjustments in Authorized Shares**. In the event of any corporate event or transaction(including, but not limited to, a change in the Shares of the Company or the capitalization of theCompany) such as a merger, consolidation, reorganization, recapitalization, separation, stockdividend, stock split, reverse stock split, split up, spin-off, or other distribution of stock orproperty of the Company, combination of Shares, exchange of Shares, dividend in kind, or other likechange in capital structure or distribution (other than normal cash dividends) to stockholders ofthe Company, or any similar corporate event or transaction, the Committee, in its sole discretion,in order to prevent dilution or enlargement of Participants’ rights under this Plan, shallsubstitute or adjust, as applicable, the number and kind of Shares that may be issued under thisPlan or under particular forms of Awards, the number and kind of Shares subject to outstandingAwards, the Option Price or Grant Price applicable to outstanding Awards, the Annual Award Limits,and other value determinations applicable to outstanding Awards.
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     The Committee, in its sole discretion, may also make appropriate adjustments in the terms ofany Awards under this Plan to reflect, or related to, such changes or distributions and to modifyany other terms of outstanding Awards, including modifications of performance goals, PerformanceAward Formulas and changes in the length of Performance Periods. The determination of theCommittee as to the foregoing adjustments, if any, shall be conclusive and binding on Participantsunder this Plan.     Subject to the provisions of Article 18, without affecting the number of Shares reserved oravailable hereunder, the Committee may authorize the issuance or assumption of benefits under thisPlan in connection with any merger, consolidation, acquisition of property or stock, orreorganization upon such terms and conditions as it may deem appropriate, subject to compliancewith Code Sections 409A and 422 and any related guidance issued by the U.S. Treasury Department,where applicable.**Article 5. Eligibility and Participation**     **5.1 Eligibility**. Individuals eligible to participate in this Plan include allEmployees, Directors, and Third Party Service Providers.     **5.2 Actual Participation**. Subject to the provisions of this Plan, the Committee may, fromtime to time, select from all eligible individuals, those individuals to whom Awards shall begranted and shall determine, in its sole discretion, the nature of, any and all terms permissibleby law, and the amount of each Award.**Article 6. Stock Options**     **6.1 Grant of Options**. Subject to the terms and provisions of this Plan, Options may begranted to Participants in such number, upon such terms, and at any time and from time to time asshall be determined by the Committee, in its sole discretion; provided that ISOs may be grantedonly to eligible Employees of the Company or of any parent or subsidiary corporation (as permittedby Code Section 422).     **6.2 Award Agreement**. Each Option grant shall be evidenced by an Award Agreement that shallspecify the Option Price, the maximum duration of the Option, the number of Shares to which theOption pertains, the conditions upon which an Option shall become vested and exercisable, and suchother provisions as the Committee shall determine which are not inconsistent with the terms of thisPlan. The Award Agreement also shall specify whether the Option is intended to be an ISO or aNQSO.     **6.3 Option Price**. The Option Price shall be determined by the Committee, in its discretion,and shall be specified in the Award Agreement; provided, however, that (a) the Option Price must beat least equal to one hundred percent (100%) of the FMV of the Shares on the effective date ofgrant of the Option and (b) no ISO granted to a Ten Percent Owner shall have an Option Price lessthan one hundred ten percent (110%) of the FMV of the Shares on the effective date of grant of theOption. Notwithstanding the foregoing, an Option (whether an ISO or NQSO) may be granted with anOption Price lower than the minimum Option Price set forth above if such Option is grantedpursuant to an assumption or substitution for another option in a manner that would qualifyunder the provisions of Code Section 424(a).
