Exhibit 10.38

MEDTRONIC, INC.
2008 STOCK AWARD AND INCENTIVE PLAN

SECTION 1. Purpose; Definitions.

1.1.     Purpose.
The purpose of this Medtronic, Inc. 2008 Stock Award and Incentive Plan (this Plan) is to give the Company and its
Affiliates and Subsidiaries (each as defined below) a competitive advantage in
attracting, retaining, and motivating officers, employees, directors, and
consultants, to provide financial rewards that are intended to be deductible to
the maximum extent possible as performance-based compensation within the
meaning of Section 162(m) of the Code (as defined below), and to provide the
Company and its Subsidiaries and Affiliates with an incentive plan that gives
officers, employees, directors, and consultants financial incentives directly
linked to shareholder value. This Plan is intended to be a successor to the
Companys Amended and Restated 1994 Stock Award Plan, the Medtronic, Inc. 1998
Outside Director Stock Compensation Plan, the Medtronic, Inc. Executive
Incentive Plan, the Medtronic, Inc.  Kyphon Inc. 2002 Stock Plan, and the
Medtronic, Inc. 2003 Long-Term Incentive Plan, and to serve as the Companys
primary vehicle for equity compensation awards and long-term cash incentive
awards for employees, directors, and other service providers, as well as annual
bonus awards for the Companys executive officers. Following the date that this
Plan is approved by the Companys shareholders, no further equity compensation
awards shall be granted pursuant to any other Company plan (it being understood
that outstanding awards under such plans will continue to be settled pursuant
to the terms of such plans).

1.2.     Definitions.
Certain terms used herein have definitions given to them in the first place in
which they are used. In addition, for purposes of this Plan, the following
terms are defined as set forth below:

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| | (a)          Actmeans the Securities Exchange Act
 of 1934, as amended from time to time, any regulations promulgated
 thereunder, and any successor thereto.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
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| | (b)          Administratorshall have the meaning
 set forth in Section 2.2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
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| | (c)          Affiliatemeans a corporation or other
 entity controlled by, controlling, or under common control with, the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
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| | (d)          Applicable
Exchangemeans the New York
 Stock Exchange or such other securities exchange as may at the applicable
 time be the principal market for the Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
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| | (e)          Awardmeans an Option, Stock Appreciation
 Right, Restricted Stock, Restricted Stock Unit, Other Stock-Based Award, or
 Performance Award granted pursuant to the terms of this Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
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| | (f)          Award
Agreementmeans a written
 document or agreement setting forth the terms and conditions of a specific
 Award.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
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| | (g)          Beneficial
Ownershall have the
 meaning given in Rule 13d-3, promulgated pursuant to the Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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| | (h)          Boardmeans the Board of Directors of
 the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
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| | (i)          Causemeans, unless otherwise provided
 in an Award Agreement, (i) Cause as defined in any Individual Agreement to
 which the applicable Participant is a party and which is operative at the
 time in question, or (ii) if there is no such Individual Agreement, or if it
 does not define Cause: (A) commission by the Participant of a felony under
 federal law or the law of the state in which such action occurred, (B)
 failure on the part of the Participant to perform such Participants
 employment duties in any material respect, (C) the Participants prolonged
 absence from duty without the consent of the Company, (D) intentional
 engagement by the Participant in any activity that is in conflict with or
 adverse to the business or other interests of the Company, or (E) willful
 misconduct or malfeasance of duty which is reasonably determined to be
 detrimental to the Company. Notwithstanding the general rule of Section 2.3,
 following a Change of Control, any determination by the Committee as to
 whether Cause exists shall be subject to de novo review.
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| | (j)          Change
of Controlshall have the
 meaning set forth in Section 10.2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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| | (k)          Codemeans the Internal Revenue Code
 of 1986, as amended from time to time, and any successor thereto, regulations
 promulgated thereunder, and other relevant interpretive guidance issued by
 the Internal Revenue Service or the Treasury Department. Reference to any
 specific section of the Code shall be deemed to include such regulations and
 guidance, as well as any successor provision of the Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
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| | (l)          Committeemeans a committee or
 subcommittee of the Board, appointed from time to time by the Board, which
 committee or subcommittee shall consist of two or more non-employee
 directors, each of whom is intended to be, to the extent required by Rule
 16b-3, a non-employee director as defined in Rule 16b-3 and, to the extent
 required by Section 162(m) of the Code and any regulations promulgated
 thereunder, an outside director as defined under Section 162(m) of the
 Code. Initially, and unless and until otherwise determined by the Board,
 Committee means the Compensation Committee of the Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
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| | (m)          Common
Stockmeans common stock, par
 value $0.10 per share, of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (n)          Companymeans Medtronic, Inc., a
 Minnesota corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (o)          Disaffiliationmeans a Subsidiarys or
 Affiliates ceasing to be a Subsidiary or Affiliate for any reason
 (including, without limitation, as a result of a public offering, or a
 spinoff or sale by the Company, of the stock of the Subsidiary or Affiliate)
 or a sale of a division of the Company or its Affiliates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
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| | (p)          Eligible
Individualsmeans directors,
 officers, employees, and consultants of the Company or any Subsidiary or
 Affiliate, and prospective employees, officers and consultants, who have
 accepted offers of employment or consultancy from the Company or any
 Subsidiary or Affiliate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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| | (q)          Fair
Market Valuemeans, unless
 otherwise determined by the Committee, the closing price of a share of Common
 Stock on the Applicable Exchange on the date of measurement or, if Shares
 were not traded on the Applicable Exchange on such measurement date, on the
 next preceding date on which Shares were traded, all as reported by such
 source as the Committee may select. If the Common Stock is not listed on a
 national securities exchange, Fair Market Value shall be determined by the
 Committee in its good faith discretion, taking into account, to the extent
 appropriate, the requirements of Section 409A of the Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
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| | (r)          Free-Standing
SARshall have the
 meaning set forth in Section 5.3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (s)          Full-Value
Awardmeans any Award other
 than an Option, Stock Appreciation Right, or Performance Cash Award.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
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| | (t)          Good
Reasonmeans a Termination of
 Employment during the two-year period following a Change of Control by a Participant
 if (i) such Termination of Employment constitutes a termination for good
 reason or qualifies under any similar constructive termination provision in
 any Individual Agreement applicable to such Participant, or (ii) if the
 Participant is not party to any such Individual Agreement, or if such
 Individual Agreement does not contain such a provision, any Termination of
 Employment following the occurrence of: (A) an involuntary relocation that
 increases the Participants commute by more than 50 miles from the commute in
 effect immediately prior to the applicable Change of Control, (B) a material
 reduction in either the Participants base pay or in the Participants
 overall compensation opportunity from the levels in effect immediately prior
 to the applicable Change of Control or (C) a material reduction in the
 Participants authority, duties or responsibilities below the levels in
 effect immediately prior to the applicable Change of Control. Notwithstanding
 the foregoing, a Termination of Employment shall be deemed to be for Good
 Reason under clause (ii) of this Section 1.2(t) only if the Participant
 provides written notice to the Company of the existence of one or more of the
 conditions giving rise to Good Reason within 90 days of the initial existence
 of such condition, the Company fails to cure such condition during the 30-day
 period (the Cure Period) following its receipt of such notice, and the
 Participant terminates employment within 180 days following the conclusion of
 the Cure Period.
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| | (u)          Grant
Datemeans (i) the date on which
 the Committee (or its delegate, if applicable) takes action to select an
 Eligible Individual to receive a grant of an Award and determines the number                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

