Exhibit 10.1

 

3M COMPANY
2016 LONG-TERM INCENTIVE PLAN

 

The Plan’s purpose is to enhance the Company’s ability to attract, retain and
motivate persons who make (or are expected to make) important contributions to
the Company by providing these individuals with equity ownership opportunities. 
The Plan succeeds the 3M 2008 Long-Term Incentive Plan.

 

ARTICLE I.
DEFINITIONS

 

As used in the Plan, the following words and phrases will have the meanings
specified below, unless the context clearly indicates otherwise:

 

1.1                               “Administrator” means the Board or a Committee
to the extent that the Board’s powers or authority under the Plan have been
delegated to such Committee.  With reference to the Board’s or a Committee’s
powers or authority under the Plan that have been delegated to one or more
officers pursuant to Section 3.2, the term “Administrator” shall refer to such
person(s) unless and until such delegation has been revoked.

 

1.2                               “Applicable Law” means any applicable law,
including without limitation:  (a) provisions of the Code, the Securities Act,
the Exchange Act and any rules or regulations thereunder; (b) corporate,
securities, tax or other laws, statutes, rules, requirements or regulations,
whether U.S. or non-U.S. federal, state or local; and (c) rules of any
securities exchange or automated quotation system on which the Shares are
listed, quoted or traded.

 

1.3                               “Award” means an Option, Stock Appreciation
Right, Restricted Stock award, Restricted Stock Unit award, Performance Bonus
Award, Performance Share award or Other Stock or Cash Based Award granted to a
Participant under the Plan.

 

1.4                               “Award Agreement” means a written agreement
evidencing an Award, which may be electronic, that contains such terms and
conditions as the Administrator determines, consistent with and subject to the
terms and conditions of the Plan.

 

1.5                               “Board” means the Board of Directors of the
Company.

 

1.6                               “Change in Control” means the occurrence of a
“change in control event,” as defined in Treasury Regulation
Section 1.409A-3(i)(5) or such other regulation or guidance issued under
Section 409A.  The Administrator shall have full and final authority, which
shall be exercised in its sole discretion, to determine conclusively whether a
Change in Control has occurred pursuant to the above definition, the date of the
occurrence of such Change in Control and any incidental matters relating
thereto; provided that any exercise of authority in conjunction with a
determination of whether a Change in Control is a “change in control event” as
defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with
such regulation.  Further and for the avoidance of doubt, a transaction will not
constitute a Change in Control if its sole purpose is to (i) change the
jurisdiction of the Company’s incorporation, or (ii) create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company’s securities immediately before such transaction.

 

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1.7                               “Code” means the U.S. Internal Revenue Code of
1986, as amended, and all regulations, guidance, compliance programs and other
interpretative authority issued thereunder.

 

1.8                               “Committee” means one or more committees or
subcommittees of the Board, which may include one or more Company directors or
executive officers, to the extent Applicable Laws permit.  To the extent
required to comply with the provisions of Rule 16b-3, it is intended that each
member of the Committee will be, at the time the Committee takes any action with
respect to an Award that is subject to Rule 16b-3, a “non-employee director”
within the meaning of Rule 16b-3; however, a Committee member’s failure to
qualify as a “non-employee director” within the meaning of Rule 16b-3 will not
invalidate any Award granted by the Committee that is otherwise validly granted
under the Plan.

 

1.9                               “Common Stock” means the common stock of the
Company.

 

1.10                        “Company” means 3M Company, a Delaware corporation,
or any successor.

 

1.11                        “Designated Beneficiary” means the beneficiary or
beneficiaries the Participant designates, in a manner the Company permits and
determines, to receive amounts due or exercise the Participant’s rights if the
Participant dies.  Without a Participant’s effective designation, “Designated
Beneficiary” will mean the Participant’s estate or legal heirs.

 

1.12                        “Director” means a Board member.

 

1.13                        “Disability” means a permanent and total disability
under Section 22(e)(3) of the Code.

 

1.14                        “Dividend Equivalents” means a right granted to a
Participant to receive the equivalent value (in cash or Shares) of dividends
paid on a specified number of Shares. Such Dividend Equivalents shall be
converted to cash or additional Shares, or a combination of cash and Shares, by
such formula and at such time and subject to such limitations as may be
determined by the Administrator.

 

1.15                        “Effective Date” has the meaning set forth in
Section 10.3.

 

1.16                        “Employee” means any employee of the Company or any
of its Subsidiaries.

 

1.17                        “Equity Restructuring” means a nonreciprocal
transaction between the Company and its stockholders, such as a stock dividend,
stock split (including a reverse stock split), spin-off or recapitalization
through a large, nonrecurring cash dividend, that affects the number or kind of
Shares (or other Company securities) or the share price of Common Stock (or
other Company securities) and causes a change in the per share value of the
Common Stock underlying outstanding Awards.

 

1.18                        “Exchange Act” means the U.S. Securities Exchange
Act of 1934, as amended, and all regulations, guidance and other interpretative
authority issued thereunder.

 

1.19                        “Fair Market Value” means, as of any date, the value
of a Share determined as follows: (i) if the Common Stock is listed on any
established stock exchange, the value of a Share will be the closing sales price
for a Share as quoted on such exchange for such date, or if no sale occurred on
such date, the last day preceding such date during which a sale occurred,

 

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as reported in The Wall Street Journal or another source the Company deems
reliable; (ii) if the Common Stock is not listed on an established stock
exchange but is quoted on a national market or other quotation system, the value
of a Share will be the closing sales price for a Share on such date, or if no
sales occurred on such date, then on the last date preceding such date during
which a sale occurred, as reported in The Wall Street Journal or another source
the Administrator deems reliable; or (iii) if the Common Stock is not listed on
any established stock exchange or quoted on a national market or other quotation
system, the value of a Share will be established by the Administrator in its
sole discretion.

 

1.20                        “Full Value Award” shall mean any Award that is
settled in Shares other than: (a) an Option, (b) a Stock Appreciation Right or
(c) any other Award for which the Participant pays the intrinsic value existing
as of the date of grant (whether directly or by forgoing a right to receive a
payment from the Company or any Subsidiary).

 

1.21                        “Greater Than 10% Stockholder” means an individual
then owning (within the meaning of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the Company or any
parent corporation or subsidiary corporation of the Company, as determined in
accordance with in Section 424(e) and (f) of the Code, respectively.

 

1.22                        “Incentive Stock Option” means an Option that meets
the requirements to qualify as an “incentive stock option” as defined in
Section 422 of the Code.

 

1.23                        “Misconduct” will have the meaning assigned to such
term in the applicable Award Agreement or, if not defined therein, (A) the
Participant’s willful failure to substantially perform the Participant’s duties
(other than a failure resulting from the Participant’s Disability); (B) the
Participant’s willful failure to carry out, or comply with any lawful and
reasonable directive of the Board or the Participant’s immediate supervisor;
(C) the occurrence of any act or omission by the Participant that could
reasonably be expected to result in (or has resulted in) the Participant’s
conviction, plea of no contest, plea of nolo contendere, or imposition of
unadjudicated probation for any felony or indictable offense or crime involving
moral turpitude; (D) the Participant’s commission of an act of fraud,
embezzlement, misappropriation, misconduct, or breach of fiduciary duty against
the Company or any of its Subsidiaries or affiliates or any of their officers,
directors, employees, customers, suppliers, insurers or agents; (E) the
Participant’s material breach of any material provision of any written agreement
with the Company or any Subsidiary; or (F) any other intentional misconduct by
the Participant significantly affecting the business or affairs of the Company
or any Subsidiary in an adverse manner.  The Committee shall have the authority
to determine conclusively whether a Participant has committed Misconduct
pursuant to the above definition, the date of the occurrence of such Misconduct
and any incidental matters relating thereto; provided, however, that the
Company’s Chief Executive Officer may establish a committee of two or more
officers of the Company (at least one of whom shall be the Company’s Chief
Executive Officer or Senior Vice President, Human Resources) to make any and all
such determinations with respect to any Participant who is not then, and was not
previously, subject to Section 16 of the Exchange Act with respect to the
Company. The foregoing definition shall not in any way preclude or restrict the
right of the Company or any Subsidiary to discharge or dismiss any Participant
or other person in the service of the Company or any Subsidiary for any other
acts or omissions, but such other acts or omissions shall not be deemed, for
purposes of the Plan, to constitute Misconduct.