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     **6.4 Term of Options**. Each Option granted to a Participant shall expire at such time as theCommittee shall determine at the time of grant; provided, however, that (a) no Option shall beexercisable later than the tenth (10th) anniversary of the effective date of its grantand (b) no ISO granted to a Ten Percent Owner shall be exercisable later than the fifth(5th) anniversary of the effective date of its grant.     **6.5 Exercise of Options**. Options granted under this Article 6 shall be exercisable at suchtimes and be subject to such restrictions and conditions as the Committee shall in each instanceapprove, which terms and restrictions need not be the same for each grant or for each Participant.     **6.6 Payment**. Options granted under this Article 6 shall be exercised by the delivery of anotice of exercise to the Company or an agent designated by the Company in a form specified oraccepted by the Committee, or by complying with any alternative procedures which may be authorizedby the Committee, setting forth the number of Shares with respect to which the Option is to beexercised, accompanied by full payment for the Shares.     A condition of the issuance of the Shares as to which an Option shall be exercised shall bethe payment of the Option Price. The Option Price of any Option shall be payable to the Company infull either: (a) in cash or its equivalent; (b) by tendering (either by actual delivery orattestation) previously acquired Shares having an aggregate Fair Market Value at the time ofexercise equal to the Option Price (provided that except as otherwise determined by the Committee,the Shares that are tendered must have been held by the Participant for at least six (6) months (orsuch other period, if any, as the Committee may permit) prior to their tender to satisfy theOption Price if acquired directly or indirectly from the Company other than pursuant to an openmarket purchase); (c) by a combination of (a) and (b); or (d) any other method approved or acceptedby the Committee in its sole discretion, including, without limitation, if the Committee sodetermines, a cashless (broker-assisted) exercise.     Subject to any governing rules or regulations, as soon as practicable after receipt of writtennotification of exercise and full payment (including satisfaction of any applicable taxwithholding), the Company shall issue or cause to be issued the Shares acquired pursuant to suchexercise and shall deliver such Shares to or for the benefit of the Participant by means of one ormore of the following: (i) by delivering to the Participant evidence of book entry Shares creditedto the account of the Participant, (ii) by depositing such Shares for the benefit of theParticipant with any broker with which the Participant has an account relationship, or (iii) bydelivering such Shares to the Participant in certificate form.     Unless otherwise determined by the Committee, all payments under all of the methods indicatedabove shall be paid in United States dollars.     **6.7 Restrictions on Share Transferability**. The Committee may impose such restrictions on anyShares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deemadvisable, including, without limitation, minimum holding period requirements, restrictions underapplicable federal securities laws, under the requirements of any stock exchange or marketupon which such Shares are then listed and/or traded, or under any blue sky or statesecurities laws applicable to such Shares.
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     **6.8 Termination of Service**. Each Award Agreement evidencing an Option shall set forth theextent to which the Participant shall have the right to exercise the Option following terminationof the Participant’s Service. Such provisions shall be determined in the sole discretion of theCommittee, need not be uniform among all Options issued pursuant to this Article 6, and may reflectdistinctions based on the reasons for termination.     **6.9 ISO Fair Market Value Limitation.**To the extent that options designated as ISOs (grantedunder all stock option plans of the Company or any parent or subsidiary corporation, including thePlan) become exercisable by a Participant for the first time during any calendar year for stockhaving an aggregate Fair Market Value greater than $100,000 (or such other limit provided by CodeSection 422), the portion of such options which exceeds such amount shall be treated as NQSOs. Forpurposes of this Section, options designated as ISOs shall be taken into account in the order inwhich they were granted, and the Fair Market Value of stock shall be determined as of the time theoption with respect to such stock is granted. If an Option is treated as an ISO in part and as anNQSO in part by reason of the limitation set forth in this Section, the Participant may designatewhich portion of such Option the Participant is exercising. In the absence of such designation,the Participant shall be deemed to have exercised the ISO portion of the Option first. Uponexercise, shares issued pursuant to each such portion shall be separately identified.