2

---

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
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| | of Shares to
 be subject to such Award, or (ii) such later date as is provided by the
 Committee (or its delegate, if applicable).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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| | (v)          Incentive
Stock Optionmeans any
 Option that is designated in the applicable Award Agreement as an incentive
 stock option within the meaning of Section 422 of the Code or any successor
 provision thereto, and that in fact qualifies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
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| | (w)          Individual
Agreementmeans an
 employment, consulting, severance, change of control severance, or similar
 agreement between a Participant and the Company or between the Participant
 and any of the Companys Subsidiaries or Affiliates. For purposes of this
 Plan, an Individual Agreement shall be considered operative during its
 term; provided,that an
 Individual Agreement under which severance or other substantive protections,
 compensation and/or benefits are provided only following a change of control
 or termination of employment in anticipation of a change of control shall not
 be considered operative until the occurrence of a Change of Control or
 Termination of Employment in anticipation of a Change of Control, as the case
 may be.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (x)          ISO
Eligible Employeemeans an
 employee of the Company, any subsidiary corporation (within the meaning of
 Section 424(f) of the Code), or parent corporation (within the meaning of
 Section 424(e) of the Code).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
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| | (y)          Nonqualified
Optionmeans any Option
 that either (i) is not designated as an Incentive Stock Option or (ii) is so
 designated but fails to qualify as such.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
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| | (z)          Other
Stock-Based Awardsmeans Awards
 of Common Stock and other Awards that are valued in whole or in part by
 reference to, or are otherwise based upon, Common Stock, including (without
 limitation) unrestricted stock, dividend equivalents, and convertible
 debentures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
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| | (aa)          Optionmeans an Award granted under
 Section 5.1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
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| | (bb)          Participantmeans an Eligible
 Individual to whom an Award is or has been granted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
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| | (cc)          Performance
Awardmeans a Performance
 Cash Award, an Award of Performance-Based Restricted Stock, or Performance
 Units, as each is defined herein.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
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| | (dd)          Performance-Based
Restricted Stockshall
 have the meaning given in Section 6.1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
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| | (ee)          Performance
Cash Awardshall have the
 meaning set forth in Section 9.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
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| | (ff)          Performance
Goalsmeans the
 performance goals established by the Committee in connection with the grant
 of a Performance Award. In the case of Qualified Performance-Based Awards,
 (i) such goals shall be based on the attainment of or changes in specified
 levels of one or more of the following measures: sales, net sales, revenue,
 revenue growth or product revenue growth, operating income (before or after
 taxes), return on invested capital, return on capital employed, pre-or
 after-tax income (before or after allocation or corporate overhead and
 bonus), net earnings, earnings per share, diluted earnings per share,
 consolidated earnings before or after taxes (including earnings before some
 or all of the following: interest, taxes, depreciation and amortization), net
 income, gross profit, gross margin, year-end cash, debt reductions, book
 value per share, return on equity, expense management, return on investment,
 improvements in capital structure, profitability of an identifiable business
 unit or product, maintenance or improvements of profit margins, stock price,
 market share, costs, cash flow, working capital, return on assets or net
 assets, asset turnover, inventory turnover, economic value added (economic
 profit) or equivalent metrics, comparison with various stock market indices,
 appreciation in and/or maintenance of share price, reductions in costs, regulatory
 achievements, implementation, completion or attainment of measurable
 objectives with respect to research, development, products or projects and
 recruiting or maintaining personnel, and total shareholder return; each as
 measured with respect to the Company or one or more Affiliates, Subsidiaries,
 divisions, business units, or business segments of the Company, either in
 absolute terms or relative to the performance of one or more other companies