 

1.24                        “Nonqualified Stock Option” means an Option that is
not an Incentive Stock Option.

 

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1.25                        “Option” means a right granted under Article V to
purchase a specified number of Shares at a specified price per Share during a
specified time period.  An Option may be either an Incentive Stock Option or a
Nonqualified Stock Option.

 

1.26                        “Other Stock or Cash Based Awards” means cash
awards, awards of Shares, and other awards valued wholly or partially by
referring to, or are otherwise based on, Shares or other property.

 

1.27                        “Overall Share Limit” means the sum of
(i) 23,965,000 Shares; (ii) the aggregate number of Shares that remain available
for future awards under the Prior Plans as of immediately prior to the Effective
Date and (iii) the number of Shares that are subject to Prior Plan Awards that
become available for issuance under the Plan pursuant to Article IV.

 

1.28                        “Participant” means a Service Provider who has been
granted an Award.

 

1.29                        “Performance-Based Award” means an Award (other than
an Option or SAR) granted pursuant to Article VI or VII, but which is subject to
the terms and conditions set forth in Section 10.18.  All Performance-Based
Awards are intended to qualify as Performance-Based Compensation.

 

1.30                        “Performance-Based Compensation” means any
compensation that is intended to qualify as “performance-based compensation” as
described in Section 162(m)(4)(C) of the Code or any successor provision.

 

1.31                        “Performance Bonus Award” has the meaning set forth
in Section 7.3.

 

1.32                        “Performance Criteria” mean the criteria (and
adjustments) that the Administrator, in its sole discretion, may select to
establish one or more performance goals for an Award for a specified Performance
Period; provided that:

 

(a)                                 The Performance Criteria that will be used
to establish performance goals for Performance-Based Awards intended to qualify
as Performance-Based Compensation are limited to the following:  (i) net
earnings or losses (either before or after one or more of (A) interest,
(B) taxes, (C) depreciation, (D) amortization, and (E) non-cash equity-based
compensation expense); (ii) gross or net sales or revenue or sales or revenue
growth; (iii) gross or net organic sales volume or organic sales volume growth,
(iv) net income (either before or after taxes) or adjusted net income; (v) sales
from one or more products (or categories of products) as a percentage of total
sales or revenue; (vi) profits (including but not limited to gross profits, net
profits, profit growth, net operation profit or economic profit), profit return
ratios or operating margin; (vii) operating earnings (either before or after
taxes or before or after allocation of corporate overhead and bonus);
(viii) cash flow (including operating cash flow, free cash flow, free cash flow
conversion or cash flow return on capital); (ix) return on assets; (x) return on
capital or invested capital; (xi) cost of capital; (xii) return on stockholders’
equity; (xiii) total stockholder return; (xiv) return on sales; (xv) costs,
reductions in costs and cost control measures; (xvi) expenses; (xvii) working
capital; (xviii) earnings or loss per share (“EPS”) or EPS growth;
(xix) adjusted earnings or loss per share; (xx) price per share or dividends per
share (or appreciation in or maintenance of such price or dividends);
(xxi) regulatory achievements or compliance; (xxii) implementation, completion
or attainment of objectives relating to research, development, regulatory,
commercial, or strategic milestones or developments; (xxiii) market share;
(xxiv) economic value or economic value added models; (xxv) division, group or
corporate financial goals; (xxvi) customer satisfaction/growth; (xxvii)

 

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customer service; (xxviii) employee satisfaction; (xxix) recruitment and
maintenance of personnel; (xxx) human resources management; (xxxi) supervision
of litigation and other legal matters; (xxxii) strategic partnerships and
transactions; (xxxiii) financial ratios (including those measuring liquidity,
activity, profitability or leverage); (xxxiv) debt levels or reductions;
(xxxv) sales-related goals; (xxxvi) financing and other capital raising
transactions; (xxxvii) cash on hand; (xxxviii) acquisition activity;
(xxxix) investment sourcing activity; and (xl) marketing initiatives, any of
which may be measured in absolute terms or as compared to any incremental
increase or decrease. Such performance goals also may be expressed in terms of
the Company’s performance or the performance of a Subsidiary, division, business
segment or business unit of the Company or a Subsidiary, or may be expressed in
terms of performance relative to performance of one or more other companies or
by comparisons of any of the indicators of performance relative to performance
of other companies.  Any performance goals that are financial metrics may be
determined in accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”), in accordance with accounting principles established by the
International Accounting Standards Board (“IASB Principles”), or may be adjusted
when established to include or exclude any items otherwise includable or
excludable under GAAP or under IASB Principles.

 

(b)                                 The Committee, in its sole discretion, may
provide for exclusion of the impact of an event or occurrence which the
Committee determines should appropriately be excluded, including
(i) restructurings, discontinued operations, special items, and other unusual,
infrequently occurring or non-recurring charges, events or items; (ii) asset
sales or write-downs; (iii) litigation or claim judgments or settlements;
(iv) acquisitions or divestitures; (v) reorganization or change in the corporate
structure or capital structure of the Company; (vi) an event either not directly
related to the operations of the Company, Subsidiary, division, business segment
or business unit or not within the reasonable control of management;
(vii) foreign exchange gains and losses; (viii) a change in the fiscal year of
the Company; (ix) the refinancing or repurchase of bank loans or debt
securities; (x) unbudgeted capital expenditures; (xi) the issuance or repurchase
of equity securities and other changes in the number of outstanding shares;
(xii) conversion of some or all of convertible securities to Common Stock;
(xiii) any business interruption event; (xiv) changes in pricing; (xv) changes
in foreign currency exchange rates; (xvi) the cumulative effects of tax or
accounting changes in accordance with U.S. generally accepted accounting
principles; (xvii) unusual tax transactions; or (xviii) the effect of changes in
other laws or regulatory rules affecting reported results.

 

1.33                        “Performance Period” means one or more periods of
time, which may be of varying and overlapping durations, as the Committee may
select, over which the attainment of one or more performance goals will be
measured for the purpose of determining a Participant’s right to, and the
payment of, a Performance-Based Award.

 

1.34                        “Performance Share” means a right granted to a
Participant pursuant to Section 7.1 and subject to Section 7.2, to receive
Shares, the payment of which is contingent upon achieving certain performance
goals or other performance-based targets established by the Administrator.

 

1.35                        “Plan” means this 3M Company 2016 Long-Term
Incentive Plan.

 

1.36                        “Prior Plans” means, collectively, the 3M 2005
Management Stock Ownership Program, the 3M 2008 Long-Term Incentive Plan and any
prior equity incentive plans of the Company or its predecessor.

 

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1.37                        “Prior Plan Award” means an award outstanding under
the Prior Plans as of the Effective Date.

 

1.38                        “Restricted Stock” means Shares awarded to a
Participant under Article VI, subject to certain vesting conditions and other
restrictions.

 

1.39                        “Restricted Stock Unit” means an unfunded, unsecured
right to receive, on the applicable settlement date, one Share or an amount in
cash or other consideration determined by the Administrator to be of equal value
as of such settlement date, subject to certain vesting conditions and other
restrictions.

 

1.40                        “Retires” or Retirement” will have the meaning
assigned to such term in the applicable Award Agreement or, if not defined
therein, a Participant’s Termination of Service after attaining age 55 with at
least 10 years of employment service.

 

1.41                        “Rule 16b-3” means Rule 16b-3 promulgated under the
Exchange Act.

 

1.42                        “Section 409A” means Section 409A of the Code.

 

1.43                        “Securities Act” means the U.S. Securities Act of
1933, as amended, and all regulations, guidance and other interpretative
authority issued thereunder.

 

1.44                        “Service Provider” means an Employee or Director.

 

1.45                        “Shares” means shares of Common Stock.

 

1.46                        “Stock Appreciation Right” or “SAR” means a right
granted under Article V to receive a payment equal to the excess of the Fair
Market Value of a specified number of Shares on the date the right is exercised
over the exercise price set forth in the applicable Award Agreement.