**Article 7. Stock Appreciation Rights**     **7.1 Grant of SARs**. Subject to the terms and conditions of this Plan, SARs may begranted to Participants in such number, upon such terms, and at any time and from time to time asshall be determined by the Committee, in its sole discretion. The Committee may grant FreestandingSARs, Tandem SARs, or any combination of these forms of SARs.     **7.2 Award Agreement**. Each SAR Award shall be evidenced by an Award Agreement that shallspecify the Grant Price, the maximum duration of the SAR, the number of Shares to which the SARpertains, the conditions upon which the SAR shall become vested and exercisable, and such otherprovisions as the Committee shall determine which are not inconsistent with the terms of this Plan.     **7.3 Grant Price.**The Grant Price for each grant of a Freestanding SAR shall be determined bythe Committee and shall be specified in the Award Agreement; provided, however, the Grant Pricemust be at least equal to one hundred percent (100%) of the FMV of the Shares on the effective dateof grant. The Grant Price of Tandem SARs shall be equal to the Option Price of the related Option.     **7.4 Term of SARs**. The term of an SAR granted under this Plan shall be determined by theCommittee, in its sole discretion; provided, however, that no SAR shall be exercisable later thanthe tenth (10th) anniversary of the effective date of its grant.     **7.5 Exercise of Freestanding SARs**. Freestanding SARs granted under this Article 7 shall beexercisable at such times and be subject to such restrictions and conditions as the Committee shallin each instance approve, which terms and restrictions need not be the same for each grant orfor each Participant.
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     **7.6 Exercise of Tandem SARs**. Tandem SARs may be exercised for all or part of the Sharessubject to the related Option upon the surrender of the right to exercise the equivalent portion ofthe related Option. A Tandem SAR may be exercised only with respect to the Shares for which itsrelated Option is then exercisable.     Notwithstanding any other provision of this Plan to the contrary, with respect to a Tandem SARgranted in connection with an ISO: (a) the Tandem SAR will expire no later than the expiration ofthe underlying ISO; (b) the value of the payout with respect to the Tandem SAR may be for no morethan one hundred percent (100%) of the excess of the Fair Market Value of the Shares subject to theunderlying ISO at the time the Tandem SAR is exercised over the Option Price of the underlying ISO;and (c) the Tandem SAR may be exercised only when the Fair Market Value of the Shares subject tothe ISO exceeds the Option Price of the ISO.     **7.7 Deemed Exercise of SARs.**If, on the date on which an SAR would otherwise terminate orexpire, the SAR by its terms remains exercisable immediately prior to such termination orexpiration and, if so exercised, would result in a payment to the holder of such SAR, then anyportion of such SAR which has not previously been exercised shall automatically be deemed to beexercised as of such date with respect to such portion.     **7.8 Settlement of SAR Amount**. Upon the exercise of an SAR, the Participant shall be entitledto receive payment from the Company in an amount determined by multiplying: (a) The excess of the Fair Market Value of a Share on the date of exercise over the GrantPrice; by  (b) The number of Shares with respect to which the SAR is exercised.     Payment of such amount upon the exercise of SARs shall be made solely by means of the issuanceof Shares delivered to or for the benefit of the Participant by one or more of the means describedin Section 6.6.     **7.9 Restrictions on Share Transferability**. The Committee may impose such restrictions on anyShares acquired pursuant to the exercise of an SAR granted under this Article 7 as it may deemadvisable, including, without limitation, minimum holding period requirements, restrictions underapplicable federal securities laws, under the requirements of any stock exchange or market uponwhich such Shares are then listed and/or traded, or under any blue sky or state securities lawsapplicable to such Shares.     **7.10 Termination of Service**. Each Award Agreement evidencing an SAR shall set forth theextent to which the Participant shall have the right to exercise the SAR following termination ofthe Participant’s Service. Such provisions shall be determined in the sole discretion of theCommittee, need not be uniform among all SARs issued pursuant to this Article 7, and may reflectdistinctions based on the reasons for termination.