 or an index covering multiple companies; (ii) such Performance Goals shall be
 set by the Committee in the time period prescribed by Section 162(m) of the
 Code and the regulations promulgated thereunder; and (iii) such Performance
 Goals shall be objective, preestablished performance goals within the meaning
 of Section 162(m) of the Code and the regulations promulgated thereunder.

3

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| | (gg)         Performance
Periodmeans that period
 established by the Committee at the time any Performance Award is granted or
 at any time thereafter during which any Performance Goal specified by the
 Committee with respect to such Award is to be measured.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
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| | (hh)         Performance
Unitsshall have the
 meaning given in Section 7.1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
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| | (ii)           Planmeans this Medtronic, Inc. 2008 Stock
 Award and Incentive Plan, as set forth herein and as hereafter amended from
 time to time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (jj)           Qualified
Performance-Based Awardmeans
 an Award intended to qualify for the Section 162(m) Exemption, as provided in
 Section 11.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (kk)         Replaced
Awardshall have the meaning
 given in Section 10.1.          (ll)           Replacement
 Awardshall have the meaning given in Section 10.1.          (mm)       Restricted Stockshall have the
 meaning given in Section 6.          (nn)          Restricted
 Stock Unitsshall have the meaning given in Section 7.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (oo)          Restriction
Periodmeans, with respect
 to Restricted Stock and Restricted Stock Units, the period commencing with
 the Grant Date and ending upon the expiration of the applicable vesting
 conditions or the achievement of the applicable Performance Goals (it being
 understood that the Committee may provide that restrictions shall lapse with
 respect to portions of the applicable Award during the Restriction Period).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (pp)          Section
162(m) Exemptionmeans the
 exemption from the limitation on deductibility imposed by Section 162(m) of
 the Code that is set forth in Section 162(m)(4)(C) of the Code.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (qq)         Sharemeans a share of Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (rr)          Stock
Appreciation Rightor SARshall have the meaning set forth
 in Section 5.3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (ss)          Subsidiarymeans any corporation,
 partnership, joint venture, limited liability company, or other entity during
 any period in which at least a 50% voting or profits interest is owned,
 directly or indirectly, by the Company or any successor to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (tt)          Substitute
Awardmeans any Award
 granted in assumption of, or in substitution for, an award of a company or
 business (that is not, prior to the applicable transaction, a Subsidiary or
 Affiliate of the Company) acquired by the Company or a Subsidiary or
 Affiliate or with which the Company or a Subsidiary or Affiliate combines.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (uu)         Tandem
SARshall have the meaning set
 forth in Section 5.3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (vv)         Ten
Percent Shareholdermeans a person
 owning stock possessing more than 10% of the total combined voting power of
 all classes of stock of the Company, any subsidiary corporation (within the
 meaning of Section 424(f) of the Code), or parent corporation (within the
 meaning of Section 424(e) of the Code).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (ww)       Termmeans the maximum period during
 which an Option or Stock Appreciation Right may remain outstanding, subject
 to earlier termination upon Termination of Employment or otherwise, as
 specified in the applicable Award Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (xx)         Termination
of Employmentmeans,
 unless otherwise provided in the Award Agreement, the termination of the
 applicable Participants employment with, or performance of services for, the
 Company and any of its Subsidiaries or Affiliates. Unless otherwise
 determined by the Committee, a Participant employed by, or performing
 services for, a Subsidiary or an Affiliate or a division of the Company or
 its Affiliates shall be deemed to incur a Termination of Employment if, as a
 result of a Disaffiliation, such Subsidiary, Affiliate, or division ceases to
 be a Subsidiary, Affiliate or division, as the case may be, and the
 Participant does not immediately become an employee of, or service provider
 for, the Company or another Subsidiary or Affiliate. Temporary absences from
 employment because of illness, vacation, or leave of absence, and transfers
 among the Company and its Subsidiaries and Affiliates, shall not be
 considered Terminations of Employment. Notwithstanding the foregoing, with
 respect to any Award that constitutes nonqualified deferred compensation
 within the meaning of Section 409A of the Code, Termination of Employment
 shall mean a separation from service as defined under Section 409A of the
 Code.