 

1.47                        “Subsidiary” means any entity (other than the
Company), whether domestic or foreign, in an unbroken chain of entities
beginning with the Company if each of the entities other than the last entity in
the unbroken chain beneficially owns, at the time of the determination,
securities or interests representing at least 50% of the total combined voting
power of all classes of securities or interests in one of the other entities in
such chain or any other entity in which the Company has a significant equity
interest, as determined by the Administrator.

 

1.48                        “Substitute Awards” means Awards granted or Shares
issued by the Company in assumption of, or in substitution or exchange for,
awards previously granted, or the right or obligation to make future awards, in
each case by a company or other entity acquired by the Company or any Subsidiary
or with which the Company or any Subsidiary combines.

 

1.49                        “Termination of Service” means:

 

(a)                                 As to an Employee, the time when the
employee-employer relationship between a Participant and the Company or any
Subsidiary is terminated for any reason, including, without limitation, a
termination by resignation, discharge, death, disability or retirement; but
excluding terminations where the Participant simultaneously commences or remains
in employment with the Company or any Subsidiary.

 

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(b)                                 As to a non-employee Director, the time when
a Participant who is a non-employee Director ceases to be a Director for any
reason, including, without limitation, a termination by resignation, failure to
be elected, death or retirement, but excluding terminations where the
Participant simultaneously commences employment with the Company or any
Subsidiary.

 

The Company, in its sole discretion, shall determine the effect of all matters
and questions relating to any Termination of Service, including, without
limitation, whether a Termination of Service has occurred, whether a Termination
of Service resulted from a discharge for Misconduct and all questions of whether
particular leaves of absence constitute a Termination of Service.  For purposes
of the Plan, a Participant’s employee-employer relationship shall be deemed to
be terminated in the event that the Subsidiary employing or contracting with
such Participant ceases to remain a Subsidiary following any merger, sale of
stock or other corporate transaction or event (including, without limitation, a
spin-off), even though the Participant may subsequently continue to perform
services for that entity.

 

ARTICLE II.
ELIGIBILITY

 

Service Providers are eligible to be granted Awards under the Plan, subject to
the limitations described herein.  No Service Provider shall have any right to
be granted an Award pursuant to the Plan.

 

ARTICLE III.
ADMINISTRATION AND DELEGATION

 

3.1                               Administration.  The Plan is administered by
the Administrator.  The Administrator has authority to determine which Service
Providers receive Awards, grant Awards and set Award terms and conditions,
subject to the conditions and limitations in the Plan.  The Administrator also
has the authority to take all actions and make all determinations under the
Plan, to interpret the Plan and Award Agreements and to adopt, amend and repeal
Plan administrative rules, guidelines and practices as it deems advisable.  The
Administrator may correct defects and ambiguities, supply omissions, reconcile
inconsistencies in the Plan or any Award and make all other determinations that
it deems necessary or appropriate to administer the Plan and any Awards.  The
Administrator’s determinations under the Plan are in its sole discretion and
will be final and binding on all persons having or claiming any interest in the
Plan or any Award.

 

3.2                               Appointment of Committees.  To the extent
Applicable Laws permit, the Board or any Committee may delegate any or all of
its powers under the Plan to one or more Committees or officers of the Company
or any of its Subsidiaries.  Any delegation hereunder shall be subject to the
restrictions and limits that the Board or Committee specifies at the time of
such delegation or that are otherwise included in the applicable organizational
documents of the Company, and the Board or Committee, as applicable, may at any
time rescind the authority so delegated or appoint a new delegatee. At all
times, the delegatee appointed under this Section 3.2 shall serve in such
capacity at the pleasure of the Board or the Committee, as applicable, and the
Board or the Committee may abolish any Committee to which authority has been
delegated at any time and re-vest in itself any previously delegated authority.

 

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ARTICLE IV.
STOCK AVAILABLE FOR AWARDS

 

4.1                               Number of Shares.  Subject to adjustment under
Article VIII and the terms of this Article IV, Awards may be made under the Plan
covering up to the Overall Share Limit.  As of the Effective Date, the Company
will cease granting awards under the Prior Plans; however, Prior Plan Awards
will remain subject to the terms of the applicable Prior Plan. Shares issued or
delivered under the Plan may consist of authorized but unissued Shares, Shares
purchased on the open market or treasury Shares. Notwithstanding the foregoing,
the aggregate number of Shares available for issuance under the Plan shall be
reduced by 2.5 Shares for each Share delivered in settlement of any Full Value
Award, and by one share for every one share granted that is subject to Options
or Stock Appreciation Rights.

 

4.2                               Share Recycling.  If all or any part of an
Award or Prior Plan Award expires, lapses or is terminated, exchanged for cash,
surrendered, repurchased, canceled without having been fully exercised or
forfeited, in any case, in a manner that results in the Company acquiring Shares
covered by the Award or Prior Plan Award at a price not greater than the price
(as adjusted to reflect any Equity Restructuring) paid by the Participant for
such Shares or not issuing any Shares covered by the Award or Prior Plan Award,
the unused Shares covered by the Award or Prior Plan Award will, as applicable,
become or again be available for Awards under the Plan.  Further, Shares
delivered (either by actual delivery or attestation) to the Company by a
Participant to satisfy the applicable exercise or purchase price of an Award or
Prior Plan Award and/or to satisfy any applicable tax withholding obligation
(including Shares retained by the Company from the Award or Prior Plan Award
being exercised or purchased and/or creating the tax obligation) will, as
applicable, become or again be available for Award grants under the Plan.  The
payment of Dividend Equivalents in cash in conjunction with any outstanding
Awards or Prior Plan Awards shall not count against the Overall Share Limit. 
Any Shares that again become available for Awards under the Plan pursuant to
this Section shall be added as (i) one Share for every one Share subject to
Options or Stock Appreciation Rights granted under the Plan or options or stock
appreciation rights granted under any Prior Plan, and (ii) as 2.5 Shares for
every one Share subject to Full Value Awards granted under the Plan or awards
other than options or stock appreciation rights granted under any Prior Plan.

 

4.3                               Incentive Stock Option Limitations. 
Notwithstanding anything to the contrary herein, no more than 34,000,000 Shares
(as adjusted to reflect any Equity Restructuring) may be issued pursuant to the
exercise of Incentive Stock Options.

 

4.4                               Substitute Awards.  In connection with an
entity’s merger or consolidation with the Company or any Subsidiary or the
Company’s or any Subsidiary’s acquisition of an entity’s property or stock, the
Administrator may grant Awards in substitution for any options or other stock or
stock-based awards granted before such merger or consolidation by such entity or
its affiliate.  Substitute Awards may be granted on such terms and conditions as
the Administrator deems appropriate, notwithstanding limitations on Awards in
the Plan.  Substitute Awards will not count against the Overall Share Limit (nor
shall Shares subject to a Substitute Award be added to the Shares available for
Awards under the Plan as provided above), except that Shares acquired by
exercise of substitute Incentive Stock Options will count against the maximum
number of Shares that may be issued pursuant to the exercise of Incentive Stock
Options under the Plan. Additionally, in the event that a company acquired by
the Company or any Subsidiary or with which the Company or any Subsidiary
combines has shares available under a pre-existing plan approved by stockholders
and not adopted in contemplation of such acquisition or combination, the shares
available for grant pursuant to the terms of such pre-

 

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existing plan (as appropriately adjusted to reflect the transaction) may be used
for Awards under the Plan and shall not reduce the Shares authorized for grant
under the Plan (and Shares subject to such Awards (which, for the avoidance of
doubt excludes Substitute Awards) may again become available for Awards under
the Plan as provided under Section 4.2 above); provided that Awards using such
available shares (or any Shares that again become available for issuance under
the Plan under Section 4.2 above) shall not be made after the date awards or
grants could have been made under the terms of the pre-existing plan, absent the
acquisition or combination, and shall only be made to individuals who were not
employees or directors of the Company or any of its Subsidiaries prior to such
acquisition or combination.