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**Article 8. Restricted Stock and Restricted Stock Units**     **8.1 Grant of Restricted Stock or Restricted Stock Units**. Subject to the terms andprovisions of this Plan, including the provisions of Article 21 with respect to Code Section 409Aif applicable, Awards of Restricted Stock and/or Restricted Stock Units may be granted toParticipants in such number, upon such terms, and at any time and from time to time as shall bedetermined by the Committee, in its sole discretion.     **8.2 Award Agreement**. Each Restricted Stock and/or Restricted Stock Unit grant shall beevidenced by an Award Agreement that shall specify the purchase price, if any, the Period(s) ofRestriction, if any, the number of Shares of Restricted Stock or the number of Restricted StockUnits granted, and such other provisions as the Committee shall determine which are notinconsistent with the terms of this Plan.     **8.3 Purchase Price.**The purchase price, if any, for Shares issuable under each RestrictedStock Award shall be established by the Committee, in its discretion. No monetary payment (otherthan applicable tax withholding, if any) shall be required as a condition of receiving a RestrictedStock Unit Award, the consideration for which shall be services actually rendered to or for thebenefit of the Company or an Affiliate. Notwithstanding the foregoing, if required by applicablestate corporate law, the Participant shall furnish consideration in the form of cash or pastservices rendered to or for the benefit of the Company or an Affiliate having a value not less thanthe par value of the Shares issued pursuant to a Restricted Stock or Restricted Stock Unit Award.     **8.4 Purchase Period; Payment of Purchase Price.**If the Committee determines to grant aParticipant the right to purchase Shares of Restricted Stock (a “**Purchase Right**”), such PurchaseRight shall be exercisable within a period established by the Committee, which shall in no eventexceed thirty (30) days from the effective date of the grant of the Purchase Right. Except asotherwise provided below, payment of the purchase price for the number of Shares purchased pursuantto a Purchase Right shall be made (a) in cash or its equivalent, (b) by such other consideration,including past services rendered to or for the benefit of the Company or an Affiliate, as may beapproved by the Committee from time to time to the extent permitted by applicable law, or (c) byany combination thereof. The Committee may at any time or from time to time grant Purchase Rightswhich do not permit all of the foregoing forms of consideration to be used in payment of thepurchase price or which otherwise restrict one or more forms of consideration.     **8.5 Vesting Restrictions**. The Committee shall impose such other conditions and/orrestrictions on any Shares of Restricted Stock or Restricted Stock Units granted pursuant to thisPlan as it may deem advisable including, without limitation, restrictions based upon continuedService, the achievement of specific performance goals, time-based restrictions on vestingfollowing the attainment of the performance goals, and/or other time-based restrictions. Theperiod during which Shares subject to an Award of Restricted Stock or Restricted Stock Units remainsubject to such conditions and/or restrictions shall be the “Period of Restriction” with respect tosuch Shares. To the extent deemed appropriate by the Committee, the Company may retain thecertificates representing Shares of Restricted Stock in the Company’s possession until such time asthe Period of Restriction applicable to such Shares has lapsed.