4

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SECTION 2. Administration.

2.1.     Committee.
The Plan shall be administered by the Committee or a duly designated
Administrator, as defined herein. The Committee shall, subject to Section 11,
have plenary authority to grant Awards to Eligible Individuals pursuant to the
terms of the Plan. Among other things, the Committee shall have the authority,
subject to the terms and conditions of the Plan:

| |                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)          To
 select the Eligible Individuals to whom Awards may be granted;                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                          
| | (b)          To
 determine whether and to what extent Options, Stock Appreciation Rights,
 Restricted Stock, Restricted Stock Units, Other Stock-Based Awards, or
 Performance Awards, or any combination thereof, are to be granted hereunder;                          
| |                                                                                                                                                                                                                                                                          
| | (c)          To
 determine the number of Shares to be covered by each Award granted under the
 Plan;                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                          
| | (d)          To
 determine the terms and conditions of each Award granted hereunder, based on
 such factors as the Committee shall determine;                                                                                                                            
| |                                                                                                                                                                                                                                                                          
| | (e)          Subject
 to Section 12, to modify, amend, or adjust the terms and conditions of any
 Award;                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                          
| | (f)          To
 adopt, alter, or repeal such administrative rules, guidelines, and practices
 governing the Plan as the Committee shall from time to time deem advisable;                                                                                               
| |                                                                                                                                                                                                                                                                          
| | (g)          To
 interpret the terms and provisions of the Plan and any Award issued under the
 Plan (and any agreement relating thereto);                                                                                                                               
| |                                                                                                                                                                                                                                                                          
| | (h)          Subject
 to Sections 11 and 12, to accelerate the vesting or lapse of restrictions of
 any outstanding Award, based in each case on such considerations as the
 Committee in its sole discretion may determine;                                             
| |                                                                                                                                                                                                                                                                          
| | (i)          To
 decide all other matters that must be determined in connection with an Award;                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                          
| | (j)          To
 determine whether, to what extent, and under what circumstances cash, Shares,
 and other property and other amounts payable with respect to an Award under
 this Plan shall be deferred either automatically or at the election of the
 Participant; and
| |                                                                                                                                                                                                                                                                          
| | (k)          To
 otherwise administer the Plan.                                                                                                                                                                                                                          

2.2.     Committee
Procedures; Board Authority. The Committee shall exercise its
authority under the Plan as follows:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)          The
 Committee may act only with the assent of a majority of its members then in
 office, except that the Committee may, except to the extent prohibited by
 applicable law or the listing standards of the Applicable Exchange and
 subject to Section 11.3, allocate all or any portion of its responsibilities
 and powers to any one or more of its members and may delegate all or any part
 of its responsibilities and powers to any person or persons selected by it
 (the Administrator).
 Notwithstanding the foregoing, the Committee may not so delegate any
 responsibility or power to the extent that such delegation would cause a
 Qualified Performance-Based Award hereunder not to qualify for the Section
 162(m) Exemption, or make any Award hereunder subject to (and not exempt
 from) the short-swing recovery rules of Section 16(b) of the Act. Without
 limiting the generality of the foregoing, the Committee may not delegate its
 responsibilities and powers to grant, establish the terms and conditions of,
 and otherwise administer Qualified Performance-Based Awards, nor its
 responsibilities and powers to grant and establish the terms and conditions
 of Awards to Participants who are subject to Section 16(b) (as defined in
 Section 11.4 below).
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (b)          Subject
 to Section 11.3, any authority granted to the Committee may also be exercised
 by the full Board. To the extent that any permitted action taken by the Board
 conflicts with action taken by the Committee, the Board action shall control.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

2.3.     Discretion of
Committee. Subject to Section 1.2(i), any determination made by the
Committee or by the Administrator under the provisions of the Plan with respect
to any Award shall be made in the sole discretion of the Committee or the
Administrator at the time of the grant of the Award or, unless in contravention
of any express term of the Plan, at any time thereafter. All decisions made by
the Committee

5

---

or the
Administrator shall be final and binding on all persons, including the Company,
Participants, and Eligible Individuals.