 

4.5                               Non-Employee Director Compensation. 
Notwithstanding any provision to the contrary in the Plan or in any policy of
the Company regarding non-employee Director compensation, the Administrator may
establish compensation for non-employee Directors from time to time, subject to
the limitations in the Plan.  The Administrator will from time to time determine
the terms, conditions and amounts of all such non-employee Director compensation
in its sole discretion and pursuant to the exercise of its business judgment,
taking into account such factors, circumstances and considerations as it shall
deem relevant from time to time, provided that the sum of any cash compensation,
or other compensation, and the value (determined as of the grant date in
accordance with Financial Accounting Standards Board Accounting Standards
Codification Topic 718, or any successor thereto) of Awards granted to a
non-employee Director as compensation for services as a non-employee Director
during any calendar year may not exceed $600,000.

 

ARTICLE V.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

 

5.1                               General.  The Administrator may grant Options
or Stock Appreciation Rights to one or more Service Providers, subject to such
terms and conditions not inconsistent with the Plan as the Administrator shall
determine.  The Administrator will determine the number of Shares covered by
each Option and Stock Appreciation Right, the exercise price of each Option and
Stock Appreciation Right and the conditions and limitations applicable to the
exercise of each Option and Stock Appreciation Right.  A Stock Appreciation
Right will entitle the Participant (or other person entitled to exercise the
Stock Appreciation Right) to receive from the Company upon exercise of the
exercisable portion of the Stock Appreciation Right an amount determined by
multiplying the excess, if any, of the Fair Market Value of one Share on the
date of exercise over the exercise price per Share of the Stock Appreciation
Right by the number of Shares with respect to which the Stock Appreciation Right
is exercised, subject to any limitations of the Plan or that the Administrator
may impose and payable in cash, Shares valued at Fair Market Value on the date
of exercise or a combination of the two as the Administrator may determine or
provide in the Award Agreement.

 

5.2                               Exercise Price.  The Administrator will
establish each Option’s and Stock Appreciation Right’s exercise price and
specify the exercise price in the Award Agreement.  The exercise price will not
be less than 100% of the Fair Market Value on the grant date of the Option or
Stock Appreciation Right.

 

5.3                               Duration of Options.  Each Option or Stock
Appreciation Right will be exercisable at such times and as specified in the
Award Agreement, provided that the term of an Option or Stock Appreciation Right
will not exceed ten years.

 

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5.4                               Exercise.

 

(a)                                 Exercise Procedure.  Options and Stock
Appreciation Rights may be exercised by delivering to the Company a notice of
exercise, in a form and manner the Company approves (which may be electronic or
telephonic), signed or authenticated by the person authorized to exercise the
Option or Stock Appreciation Right, together with, as applicable, payment in
full of (i) the exercise price for the number of Shares for which the Option is
exercised in a manner specified in Section 5.5 and (ii) all applicable taxes in
a manner specified in Section 9.5.

 

(b)                                 Limited Automatic Exercise.  Notwithstanding
anything to the contrary in Section 5.4(a), unless otherwise determined in the
Award Agreement, the vested and exercisable portion of an Option or Stock
Appreciation Right that remains outstanding immediately prior to the expiration
of its full term (or, if applicable, the limited post-termination exercise
window) shall be deemed to have been exercised by the Participant at such time
if (i) the Participant has accepted the Option or Stock Appreciation Right,
(ii) the Fair Market Value of one Share exceeds the applicable exercise price
per Share, and (iii) either (A) such Option or Stock Appreciation Right remains
outstanding on the last day of its full term or (B) the Participant’s Option or
Stock Appreciation Right otherwise would terminate prior to the last day of its
full term as a result of the Participant’s death.  For the avoidance of doubt,
an Option or Stock Appreciation Right that terminates upon the expiration of its
limited post-termination exercise window shall not be deemed to have remained
outstanding on the last day of its full term for purposes of clause (iii) in the
preceding sentence.  In the event an Option or Stock Appreciation Right is
exercised pursuant to this Section 5.4(b), the Company shall deliver to the
Participant the number of Shares for which the Option or Stock Appreciation
Right was deemed exercised, less the number of Shares required to be withheld
for the payment of the total purchase price and required withholding taxes. 
Unless the Company otherwise determines, an Option or Stock Appreciation Right
may not be exercised for a fraction of a Share.

 

5.5                               Payment Upon Exercise.  The Administrator
shall determine the methods (or combination of methods) by which payment of the
exercise price of an Option shall be made, including, without limitation:

 

(a)                                 cash, check or wire transfer of immediately
available funds; provided that the Company may limit the use of one of the
foregoing methods if one or more of the methods below is permitted;

 

(b)                                 if there is a public market for Shares at
the time of exercise, unless the Company otherwise determines, (A) delivery
(including telephonically to the extent permitted by the Company) of a notice
that the Participant has placed a market sell order with a broker acceptable to
the Company with respect to Shares then issuable upon exercise of the Option and
that the broker has been directed to deliver promptly to the Company funds
sufficient to pay the exercise price, or (B) the Participant’s delivery to the
Company of a copy of irrevocable and unconditional instructions to a broker
acceptable to the Company to deliver promptly to the Company an amount
sufficient to pay the exercise price by cash, check or wire transfer of
immediately available funds; provided that such amount is paid to the Company at
such time as may be required by the Company;

 

(c)                                  to the extent permitted by the
Administrator, delivery (either by actual delivery or attestation) of Shares
owned by the Participant valued at their Fair Market Value on the date of
delivery (or such other date determined by the Administrator);

 

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(d)                                 to the extent permitted by the
Administrator, surrendering Shares then issuable upon the Option’s exercise
valued at their Fair Market Value on the exercise date; or

 

(e)                                  to the extent permitted by the
Administrator, delivery of a promissory note or any other lawful consideration.

 

5.6                               Additional Terms of Incentive Stock Options. 
The Administrator may grant Incentive Stock Options only to employees of the
Company, any of its present or future parent or subsidiary corporations, as
defined in Sections 424(e) or (f) of the Code, respectively, and any other
entities the employees of which are eligible to receive Incentive Stock Options
under the Code.  If an Incentive Stock Option is granted to a Greater Than 10%
Stockholder, the exercise price will not be less than 110% of the Fair Market
Value on the Option’s grant date, and the term of the Option will not exceed
five years.  All Incentive Stock Options will be subject to and construed
consistently with Section 422 of the Code.  By accepting an Incentive Stock
Option, the Participant agrees to give prompt notice to the Company of
dispositions or other transfers (other than in connection with a Change in
Control) of Shares acquired under the Option made within (i) two years from the
grant date of the Option or (ii) one year after the transfer of such Shares to
the Participant, specifying the date of the disposition or other transfer and
the amount the Participant realized, in cash, other property, assumption of
indebtedness or other consideration, in such disposition or other transfer. 
Neither the Company nor the Administrator will be liable to a Participant, or
any other party, if an Incentive Stock Option fails or ceases to qualify as an
“incentive stock option” under Section 422 of the Code.  Any Incentive Stock
Option or portion thereof that fails to qualify as an “incentive stock option”
under Section 422 of the Code for any reason, including becoming exercisable
with respect to Shares having a fair market value exceeding the $100,000
limitation under Treasury Regulation Section 1.422-4, will be a Nonqualified
Stock Option.

 

ARTICLE VI.
RESTRICTED STOCK; RESTRICTED STOCK UNITS

 

6.1                               General.  The Administrator may grant
Restricted Stock, or the right to purchase Restricted Stock, to any Service
Provider, subject to forfeiture or the Company’s right to repurchase all or part
of such shares at their issue price or other stated or formula price from the
Participant if conditions the Administrator specifies in the Award Agreement are
not satisfied before the end of the applicable restriction period or periods
that the Administrator establishes for such Award.  In addition, the
Administrator may grant to Service Providers Restricted Stock Units, which may
be subject to vesting and forfeiture conditions during the applicable
restriction period or periods, as set forth in an Award Agreement.  The Award
Agreement for each Restricted Stock and Restricted Stock Unit Award shall set
forth the terms and conditions not inconsistent with the Plan as the
Administrator shall determine.

 

6.2                               Restricted Stock.

 

(a)                                 Dividends.  Subject to any limitations
approved by the Administrator and set forth in the Award Agreement, Participants
holding shares of Restricted Stock will be entitled to all ordinary cash
dividends paid with respect to such Shares.  In addition, unless the
Administrator provides otherwise and subject to the provisions of this
Section 6.2(a) below, if any dividends or distributions are paid in Shares, or
consist of a dividend or distribution to holders of Common Stock of cash or
property other than an ordinary cash dividend, the Shares or other cash or
property will be subject to the same restrictions on transferability and
forfeitability as the shares of Restricted Stock with respect to which they were
paid.