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     Except as otherwise provided in this Article 8 and subject to the satisfaction of anyapplicable tax withholding obligations, Shares of Restricted Stock covered by each Restricted StockAward shall become freely transferable by the Participant after the Period of Restriction withrespect to such Shares has lapsed.     **8.6 Settlement of Restricted Stock Unit Awards.**The Company shall issue to a Participant onthe date on which Restricted Stock Units subject to the Participant’s Restricted Stock Unit Awardvest or on such other date(s) determined by the Committee, in its discretion, and set forth in theAward Agreement one (1) Share for each Restricted Stock Unit then becoming vested or otherwise tobe settled on such date, subject to the withholding of applicable taxes. If permitted by theCommittee, and subject to the provisions of Article 21 with respect to Code Section 409A, theParticipant may elect to defer receipt of all or any portion of the Shares issuable to theParticipant pursuant to this Section, and such deferred issuance date(s) elected by the Participantshall be set forth in the Award Agreement. Shares issued in settlement of Restricted Stock UnitAwards shall be delivered to or for the benefit of the Participant by one or more of the meansdescribed in Section 6.6. Notwithstanding the foregoing, the Committee, in its discretion, mayprovide for settlement of any Restricted Stock Unit Award by payment to the Participant in cash ofan amount equal to the Fair Market Value on the payment date of the Shares otherwise issuable tothe Participant pursuant to this Section.     **8.7 Certificate Legend**. In addition to any legends placed on certificates pursuant to Section8.5, each certificate representing Shares of Restricted Stock granted pursuant to this Plan maybear a legend such as the following or as otherwise determined by the Committee in its solediscretion:     The sale or transfer of Shares of stock represented by this certificate, whether voluntary,involuntary, or by operation of law, is subject to certain restrictions on transfer as set forth inthe Maxtor Corporation 2005 Performance Incentive Plan, and in the associated Award Agreement. Acopy of this Plan and such Award Agreement may be obtained from Maxtor Corporation.     **8.8 Voting Rights; Dividends and Distributions; Dividend Equivalent Rights**. Unless otherwisedetermined by the Committee and set forth in a Participant’s Award Agreement, to the extentpermitted or required by law, as determined by the Committee, Participants holding Shares ofRestricted Stock granted hereunder may be granted the right to exercise full voting rights and toreceive dividends and other distributions paid with respect to those Shares during the Period ofRestriction. However, in the event of a dividend or distribution paid in Shares or any otheradjustment made upon a change in the capital structure of the Company as described in Section 4.4,any and all new, substituted or additional securities or other property (other than normal cashdividends) to which the Participant is entitled by reason of the Participant’s Restricted StockAward shall be immediately subject to the same Period of Restriction as the Shares subject to suchAward with respect to which such dividends or distributions were paid or adjustments were made. AParticipant shall have no voting rights with respect to any Restricted Stock Unit Award until thedate of issuance of Shares in settlement of such Award. The Committee may, in its discretion,grant Dividend Equivalent Rights with respect to one or more Restricted Stock Unit Awards, asprovided in Section 14.     **8.9 Restrictions on Share Transferability.**The Committee may impose such restrictions on anyShares acquired pursuant to Restricted Stock and Restricted Stock Unit Awards granted under
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this Article 8 as it may deem advisable, including, without limitation, minimum holding periodrequirements, restrictions under applicable federal securities laws, under the requirements of anystock exchange or market upon which such Shares are then listed and/or traded, or under any bluesky or state securities laws applicable to such Shares.     **8.10 Termination of Service**. Each Award Agreement evidencing a Restricted Stock or RestrictedStock Unit Award shall set forth the extent to which the Participant shall have the right to retainShares of Restricted Stock or Restricted Stock Units following termination of the Participant’sService. Such provisions shall be determined in the sole discretion of the Committee, need not beuniform among all Shares of Restricted Stock or Restricted Stock Units issued pursuant to thisPlan, and may reflect distinctions based on the reasons for termination.     **8.11****Section 83(b)****Election**. The Committee may provide in an Award Agreement that the Awardof Restricted Stock is conditioned upon the Participant making or refraining from making anelection with respect to the Award under Code Section 83(b). If a Participant makes an electionpursuant to Code Section 83(b) concerning a Restricted Stock Award, the Participant shall berequired to file promptly a copy of such election with the Company.**Article 9. Performance Awards**     **9.1 Grant of Performance Awards**. Subject to the terms and provisions of this Plan,including the provisions of Article 21 with respect to Code Section 409A, if applicable,Performance Awards consisting of Performance Units and/or Performance Shares may be granted toParticipants in such number, upon such terms, and at any time and from time to time as shall bedetermined by the Committee, in its sole discretion.     **9.2 Award Agreement.