2.4.     Award Agreements.
Unless otherwise determined by the Committee, the terms and conditions of each
Award, as determined by the Committee, shall be set forth in a written Award
Agreement. Award Agreements may be amended only in accordance with Section 12
hereof.

SECTION 3. Common Stock Subject to Plan.

3.1.     Plan Maximums.
Subject to adjustment as provided in Section 3.4, (a) the maximum number of
Shares that may be issued pursuant to Awards under the Plan shall be
50,000,000, and (b) the maximum number of Shares that may be issued pursuant to
Options intended to be Incentive Stock Options shall be 50,000,000. Shares
subject to an Award under the Plan may be authorized and unissued Shares or may
be treasury shares.

3.2.     Rules for
Calculating Shares Issued. For purposes of the limits set forth in
Section 3.1 (but not for purposes of the limits set forth in Section 3.3), each
Share that is subject to a Full-Value Award shall be counted as 3.0 Shares. To
the extent that any Award under this Plan is forfeited, or any Option and
related Tandem SAR or any Free-Standing SAR granted under this Plan terminates,
expires, or lapses without being exercised, or any Award is settled for cash,
the Shares subject to such Awards not delivered as a result thereof shall
thereupon become available (in the case of Full-Value Awards, based upon the
share-counting ratio set forth in the first sentence of this Section 3.2) for
Awards under the Plan. If the exercise price of any Option or the tax
withholding obligations relating to any Award are satisfied by delivering
Shares (either actually or through attestation) to the Company, or if a SAR is
settled for Shares, the gross number of Shares (in the case of Full-Value
Awards, based upon the share-counting ratio set forth in the first sentence of
this Section 3.2) subject to the Award shall nonetheless be deemed to have been
issued for purposes of Section 3.1. In addition, in the case of any Substitute
Award, Shares delivered or deliverable in connection with such Substitute Award
shall not be deemed granted or issued under the Plan for purposes of Sections
3.1 or 3.3.

3.3.     Individual
Limits.
Subject to adjustment as provided in Section 3.4, no Participant may be granted
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Other Stock-Based Awards, Performance Awards, or any combination thereof
relating to more than 2,000,000 Shares under the Plan during any fiscal year.
In addition to the foregoing, the maximum dollar value that may be paid to any
Participant in Qualified Performance-Based Awards denominated in cash in any
fiscal year shall be $10,000,000, including any amounts earned during such
fiscal year and deferred. If an Award is cancelled, the cancelled Award shall
continue to be counted towards the limitations set forth in this Section 3.3.

3.4.     Adjustment
Provision. The Committee shall have authority to make adjustments
under the Plan as provided below:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)          In
 the event of a merger, consolidation, acquisition of property or shares,
 stock rights offering, liquidation, separation, spinoff, Disaffiliation,
 extraordinary dividend of cash or other property, or similar event affecting
 the Company or any of its Subsidiaries (a Corporate
 Transaction), the Committee, or the Board may in its discretion
 make such substitutions or adjustments as it deems appropriate and equitable
 to (i) the aggregate number and kind of Shares or other securities reserved
 for issuance and delivery under the Plan, (ii) the various maximum share
 limitations set forth in Sections 3.1 and 3.3, (iii) the number and kind of
 Shares or other securities subject to outstanding Awards, and (iv) the
 exercise price of outstanding Awards.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (b)          In
 the event of a stock dividend, stock split, reverse stock split,
 reorganization, share combination, recapitalization, or similar event
 affecting the capital structure of the Company, the Committee or the Board
 shall make such substitutions or adjustments as it deems appropriate and
 equitable to (i) the aggregate number and kind of Shares or other securities
 reserved for issuance and delivery under the Plan, (ii) the various share
 maximum limitations set forth in Sections 3.1 and 3.3, (iii) the number and
 kind of Shares or other securities subject to outstanding Awards, and (iv)
 the exercise price of outstanding Awards.                                                                                                                               