 

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Notwithstanding anything to the contrary herein, dividends with respect to an
Award of Restricted Stock with performance-based vesting shall be accumulated
and subject to vesting to the same extent as the related shares of Restricted
Stock. All such dividends shall be paid as soon as administratively practicable
following the time the applicable Restricted Stock vests and becomes
non-forfeitable or such later time as may be set forth in the Award Agreement.

 

(b)                                 Stock Certificates.  The Company may require
that the Participant deposit in escrow with the Company (or its designee) any
stock certificates issued in respect of shares of Restricted Stock, together
with a stock power endorsed in blank.

 

6.3                               Restricted Stock Units.  The Administrator may
provide that settlement of Restricted Stock Units will occur upon or as soon as
reasonably practicable after the Restricted Stock Units vest or will instead be
deferred, on a mandatory basis or at the Participant’s election.

 

ARTICLE VII.
OTHER TYPES OF AWARDS

 

7.1                               General.  The Administrator may grant
Performance Share awards, Performance Bonus Awards, Dividend Equivalents or
Other Stock or Cash Based Awards, to one or more Service Providers, in such
amounts and subject to such terms and conditions not inconsistent with the Plan
as the Administrator shall determine.

 

7.2                               Performance Share Awards.  Each Performance
Share award shall be denominated in a number of Shares or in unit equivalents of
Shares and/or units of value (including a dollar value of Shares) and may be
linked to any one or more of the Performance Criteria or other specific
criteria, including service to the Company or Subsidiaries, determined to be
appropriate by the Administrator, in each case on a specified date or dates or
over any Performance Period.  In making such determinations, the Administrator
may consider (among such other factors as it deems relevant in light of the
specific type of Award) the contributions, responsibilities and other
compensation of the particular Participant.

 

7.3                               Performance Bonus Awards.  Each right to
receive a bonus granted under this Section 7.3 shall be denominated in the form
of cash and shall be initially payable in cash (but may, in the discretion of
the Administrator, be payable in Shares or a combination of cash and Shares) (a
“Performance Bonus Award”) and shall be payable upon the attainment of
performance goals that are established by the Administrator and relate to one or
more of the Performance Criteria or other specific criteria, including service
to the Company or Subsidiaries, in each case on a specified date or dates or
over any Performance Period.

 

7.4                               Dividend Equivalents.  If the Administrator
provides, an Award (other than an Option or Stock Appreciation Right) may
provide a Participant with the right to receive Dividend Equivalents.  Dividend
Equivalents may be paid currently or credited to an account for the Participant,
settled in cash or Shares and subject to the same restrictions on
transferability and forfeitability as the Award with respect to which the
Dividend Equivalents are granted and subject to other terms and conditions as
set forth in the Award Agreement.  Notwithstanding anything to the contrary
herein, Dividend Equivalents with respect to an Award with performance-based
vesting shall either (i) to the extent permitted by Applicable Law, not be paid
or credited or (ii) be accumulated and subject to vesting to the same extent as
the related Award.  All such Dividend Equivalents shall be paid at such time as
the Administrator shall specify in the applicable Award Agreement.

 

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7.5                               Other Stock or Cash Based Awards.  Other Stock
or Cash Based Awards may be granted to Participants, including Awards entitling
Participants to receive Shares to be delivered in the future and including
annual or other periodic or long-term cash bonus awards (whether based on
specified Performance Criteria or otherwise), in each case subject to any
conditions and limitations in the Plan. Such Other Stock or Cash Based Awards
will also be available as a payment form in the settlement of other Awards, as
standalone payments and as payment in lieu of compensation to which a
Participant is otherwise entitled.  Other Stock or Cash Based Awards may be paid
in Shares, cash or other property, as the Administrator determines.  Subject to
the provisions of the Plan, the Administrator will determine the terms and
conditions of each Other Stock or Cash Based Award, including any purchase
price, performance goal (which may be based on the Performance Criteria),
transfer restrictions, and vesting conditions, which will be set forth in the
applicable Award Agreement.

 

ARTICLE VIII.
ADJUSTMENTS FOR CHANGES IN COMMON STOCK
AND CERTAIN OTHER EVENTS

 

8.1                               Equity Restructuring.  In connection with any
Equity Restructuring, notwithstanding anything to the contrary in this
Article VIII the Administrator will equitably adjust the terms of the Plan and
each outstanding Award as it deems appropriate to reflect the Equity
Restructuring, which may include (i) adjusting the number and type of securities
subject to each outstanding Award and/or with respect to which Awards may be
granted under the Plan (including, but not limited to, adjustments of the
limitations in Article IV hereof on the maximum number and kind of shares that
may be issued); (ii) adjusting the terms and conditions of (including the grant
or exercise price), and the performance goals or other criteria included in,
outstanding Awards; and (iii) granting new Awards or making cash payments to
Participants.  The adjustments provided under this Section 8.1 will be
nondiscretionary and final and binding on all interested parties, including the
affected Participant and the Company; provided that the Administrator will
determine whether an adjustment is equitable.

 

8.2                               Corporate Transactions.  In the event of any
dividend or other distribution (whether in the form of cash, Common Stock, other
securities, or other property), reorganization, merger, consolidation, split-up,
spin off, combination, amalgamation, repurchase, recapitalization, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, or sale or exchange of Common
Stock or other securities of the Company, Change in Control, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, other similar corporate transaction or event, other unusual or
nonrecurring transaction or event affecting the Company or its financial
statements or any change in any Applicable Laws or accounting principles, the
Administrator, on such terms and conditions as it deems appropriate, either by
the terms of the Award or by action taken prior to the occurrence of such
transaction or event (except that action to give effect to a change in
Applicable Law or accounting principles may be made within a reasonable period
of time after such change) and either automatically or upon the Participant’s
request, is hereby authorized to take any one or more of the following actions
whenever the Administrator determines that such action is appropriate in order
to (x) prevent dilution or enlargement of the benefits or potential benefits
intended by the Company to be made available under the Plan or with respect to
any Award granted or issued under the Plan, (y) to facilitate such transaction
or event or (z) give effect to such changes in Applicable Laws or accounting
principles:

 

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(a)                                 To provide for the cancellation of any such
Award in exchange for either an amount of cash or other property with a value
equal to the amount that could have been obtained upon the exercise or
settlement of the vested portion of such Award or realization of the
Participant’s rights under the vested portion of such Award, as applicable;
provided that, if the amount that could have been obtained upon the exercise or
settlement of the vested portion of such Award or realization of the
Participant’s rights, in any case, is equal to or less than zero, then the Award
may be terminated without payment;

 

(b)                                 To provide that such Award shall vest and,
to the extent applicable, be exercisable as to all shares covered thereby,
notwithstanding anything to the contrary in the Plan or the provisions of such
Award;

 

(c)                                  To provide that such Award be assumed by
the successor or survivor corporation or entity, or a parent or subsidiary
thereof, or shall be substituted for by awards covering the stock of the
successor or survivor corporation or entity, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and/or
applicable exercise or purchase price, in all cases, as determined by the
Administrator;

 

(d)                                 To make adjustments in the number and type
of shares of Common Stock (or other securities or property) subject to
outstanding Awards and/or with respect to which Awards may be granted under the
Plan (including, but not limited to, adjustments of the limitations in
Article IV hereof on the maximum number and kind of shares which may be issued)
and/or in the terms and conditions of (including the grant or exercise price),
and the criteria included in, outstanding Awards;

 

(e)                                  To replace such Award with other rights or
property selected by the Administrator; and/or

 

(f)                                   To provide that the Award will terminate
and cannot vest, be exercised or become payable after the applicable event.

 

8.3                               Administrative Stand Still.  In the event of
any pending stock dividend, stock split, combination or exchange of shares,
merger, consolidation or other distribution (other than normal cash dividends)
of Company assets to stockholders, or any other extraordinary transaction or
change affecting the Shares or the share price of Common Stock (including any
Equity Restructuring or any securities offering or other similar transaction) or
for reasons of administrative convenience or to facilitate compliance with any
Applicable Laws, the Company may refuse to permit the exercise or settlement of
one or more Awards for such period of time as the Company may determine to be
reasonably appropriate under the circumstances.