**Each Performance Award shall be evidenced by an Award Agreement thatshall specify the number of Performance Units and/or Performance Shares subject to such Award andthe additional terms and conditions of such Award as the Committee shall determine which are notinconsistent with the terms of this Plan.     **9.3 Initial Value of Performance Units or Performance Shares**. Each Performance Unit shallhave an initial value that is established by the Committee at the time of grant. Each PerformanceShare shall have an initial value equal to the Fair Market Value of a Share on the date of grant.The Committee shall set performance goals in its discretion which, depending on the extent to whichthey are met, will determine the monetary value and/or number of Shares that will be paid to theParticipant in settlement of the Participant’s Performance Award.     **9.4 Establishment of Performance Period, Performance Goals and Performance Award Formula.**Ingranting each Performance Award, the Committee shall establish in writing the applicablePerformance Period, Performance Award Formula and one or more performance goals which, whenmeasured at the end of the Performance Period, shall determine on the basis of the PerformanceAward Formula the final value of the Performance Award to be paid to the Participant. Unlessotherwise permitted in compliance with the requirements under Code Section 162(m), with respect toeach Performance Award intended to result in the payment of Performance-Based Compensation, theCommittee shall establish the performance goal(s) on the basis of one or more Performance Measuresdescribed in Article 12 and the Performance Award Formula applicable to the
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Performance Award nolater than the earlier of (a) the date ninety (90) days after the commencementof the applicable Performance Period or (b) the date on which 25% of the Performance Periodhas elapsed, and, in any event, at a time when the outcome of the performance goals remainssubstantially uncertain. Once established, the performance goals and Performance Award Formulaapplicable to a Performance Award intended to result in the payment of Performance-BasedCompensation shall not be changed during the Performance Period. The Company shall notify eachParticipant granted a Performance Award of the terms of such Award, including the PerformancePeriod, performance goal(s) and Performance Award Formula.     **9.5 Determination of Final Value of Performance Awards.**As soon as practicable following thecompletion of the Performance Period applicable to a Performance Award, the Committee shall certifyin writing the extent to which the applicable performance goals have been attained and theresulting final value of the Performance Award earned by the Participant and to be paid upon itssettlement in accordance with the applicable Performance Award Formula.     **9.6 Discretionary Adjustment of Award Formula.**In its discretion, the Committee may, eitherat the time it grants a Performance Award or at any time thereafter, provide for the positive ornegative adjustment of the Performance Award Formula applicable to any Performance Award notintended to result in Performance-Based Compensation to reflect such Participant’s individualperformance in his or her position with the Company or such other factors as the Committee maydetermine. If permitted under the Award Agreement evidencing a Performance Award intended toresult in Performance-Based Compensation, the Committee shall have the discretion, on the basis ofsuch criteria as may be established by the Committee, to reduce some or all of the value of thePerformance Award that would otherwise be paid to the Participant upon its settlementnotwithstanding the attainment of any performance goal and the resulting value of the PerformanceAward determined in accordance with the Performance Award Formula. No such reduction may result inan increase in the amount payable upon settlement of another Participant’s Performance Award thatis intended to result in Performance-Based Compensation.     **9.7 Settlement of Performance Awards**. Subject to the provisions of Article 21 with respect toCode Section 409A, as soon as practicable following the Committee’s determination and certificationin accordance with Sections 9.5 and 9.6 or on such other date(s) determined by the Committee, inits discretion, and set forth in the Award Agreement, payment shall be made to each eligibleParticipant of the final value of the Participant’s Performance Award. Payment of such amountshall be made in the form of cash, Shares, or a combination thereof as determined by the Committee.Unless otherwise provided in the Award Agreement evidencing a Performance Award, payment shall bemade in a lump sum. If permitted by the Committee, and subject to the provisions of Article 21with respect to Code Section 409A, the Participant may elect to defer receipt of all or any portionof the payment to be made to the Participant pursuant to this Section, and such deferred paymentdate(s) elected by the Participant shall be set forth in the Award Agreement.     If payment is to be made in Shares, the number of such Shares shall be determined by dividingthe final value of the Performance Award by the value of a Share determined by the method specifiedin the Award Agreement. Such methods may include, without limitation, the closing market price ona specified date (such as the settlement date) or an average of market prices over a series oftrading days. Shares issued in payment of any Performance Award may be fully vested and freelytransferable shares or may be Shares subject to a Period of Restriction as provided in Section 8.5.Shares issued in settlement of Performance Awards shall be delivered to or for the benefit ofthe Participant by one or more of the means described in Section 6.6.