6

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (c)          In the
 case of Corporate Transactions, such adjustments may include, without
 limitation, (i) the cancellation of outstanding Awards in exchange for
 payments of cash, property, or a combination thereof having an aggregate
 value equal to the value of such Awards, as determined by the Committee or
 the Board in its sole discretion (it being understood that, in the case of a
 Corporate Transaction with respect to which shareholders of Common Stock
 receive consideration other than publicly traded equity securities of the
 Surviving Corporation (as defined below in Section 10.2), any such
 determination by the Committee that the value of an Option or Stock
 Appreciation Right shall for this purpose be deemed to equal the excess, if
 any, of the value of the consideration being paid for each Share pursuant to
 such Corporate Transaction over the exercise price of such Option or Stock
 Appreciation Right shall conclusively be deemed valid), (ii) the substitution
 of other property (including, without limitation, cash or other securities of
 the Company and securities of entities other than the Company) for the Shares
 subject to outstanding Awards, and (iii) in connection with a Disaffiliation,
 arranging for the assumption of Awards, or replacement of Awards with new
 awards based on other property or other securities (including, without
 limitation, other securities of the Company and securities of entities other
 than the Company), by the affected Subsidiary, Affiliate, or division of the
 Company or by the entity that controls such Subsidiary, Affiliate, or
 division of the Company following such Corporate Transaction (as well as any
 corresponding adjustments to Awards that remain based upon Company
 securities).
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (d)          The
 Committee may adjust the Performance Goals applicable to any Awards to
 reflect any unusual or non-recurring events and other extraordinary items as
 approved by the Committee, including without limitation certain litigation
 and in-process research and development, impact of charges for
 restructurings, discontinued operations, and the cumulative effects of
 accounting or tax changes, each as defined by generally accepted accounting
 principles, under rules promulgated by the Securities and Exchange Commission,
 or as identified in the Companys financial statements, notes to the
 financial statements, managements discussion and analysis, or other public
 filings, providedthat (i) in
 the case of Performance Goals applicable to any Qualified Performance-Based
 Award, such adjustment does not cause an Award to fail to qualify for the
 Section 162(m) Exemption, and (ii) the determination whether any such
 adjustments will apply to a Qualified Performance-Based Award is made at such
 time and in such a manner as is necessary to ensure that such Qualified
 Performance Based Award does not fail to qualify for the Section 162(m)
 Exemption.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

3.5.     Section 409A of the
Code. Notwithstanding the foregoing: (a) any adjustments made
pursuant to Section 3.4 to Awards that are considered deferred compensation
within the meaning of Section 409A of the Code shall be made in compliance with
the requirements of Section 409A of the Code and (b) any adjustments made
pursuant to Section 3.4 to Awards that are not considered deferred
compensation subject to Section 409A of the Code shall be made in such a
manner as to ensure that, after such adjustment, the Awards either (i) continue
not to be subject to Section 409A of the Code, or (ii) comply with the
requirements of Section 409A of the Code, and (c) in any event, the Board, the
Committee, and the Administrator shall not have any authority to make any
adjustments pursuant to Section 3.4 to the extent that the existence of such
authority would cause an Award that is not intended to be subject to Section
409A of the Code at the Grant Date to be subject thereto.

SECTION 4. Eligibility.

4.1.     Eligible
Individuals; Incentive Stock Options. Awards may be granted under
the Plan to Eligible Individuals; provided,that
Incentive Stock Options may be granted only to employees of the Company and its
Subsidiaries or parent corporation (within the meaning of Section 424(f) of the
Code).

SECTION 5. Options and Stock Appreciation
Rights.

5.1     Types of Options.
Options may be of two types: Incentive Stock Options and Nonqualified Options.
The Award Agreement for an Option shall indicate whether the Option is intended
to be an Incentive Stock Option or a Nonqualified Option; provided, that any
Option that is designated as an Incentive Stock Option but fails to meet the
requirements therefor (as described in Section 5.2 or otherwise), and any
Option that is not expressly designated as intended to be an Incentive Stock
Option shall be treated as a Nonqualified Option.

7

---

5.2.     Incentive Stock
Option Limitations. To the extent that the aggregate Fair Market
Value, determined at the time of grant, of the Shares with respect to which
Incentive Stock Options are exercisable for the first time during any calendar
year under the Plan or any other stock option plan of the Company, any
subsidiary corporation (within the meaning of Section 424(f) of the Code), or
parent corporation (within the meaning of Section 424(e) of the Code) exceeds
$100,000, such Options shall be deemed Nonqualified Options. If an ISO Eligible
Employee does not remain employed by the Company, any subsidiary corporation
(within the meaning of Section 424(f) of the Code), or parent corporation
(within the meaning of Section 424(e) of the Code) at all times from the time
an Incentive Stock Option is granted until 3 months prior to the date of
exercise thereof (or such other period as required by applicable law), such
Option shall be treated as a Nonqualified Stock Option. Should any provision of
the Plan not be necessary in order for any Options to qualify as Incentive
Stock Options, or should any additional provisions be required, the Committee
may amend the Plan accordingly, without the necessity of obtaining the approval
of the shareholders of the Company.