 

8.4                               General.  Except as expressly provided in the
Plan or the Administrator’s action under the Plan, no Participant will have any
rights due to any subdivision or consolidation of Shares of any class, dividend
payment, increase or decrease in the number of Shares of any class or
dissolution, liquidation, merger, or consolidation of the Company or other
corporation.  Except as expressly provided with respect to an Equity
Restructuring under Section 8.1 above or the Administrator’s action under the
Plan, no issuance by the Company of Shares of any class, or securities
convertible into Shares of any class, will affect, and no adjustment will be
made regarding, the number of Shares subject to an Award or the Award’s grant or
exercise price.  The existence of the Plan, any Award Agreements and the Awards
granted hereunder will not affect or restrict in any way the Company’s right or
power to make or authorize (i) any adjustment, recapitalization, reorganization
or other change in the Company’s capital structure

 

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or its business, (ii) any merger, consolidation, spinoff, dissolution or
liquidation of the Company or sale of Company assets or (iii) any sale or
issuance of securities, including securities with rights superior to those of
the Shares or securities convertible into or exchangeable for Shares. The
Administrator may treat Participants and Awards (or portions thereof)
differently under this Article VIII.

 

ARTICLE IX.
PROVISIONS APPLICABLE TO AWARDS

 

9.1                               Transferability.  Except as the Administrator
may determine or provide in an Award Agreement or otherwise for Awards other
than Incentive Stock Options, Awards may not be sold, assigned, transferred,
pledged or otherwise encumbered, either voluntarily or by operation of law,
except by will or the laws of descent and distribution, or, subject to the
Administrator’s consent, pursuant to a domestic relations order, and, during the
life of the Participant, will be exercisable only by the Participant. 
References to a Participant, to the extent relevant in the context, will include
references to a transferee approved by the Administrator.

 

9.2                               Documentation.  Each Award will be evidenced
in an Award Agreement, which may be written or electronic, as the Administrator
determines. Each Award may contain such terms and conditions as are not
inconsistent with those set forth in the Plan.

 

9.3                               Discretion.  Except as the Plan otherwise
provides, each Award may be made alone or in addition or in relation to any
other Award.  The terms of each Award to a Participant need not be identical,
and the Administrator need not treat Participants or Awards (or portions
thereof) uniformly.

 

9.4                               Changes in Participant’s Status.  The Company
will determine how the disability, death, retirement, authorized leave of
absence or any other change or purported change in a Participant’s Service
Provider status affects an Award and the extent to which, and the period during
which, the Participant, the Participant’s legal representative, conservator,
guardian or Designated Beneficiary may exercise rights under the Award, if
applicable.  Except to the extent otherwise required by Applicable Law or
expressly authorized by the Company or by the Company’s written policy on leaves
of absence, no service credit shall be given for vesting purposes for any period
the Participant is on a leave of absence.

 

9.5                               Withholding.  Each Participant must pay the
Company, or make provision satisfactory to the Administrator for payment of, any
taxes required by law to be withheld in connection with such Participant’s
Awards by the date of the event creating the tax liability.  The Company may
deduct an amount sufficient to satisfy such tax obligations based on the minimum
statutory withholding rates (or such other rate as may be determined by the
Company after considering any accounting consequences or costs) from any payment
of any kind otherwise due to a Participant.  Subject to any Company insider
trading policy (including blackout periods) and the terms of the applicable
Award Agreement, Participants may satisfy such tax obligations (i) in cash, by
wire transfer of immediately available funds, by check made payable to the order
of the Company; provided that the Company may limit the use of one of the
foregoing methods if one or more of the exercise methods below is permitted,
(ii) to the extent permitted by the Administrator, in whole or in part by
delivery of Shares, including Shares delivered by attestation and Shares
retained from the Award creating the tax obligation, valued at their Fair Market
Value on the date of delivery (or such other date determined by the
Administrator), (iii) if there is a public market for Shares at the time the tax
obligations are satisfied, unless the Company otherwise determines, (A) delivery
(including telephonically to the

 

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extent permitted by the Company) of a notice that the Participant has placed a
market sell order with a broker acceptable to the Company with respect to Shares
then issuable upon exercise of the Award and that the broker has been directed
to deliver promptly to the Company funds sufficient to satisfy the tax
obligations, or (B) the Participant’s delivery to the Company of a copy of
irrevocable and unconditional instructions to a broker acceptable to the Company
to deliver promptly to the Company an amount sufficient to satisfy the tax
withholding by cash, check or wire transfer of immediately available funds;
provided that such amount is paid to the Company at such time as may be required
by the Company, (iv) to the extent permitted by the Administrator, delivery of a
promissory note or any other lawful consideration or (v) any combination of the
foregoing payment forms approved by the Administrator.  If any tax withholding
obligation will be satisfied under clause (ii) of the immediately preceding
sentence by the Company’s retention of Shares from the Award creating the tax
obligation and there is a public market for Shares at the time the tax
obligation is satisfied, the Company may elect to instruct any brokerage firm
determined acceptable to the Company for such purpose to sell on the applicable
Participant’s behalf some or all of the Shares retained and to remit the
proceeds of the sale to the Company or its designee, and each Participant’s
acceptance of an Award under the Plan will constitute the Participant’s
authorization to the Company and instruction and authorization to such brokerage
firm to complete the transactions described in this sentence.

 

9.6                               Amendment of Award; Prohibition on Repricing. 
The Administrator may amend, modify or terminate any outstanding Award,
including by substituting another Award of the same or a different type,
changing the exercise or settlement date, converting an Incentive Stock Option
to a Nonqualified Stock Option and providing for cash settlement of an
outstanding award.  The Participant’s consent to such action will be required
unless (i) the action, taking into account any related action, does not
materially and adversely affect the economic benefits to be delivered under the
Award as of the date of such amendment, modification or termination, or (ii) the
change is permitted under Article VIII or pursuant to Sections 10.5 or 10.6. 
Other than pursuant to Sections 8.1 and 8.2, the Administrator shall not without
the approval of the Company’s stockholders (a) lower the exercise price per
Share of an Option or Stock Appreciation Right after it is granted, (b) cancel
an Option or Stock Appreciation Right when the exercise price per Share exceeds
the Fair Market Value of one Share in exchange for cash or another Award, or
(c) take any other action with respect to an Option or Stock Appreciation Right
that the Company determines would be treated as a repricing under the rules and
regulations of the principal U.S. national securities exchange on which the
Shares are listed.

 

9.7                               Conditions on Delivery of Stock.  The Company
will not be obligated to deliver any Shares under the Plan or remove
restrictions from Shares previously delivered under the Plan until (i) all Award
conditions have been met or removed to the Company’s satisfaction, (ii) as
determined by the Company, all other legal matters regarding the issuance and
delivery of such Shares have been satisfied, including any applicable securities
laws and stock exchange or stock market rules and regulations, (iii) any
approvals from governmental agencies that the Company determines are necessary
or advisable have been obtained, and (iv) the Participant has executed and
delivered to the Company such representations or agreements as the Company deems
necessary or appropriate to satisfy any Applicable Laws.  The inability or
impracticability of the Company to obtain or maintain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained, and shall constitute circumstances in which the Administrator may
determine to amend or cancel Awards pertaining to such Shares, with or without
consideration to the Participant.

 

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9.8                               Acceleration.  The Administrator may at any
time provide that any Award will become immediately vested and fully or
partially exercisable, free of some or all restrictions or conditions, or
otherwise fully or partially realizable.

 

9.9                               Fractional Shares.  No fractional shares of
Stock shall be issued and the Company shall determine, in its sole and absolute
discretion, whether cash shall be given in lieu of fractional shares or whether
such fractional shares shall be eliminated by rounding down.