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     **9.8 Voting Rights; Dividend Equivalent Rights.**A Participant shall have no voting rights withrespect to Shares represented by a Performance Award until the date of the issuance of such Shares,if any, in settlement of such Award. The Committee may, in its discretion, grant DividendEquivalent Rights with respect to one or more Performance Share Awards, as provided in Section 14.Dividend Equivalent Rights shall not be granted with respect to Performance Units.     **9.9 Restrictions on Share Transferability.**The Committee may impose such restrictions on anyShares issued in settlement of Performance Awards under this Article 9 as it may deem advisable,including, without limitation, minimum holding period requirements, restrictions under applicablefederal securities laws, under the requirements of any stock exchange or market upon which suchShares are then listed and/or traded, or under any blue sky or state securities laws applicable tosuch Shares.     **9.10 Termination of Service**. Each Award Agreement evidencing a Performance Award shall setforth the extent to which the Participant shall have the right to retain the Performance Awardfollowing termination of the Participant’s Service. Such provisions shall be determined in thesole discretion of the Committee, need not be uniform among all Performance Awards issued pursuantto this Article 9, and may reflect distinctions based on the reasons for termination.**Article 10. Cash-Based Awards and Other Stock-Based Awards**     **10.1 Grant of Cash-Based Awards**. Subject to the terms and provisions of this Plan, theCommittee, at any time and from time to time, may grant Cash-Based Awards to Participants in suchamounts and upon such terms, including the achievement of specific performance goals, as theCommittee may determine.     **10.2 Grant of Other Stock-Based Awards**. The Committee may grant other types of equity-basedor equity-related Awards not otherwise described by the terms of this Plan (including the grant oroffer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions, asthe Committee shall determine. Such Awards may involve the transfer of actual Shares toParticipants, or payment in cash or otherwise of amounts based on the value of Shares and mayinclude, without limitation, Awards designed to comply with or take advantage of the applicablelocal laws of jurisdictions other than the United States.     **10.3 Award Agreement.**Each Cash-Based Award and Other Stock-Based Award shall be evidenced byan Award Agreement that shall specify the monetary value or number of Shares subject to such Awardand the additional terms and conditions of such Award as the Committee shall determine which arenot inconsistent with the terms of this Plan.     **10.4 Value of Cash-Based and Other Stock-Based Awards**. Each Cash-Based Award shall specify amonetary payment amount or payment range as determined by the Committee. Each Other Stock-BasedAward shall be expressed in terms of Shares or units based on Shares, as determined by theCommittee. The Committee may establish performance goals with respect to any such Award in itsdiscretion. If the Committee exercises its discretion to establish performance goals, the finalvalue
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of Cash-Based Awards or Other Stock-Based Awards that will be paid to the Participant willdepend on the extent to which the performance goals are met. The establishment of performance goalswith respect to any Cash-Based Award or Other Stock-Based Award intended to result inPerformance-Based Compensation shall comply the requirements applicable to Performance Awards setforth in Section 9.4.     **10.5 Payment of Cash-Based Awards and Other Stock-Based Awards**. Payment, if any, with respectto a Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms ofthe Award, in cash or Shares as the Committee determines. The determination and certification ofthe final value with respect to any Cash-Based Award or Other Stock-Based Award intended to resultin Performance-Based Compensation shall comply the requirements applicable to Performance Awardsset forth in Sections 9.5 and 9.6. To the extent applicable, payment with respect to eachCash-Based Award and Other Stock-Based Award shall be made in compliance with the provisions ofArticle 21 with respect to Code Section 409A. Shares issued in settlement of Cash-Based Awards andOther Stock-Based Awards shall be delivered to or for the benefit of the Participant by one or moreof the means described in Section 6.6.     **10.6 Voting Rights; Dividend Equivalent Rights.**A Participant shall have no voting rightswith respect to Shares represented by a Cash-Based Award or Other Stock-Based Award until the dateof the issuance of such Shares, if any, in settlement of such Award. The Committee may, in itsdiscretion, grant Dividend Equivalent Rights with respect to one or more Other Stock-Based Awards,as provided in Section 14. Dividend Equivalent Rights shall not be granted with respect toCash-Based Awards.     **10.7 Restrictions on Share Transferability.**The Committee may impose such restrictions on anyShares issued in settlement of Cash-Based Awards and Other Stock-Based Awards under this Article 10as it may deem advisable, including, without limitation, minimum holding period requirements,restrictions under applicable federal securities laws, under the requirements of any stock exchangeor market upon which such Shares are then listed and/or traded, or under any blue sky or statesecurities laws applicable to such Shares.     **10.8 Termination of Service**. Each Award Agreement evidencing a Cash-Based Award or OtherStock-Based Award shall set forth the extent to which the Participant shall have the right toretain such Award following termination of the Participant’s Service. Such provisions shall bedetermined in the sole discretion of the Committee, need not be uniform among all Cash-Based Awardsor Other Stock-Based Awards issued pursuant to this Article 10, and may reflect distinctions basedon the reasons for termination.**Article 11. Transferability of Awards**     **11.1 Transferability.**Except as provided in Section 11.2 below, during a Participant’slifetime, his or her Awards shall be exercisable only by the Participant. Awards shall not betransferable other than by will or the laws of descent and distribution; no Awards shall besubject, in whole or in part, to attachment, execution, or levy of any kind; and any purportedtransfer in violation hereof shall be null and void. The Committee may establish such proceduresas it deems appropriate for a Participant to designate one or more beneficiaries to whom anyamounts payable or Shares deliverable in the event of, or following, the Participant’s death, maybe provided.
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     **11.2 Committee Action.**The Committee may, in its discretion, determine that notwithstandingSection 11.1, any or all Awards (other than ISOs) held by Employees or Directors shall betransferable to and exercisable by such transferees, and subject to such terms and conditions, asthe Committee may deem appropriate; provided, however, that only the Participant to which the Awardhad been granted or a “family member” (as defined below in Section 11.3 below) of such Participantmay be a transferee of such Award. Such a determination may be made at the time an Award isgranted or at any time thereafter.     **11.3 Family Member.**For purposes of Section 11.2, “family member” shall mean a Participant’schild, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, orsister-in-law, including adoptive relationships, any person sharing the Participant’s household(other than a tenant of the Participant), a trust in which these persons (or the Participant) havemore than fifty percent (50%) of the beneficial interest, a foundation in which these persons (orthe Participant) control the management of assets, and any other entity in which these persons (orthe Participant) own more than fifty percent (50%) of the voting interests.**Article 12. Performance Measures and Performance Goals**     **12.1 Performance Measures.**Unless and until the Committee proposes for stockholdervote and the stockholders approve a change in the general Performance Measures set forth in thisArticle 12, the performance goals upon which the payment or vesting of an Award to a CoveredEmployee that is intended result in the payment of Performance-Based Compensation shall be basedsolely upon one or more of the following Performance Measures: (a) Revenue  (b) Sales  (c) Expenses  (d) Net earnings or net income (before or after taxes);  (e) Earnings per share;  (f) Net sales or revenue growth;  (g) Net operating profit;  (h) Return measures (including, but not limited to, return on assets, capital, investedcapital, equity, sales, or revenue);  (i) Cash flow (including, but not limited to, operating cash flow, free cash flow,cashflow return on equity, and cash flow return on investment);  (j) Earnings before or after any one or more of: stock-based compensation expense, taxes,interest, depreciation, and amortization;  (k) Gross or operating margins;