5.3.     Types and Nature of
Stock Appreciation Rights. Stock Appreciation Rights may be Tandem SARs, which are granted in
conjunction with an Option, or Free-Standing
SARs, which are not granted in conjunction with an Option. Upon the
exercise of a Stock Appreciation Right, the Participant shall be entitled to
receive an amount in cash, Shares, or both, in value equal to the product of
(a) the excess of the Fair Market Value of one Share over the exercise price of
the applicable Stock Appreciation Right, multiplied by (b) the number of Shares
in respect of which the Stock Appreciation Right has been exercised. The
applicable Award Agreement shall specify whether such payment is to be made in
cash or Common Stock or both, or shall reserve to the Committee or the
Participant the right to make that determination prior to or upon the exercise
of the Stock Appreciation Right.

5.4.     Tandem SARs.
A Tandem SAR may be granted at the Grant Date of the related Option. A Tandem
SAR shall be exercisable only at such time or times and to the extent that the
related Option is exercisable in accordance with the provisions of this Section
5, and shall have the same exercise price as the related Option. A Tandem SAR
shall terminate or be forfeited upon the exercise or forfeiture of the related
Option, and the related Option shall terminate or be forfeited upon the
exercise or forfeiture of the Tandem SAR.

5.5.     Exercise Price.
Except in respect of Replacement Awards or Substitute Awards, the exercise
price per Share subject to an Option or Free-Standing SAR shall be determined
by the Committee and set forth in the applicable Award Agreement, and shall not
be less than the Fair Market Value of a share of the Common Stock on the
applicable Grant Date; provided, that if an Incentive Stock Option is granted
to a Ten Percent Shareholder, the exercise price shall be no less than 110% of
the Fair Market Value of the Stock on the applicable Grant Date.

5.6.     Term. The
Term of each Option and each Free-Standing SAR shall be fixed by the Committee,
but shall not exceed 10 years from the Grant Date.

5.7     Vesting and
Exercisability. Except as otherwise provided herein, Options and
Free-Standing SARs shall be exercisable at such time or times and subject to
such terms and conditions as shall be determined by the Committee. Subject to
the terms of the Plan and the applicable Award Agreement, in no event shall the
vesting schedule of an Option or Free-Standing SAR provide that such Option or
Free-Standing SAR vest prior to the first anniversary of the date of grant, provided, however,that up to five percent
of the Shares available for grant as Options or Free-Standing SARs may be
issued without regard to the foregoing provision.

5.8     Method of
Exercise.
Subject to the provisions of this Section 5, Options and Free-Standing SARs may
be exercised, in whole or in part, at any time during the applicable Term by
giving written notice of exercise to the Company specifying the number of
Shares as to which the Option or Free-Standing SAR is being exercised. In the
case of the exercise of an Option, such notice shall be accompanied by payment
in full of the purchase price (which shall equal the product of such number of
shares multiplied by the applicable exercise price) by certified or bank check
or such other instrument as the Company may accept. If approved by the
Committee (which approval may be set forth in the applicable Award Agreement or
otherwise), payment, in full or in part, may also be made as follows:

| |                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)          Payment
 may be made in the form of Shares (by delivery of such shares or by
 attestation) of the same class as the Common Stock subject to the Option
 already owned by the Participant (based

8

---

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | on the Fair
 Market Value of the Common Stock on the date the Option is exercised); providedthat, in the case of an
 Incentive Stock Option, the right to make a payment in the form of already
 owned Shares of the same class as the Common Stock subject to the Option may
 be authorized only at the time the Option is granted.                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (b)          To
 the extent permitted by applicable law, payment may be made by delivering a
 properly executed exercise notice to the Company, together with a copy of
 irrevocable instructions to a broker to deliver promptly to the Company the
 amount of sale or loan proceeds necessary to pay the purchase price, and, if
 requested, the amount of any federal, state, local, or foreign withholding
 taxes. To facilitate the foregoing, the Company may, to the extent permitted
 by applicable law, enter into agreements for coordinated procedures with one
 or more brokerage firms.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (c)          Payment
 may be made by instructing the Company to withhold a number of Shares having
 a Fair Market Value (based on the Fair Market Value of the Common Stock on
 the date the applicable Option is exercised) equal to the product of (i) the
 exercise price multiplied by (ii) the number of Shares in respect of which the
 Option shall have been exercised.                                                                                                                                                                                                                     

5.9.     Delivery; Rights of
Shareholders. No Shares shall be delivered pursuant to the exercise
of an Option until the exercise price therefor has been fully paid and
applicable taxes have been withheld. The applicable Participant shall have all
of the rights of a shareholder of the Company holding the class or series of
Common Stock that is subject to the Option or Stock Appreciation Right
(including, if applicable, the right to vote the applicable Shares and the
right to receive dividends), when (a) the Company has received a written notice
from the Participant of exercise that complies with all procedures established
under this Plan for effective exercise, including, without limitation,
completion and delivery of all required forms, (b) the Participant has, if
requested, given the representation described in Section 15.1, and (c) in the
case of an Option, the Participant has paid in full for such Shares.