 

ARTICLE X.
MISCELLANEOUS

 

10.1                        No Right to Employment or Other Status.  No person
will have any claim or right to be granted an Award, and the grant of an Award
will not be construed as giving a Participant the right to continue employment
or any other relationship with the Company or a Subsidiary.  The Company and its
Subsidiaries expressly reserve the right at any time to dismiss or otherwise
terminate their relationship with a Participant free from any liability or claim
under the Plan or any Award, except as expressly provided in an Award Agreement.

 

10.2                        No Rights as Stockholder; Certificates.  Subject to
the Award Agreement, no Participant or Designated Beneficiary will have any
rights as a stockholder with respect to any Shares to be distributed under an
Award until becoming the record holder of such Shares.  Notwithstanding any
other provision of the Plan, unless the Company otherwise determines or
Applicable Laws require, the Company will not be required to deliver to any
Participant certificates evidencing Shares issued in connection with any Award
and instead such Shares may be recorded in the books of the Company (or, as
applicable, its transfer agent or stock plan administrator).  The Company may
place legends on any share certificate or book entry to reference restrictions
applicable to the Shares (including, without limitation, restrictions applicable
to Restricted Stock).

 

10.3                        Effective Date and Term of Plan.  The Plan will
become effective on the date it is approved by the Company’s stockholders (the
“Effective Date”).  The Plan will expire on, and no Award may be granted
pursuant to the Plan after the tenth anniversary of the Effective Date, but
Awards previously granted may extend beyond that date and shall remain in force
according to the terms of the Plan and the applicable Award Agreement.  If the
Plan is not approved by the Company’s stockholders, the Plan will not become
effective, no Awards will be granted under the Plan and the Prior Plans will
continue in full force and effect in accordance with their terms.

 

10.4                        Amendment of Plan.  The Board or the Compensation
Committee of the Board may amend, suspend or terminate the Plan at any time and
from time to time; provided that (a) no amendment requiring stockholder approval
to comply with Applicable Laws shall be effective unless approved by the Board
and the Company’s stockholders, and (b) no amendment, other than an increase to
the Overall Share Limit, may materially and adversely affect the economic
benefits to be delivered under any outstanding award as of the date of such
amendment without the affected Participant’s consent.  No Awards may be granted
under the Plan during any suspension period or after Plan termination.  Awards
outstanding at the time of any Plan suspension or termination will continue to
be governed by the Plan and the Award Agreement, as in effect before such
suspension or termination.  The Board will obtain stockholder approval of any
Plan amendment to the extent necessary to comply with Applicable Laws.

 

10.5                        Provisions for Foreign Participants.  The
Administrator may modify Awards granted to Participants who are foreign
nationals employed or residing outside the United States

 

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or establish subplans or procedures under the Plan to address differences in
laws, rules, regulations or customs of such foreign jurisdictions with respect
to tax, securities, currency, employee benefit or other matters.

 

10.6                        Section 409A.

 

(a)                                 General.  The Company intends that all
Awards be structured to comply with, or be exempt from, Section 409A, such that
no adverse tax consequences, interest, or penalties under Section 409A apply. 
Notwithstanding anything in the Plan or any Award Agreement to the contrary, the
Administrator may, without a Participant’s consent, amend the Plan or Awards,
adopt policies and procedures, or take any other actions (including amendments,
policies, procedures and retroactive actions) as are necessary or appropriate to
preserve the intended tax treatment of Awards, including any such actions
intended to (A) exempt the Plan or any Award from Section 409A, or (B) comply
with Section 409A, including regulations, guidance, compliance programs and
other interpretative authority that may be issued after an Award’s grant date. 
The Company makes no representations or warranties as to an Award’s tax
treatment under Section 409A or otherwise.  The Company will have no obligation
under this Section 10.6 or otherwise to avoid the taxes, penalties or interest
under Section 409A with respect to any Award and will have no liability to any
Participant or any other person if any Award, compensation or other benefits
under the Plan are determined to constitute noncompliant “nonqualified deferred
compensation” subject to taxes, penalties or interest under Section 409A.

 

(b)                                 Separation from Service.  If an Award
constitutes “nonqualified deferred compensation” under Section 409A, any payment
or settlement of such Award upon a Participant’s Termination of Service will, to
the extent necessary to avoid taxes under Section 409A, be made only upon the
Participant’s “separation from service” (within the meaning of Section 409A),
whether such “separation from service” occurs upon or after the Participant’s
Termination of Service.  For purposes of the Plan or any Award Agreement
relating to any such payments or benefits, references to a “termination,”
“termination of employment” or like terms mean a “separation from service.”

 

(c)                                  Payments to Specified Employees. 
Notwithstanding any contrary provision in the Plan or any Award Agreement, any
payment(s) of “nonqualified deferred compensation” required to be made under an
Award to a “specified employee” (as defined under Section 409A and as the
Company determines) due to his or her “separation from service” will, to the
extent necessary to avoid taxes under Section 409A(a)(2)(B)(i) of the Code, be
delayed for the six-month period immediately following such “separation from
service” (or, if earlier, until the specified employee’s death) and will instead
be paid (as set forth in the Award Agreement) on the day immediately following
such six-month period or as soon as administratively practicable thereafter
(without interest).  Any payments of “nonqualified deferred compensation” under
such Award payable more than six months following the Participant’s “separation
from service” will be paid at the time or times the payments are otherwise
scheduled to be made.

 

10.7                        Limitations Applicable to Section 16 Persons. 
Notwithstanding any other provision of the Plan, the Plan and any Award granted
or awarded to any Participant who is then subject to Section 16 of the Exchange
Act shall be subject to any additional limitations set forth in any applicable
exemptive rule under Section 16 of the Exchange Act (including any amendment to
Rule 16b-3 under the Exchange Act or any successor rule) that are requirements
for the application of such exemptive rule.  To the extent permitted by
applicable law, the Plan

 

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and Awards granted or awarded hereunder shall be deemed amended to the extent
necessary to conform to such applicable exemptive rule.

 

10.8                        Limitations on Liability.  Notwithstanding any other
provisions of the Plan, no individual acting as a director, officer or other
employee of the Company or any Subsidiary will be liable to any Participant,
former Participant, spouse, beneficiary, or any other person for any claim,
loss, liability, or expense incurred in connection with the Plan or any Award,
and such individual will not be personally liable with respect to the Plan
because of any contract or other instrument executed in his or her capacity as
an Administrator, director, officer or other employee of the Company or any
Subsidiary.  The Company will indemnify and hold harmless each director, officer
or other employee of the Company or any Subsidiary that has been or will be
granted or delegated any duty or power relating to the Plan’s administration or
interpretation, against any cost or expense (including attorneys’ fees) or
liability (including any sum paid in settlement of a claim with the Company’s
approval) arising from any act or omission concerning the Plan unless arising
from such person’s own fraud or bad faith; provided that he or she gives the
Company an opportunity, at its own expense, to handle and defend the same before
he or she undertakes to handle and defend it on his or her own behalf.

 

10.9                        Data Privacy.  As a condition for receiving any
Award, each Participant explicitly and unambiguously consents to the collection,
use and transfer, in electronic or other form, of personal data as described in
this Section by and among the Company and its Subsidiaries and affiliates
exclusively for implementing, administering and managing the Participant’s
participation in the Plan.  The Company and its Subsidiaries and affiliates may
hold certain personal information about a Participant, including the
Participant’s name, address and telephone number; birthdate; social security,
insurance number or other identification number; salary; nationality; job
title(s); any Shares held in the Company or its Subsidiaries and affiliates; and
Award details (the “Data”), to implement, manage and administer the Plan and
Awards.  The Company and its Subsidiaries and affiliates may transfer the Data
amongst themselves as necessary to implement, administer and manage a
Participant’s participation in the Plan, and the Company and its Subsidiaries
and affiliates may transfer the Data to third parties assisting the Company with
Plan implementation, administration and management.  These recipients may be
located in the Participant’s country, or elsewhere, and the Participant’s
country may have different data privacy laws and protections than the
recipients’ country.  By accepting an Award, each Participant authorizes such
recipients to receive, possess, use, retain and transfer the Data, in electronic
or other form, to implement, administer and manage the Participant’s
participation in the Plan, including any required Data transfer to a broker or
other third party with whom the Company or the Participant may elect to deposit
any Shares.  The Company may cancel Participant’s ability to participate in the
Plan and, in the Company’s sole discretion, the Participant may forfeit any
outstanding Awards if the Participant refuses or withdraws the consents in this
Section 10.9.

 

10.10                 Severability.  If any portion of the Plan or any action
taken under it is held illegal or invalid for any reason, the illegality or
invalidity will not affect the remaining parts of the Plan, and the Plan will be
construed and enforced as if the illegal or invalid provisions had been
excluded, and the illegal or invalid action will be null and void.

 

10.11                 Governing Documents.  If any contradiction occurs between
the Plan and any Award Agreement or other written agreement between a
Participant and the Company (or any Subsidiary), the Plan will govern, unless
such Award Agreement or other written agreement was approved by the
Administrator and expressly provides that a specific provision of the Plan will
not apply.

 

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10.12                 Governing Law.  The Plan and all Awards will be governed
by and interpreted in accordance with the laws of the State of Delaware,
disregarding the choice-of-law principles of the State of Delaware and any other
state requiring the application of a jurisdiction’s laws other than the State of
Delaware.

 

10.13                 Clawback Provisions.  All Awards (including the gross
amount of any proceeds, gains or other economic benefit the Participant actually
or constructively receives upon receipt or exercise of any Award or the receipt
or resale of any Shares underlying the Award) will be subject to recoupment by
the Company to the extent required to comply with Applicable Laws or any policy
of the Company providing for the reimbursement of incentive compensation.

 

10.14                 Titles and Headings.  The titles and headings in the Plan
are for convenience of reference only and, if any conflict, the Plan’s text,
rather than such titles or headings, will control.

 

10.15                 Conformity to Applicable Laws.  Participant acknowledges
that the Plan is intended to conform to the extent necessary with Applicable
Laws.  Notwithstanding anything herein to the contrary, the Plan and all Awards
will be administered only in a manner intended to conform with Applicable Laws. 
To the extent Applicable Laws permit, the Plan and all Award Agreements will be
deemed amended as necessary to conform to Applicable Laws.

 

10.16                 Relationship to Other Benefits.  No payment under the Plan
will be taken into account in determining any benefits under any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary, except as expressly provided in writing
in such other plan or an agreement thereunder.

 

10.17                 Broker-Assisted Sales. In the event of a broker-assisted
sale of Shares in connection with the payment of amounts owed by a Participant
under or with respect to the Plan or Awards, including amounts to be paid under
the final sentence of Section 9.5: (a) any Shares to be sold through the
broker-assisted sale will be sold on the day the payment first becomes due, or
as soon thereafter as practicable; (b) such Shares may be sold as part of a
block trade with other Participants in the Plan in which all participants
receive an average price; (c) the applicable Participant will be responsible for
all broker’s fees and other costs of sale, and by accepting an Award, each
Participant agrees to indemnify and hold the Company harmless from any losses,
costs, damages, or expenses relating to any such sale; (d) to the extent the
Company or its designee receives proceeds of such sale that exceed the amount
owed, the Company will pay such excess in cash to the applicable Participant as
soon as reasonably practicable; (e) the Company and its designees are under no
obligation to arrange for such sale at any particular price; and (f) in the
event the proceeds of such sale are insufficient to satisfy the Participant’s
applicable obligation, the Participant may be required to pay immediately upon
demand to the Company or its designee an amount in cash sufficient to satisfy
any remaining portion of the Participant’s obligation.

 

10.18                 Section 162(m) Limitations.

 

(a)                                 Individual Award Limitations. 
Notwithstanding any provision in the Plan to the contrary, and subject to
adjustment as provided in Article VIII, (i) the maximum aggregate number of
Shares with respect to all Options and Stock Appreciation Rights that may be
granted to any one person during any calendar year shall be 500,000; (ii) the
maximum aggregate number of Shares that may be earned with respect to all Awards
of Restricted Stock, Restricted Stock Units, Performance Shares and Other Stock
or Cash Based Awards that are intended to

 

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qualify as Performance-Based Compensation and are denominated in Shares that may
be granted to any one person during any calendar year shall be 500,000; and
(iii) the maximum aggregate amount that may become payable (in cash, Shares or
any combination thereof) pursuant to all Performance Bonus Awards that may be
granted to any one person during any calendar year shall be U.S. $10,000,000;
provided, however, that in no event will more than the Overall Share Limit be
granted to any one person during any calendar year of the Company with respect
to one or more Award denominated in Shares. To the extent required by
Section 162(m) of the Code, Shares subject to Awards that are canceled shall
continue to be counted against the award limits above. For purposes of this
Section 10.18(a), each Share subject to an Award (including a Full Value Award)
shall be counted as one Share against the specified limit.  Each of the
limitations in this Section, other than the Overall Share Limit, shall be
multiplied by two (2) with respect to Awards granted to a Participant during the
calendar year in which the Participant commences employment with the Company
and/or its Subsidiaries.

 

(b)                                 Committee Composition.  To the extent an
Award is intended to qualify as Performance-Based Compensation, the
Administrator with respect to such Awards shall be a Committee comprised solely
of two or more Directors, each of whom is intended to be an “outside director”
within the meaning of Section 162(m) of the Code; provided that a Committee
member’s failure to qualify as an “outside director” within the meaning of
Section 162(m) will not invalidate any Award granted by the Committee that is
otherwise validly granted under the Plan.

 

(c)                                  Performance-Based Compensation. The
Administrator, in its sole discretion, may determine at the time an Award is
granted or at any time thereafter whether such Award is intended to qualify as
Performance-Based Compensation.  For the avoidance of doubt, nothing herein
shall require the Administrator to structure any Awards in a manner intended to
constitute Performance-Based Compensation and the Administrator shall be free,
in its sole discretion, to grant Awards that are not intended to be
Performance-Based Compensation. Notwithstanding any other provision of the Plan
and except as otherwise determined by the Administrator, any Award that is
intended to qualify as Performance-Based Compensation shall be subject to any
additional limitations set forth in Section 162(m) of the Code that are
requirements for qualification as Performance-Based Compensation, and the Plan
and the applicable Award Agreement shall be deemed amended to the extent
necessary to conform to such requirements.  In addition, Awards of Restricted
Stock, Restricted Stock Units, Performance Shares, Performance Bonus Awards and
Other Stock or Cash Based Awards that are intended to qualify as
Performance-Based Compensation shall be subject to the following provisions,
which shall control over any conflicting provision in the Plan or any Award
Agreement:

 

(i)                                     To the extent necessary to comply with
the requirements of Section 162(m)(4)(C) of the Code, no later than 90 days
following the commencement of any performance period or any designated fiscal
period or period of service (or such earlier time as may be required under
Section 162(m) of the Code), the Administrator shall, in writing, (a) designate
the Participant to receive such Award, (b) select the Performance Criteria
applicable to the performance period, which Performance Criteria shall be
limited to the specific performance goals set forth in the definition of
Performance Criteria, (c) establish the performance goals (and any exclusions),
and amounts of such Awards, as applicable, which may be earned for such
performance period based on the Performance Criteria, and (d) specify the
relationship between Performance Criteria and the performance goals and the
amounts of such Awards, as applicable, to be earned by each Participant for such
performance period.

 

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(ii)                                  Following the completion of each
performance period, the Administrator shall certify in writing whether and the
extent to which the applicable performance goals have been achieved for such
performance period. In determining the amount earned under such Awards, the
Administrator shall have the right to reduce or eliminate (but not to increase)
the amount payable at a given level of performance to take into account
additional factors that the Administrator may deem relevant, including the
assessment of individual or corporate performance for the performance period.

 

(iii)                               Unless otherwise specified by the
Administrator at the time of grant, the Performance Criteria with respect to an
Award intended to be Performance-Based Compensation payable to a Participant
shall be determined on the basis of Applicable Accounting Standards.  For this
purpose, “Applicable Accounting Standards” means the U.S. Generally Accepted
Accounting Principles, International Financial Reporting Standards or other
accounting principles or standards applicable to the Company’s financial
statements under U.S. federal securities laws.

 

(iv)                              No adjustment or action described in
Article VIII or in any other provision of the Plan shall be authorized to the
extent that such adjustment or action would cause such Award to fail to so
qualify as Performance-Based Compensation, unless the Administrator determines
that the Award should not so qualify.

 

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