5.10.     Nontransferability
of Options and Stock Appreciation Rights. No Option or Free-Standing
SAR shall be transferable by a Participant other than, for no value or
consideration, (a) by will or by the laws of descent and distribution, or (b)
in the case of a Nonqualified Option or Free-Standing SAR, as otherwise
expressly permitted by the Committee including, if so permitted, pursuant to a
transfer to the Participants family members, whether directly or indirectly or
by means of a trust or partnership or otherwise. For purposes of this Plan, unless
otherwise determined by the Committee, family member shall have the meaning
given to such term in General Instructions A.1(a)(5) to Form S-8 under the
Securities Act of 1933, as amended, and any successor thereto. A Tandem SAR
shall be transferable only with the related Option and only to the extent the
Option is transferable pursuant to the preceding sentence. Any Option or Stock
Appreciation Right shall be exercisable, subject to the terms of this Plan,
only by the applicable Participant, the guardian or legal representative of
such Participant, or any person to whom such Option or Stock Appreciation Right
is permissibly transferred pursuant to this Section 5.10, it being understood
that the term Participant includes such guardian, legal representative and
other transferee; provided,that
the term Termination of Employment shall continue to refer to the Termination
of Employment of the original Participant.

5.11.     No Dividend
Equivalents. No award of dividend equivalents may be granted with
respect to any Option or SAR granted under this Plan.

5.12.     No Repricing.
Notwithstanding any other provision of this Plan, in no event may any Option or
SAR be amended, other than pursuant to Section 3.4, to decrease the exercise
price thereof, be cancelled in conjunction with the grant of any new Option or
SAR with a lower exercise price, or otherwise be subject to any action that
would be treated, for accounting purposes, as a repricing of such Option or
SAR, unless such amendment, cancellation, or action is approved by the
Companys shareholders.

SECTION 6. Restricted Stock (Including
Performance-Based Restricted Stock).

6.1.     Nature of Award;
Certificates. Shares of Restricted Stock are actual Shares issued to
a Participant, and shall be evidenced in such manner as the Committee may deem
appropriate, including book-entry registration or issuance of one or more stock
certificates. Performance-Based Restricted
Stockis an Award of Shares of Restricted Stock, the vesting of
which is subject to the attainment of Performance Goals. In the event that the
Committee grants Shares of Performance-Based Restricted Stock, the

9

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performance
levels to be achieved for each Performance Period and the amount of the Award
to be distributed shall be conclusively determined by the Committee. Any
certificate issued in respect of Shares of Restricted Stock shall be registered
in the name of the applicable Participant and, in the case of Restricted Stock,
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award. The Committee may require that the
certificates evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed and that, as a condition of any Award of
Restricted Stock, the applicable Participant shall have delivered a stock
power, endorsed in blank, relating to the Common Stock covered by such Award.

6.2.     Terms and
Conditions. Shares of Restricted Stock shall be subject to the
following terms and conditions:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)          The
 Committee shall, prior to or at the time of grant, condition the vesting or
 transferability of an Award of Restricted Stock upon the continued service of
 the applicable Participant or the attainment of Performance Goals, or the
 attainment of Performance Goals and the continued service of the applicable
 Participant. In the event that the Committee conditions the grant or vesting
 of an Award of Restricted Stock upon the attainment of Performance Goals (or
 the attainment of Performance Goals and the continued service of the
 applicable Participant), the Committee may, prior to or at the time of grant,
 designate such an Award as a Qualified Performance-Based Award. The
 conditions for grant, vesting, or transferability and the other provisions of
 Restricted Stock Awards (including without limitation any Performance Goals
 applicable to Performance-Based Restricted Stock) need not be the same with
 respect to each Participant.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (b)          Subject
 to the terms of the Plan and the applicable Award Agreement, any Award of
 Restricted Stock shall be subject to a vesting period of at least three years
 following the date of grant, providedthat
 vesting during a period of at least one year following the date of grant is
 permissible if vesting is conditioned upon the achievement of Performance
 Goals, and provided,further,
 that an Award may vest in part on a pro rata basis (as specified in the
 applicable Award Agreement) prior to the expiration of any vesting period,
 and provided,further, that up
 to five percent of Shares available for grant as Restricted Stock (together
 with all other Shares available for grant as Full-Value Awards) may be issued
 without regard to the foregoing requirements, and the Committee may
 accelerate the vesting and lapse any restrictions with respect to Restricted
 Stock granted in respect of such five percent of Shares.                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (c)          Subject
 to the provisions of the Plan and the applicable Award Agreement, during the
 Restriction Period, the Participant shall not be permitted to sell, assign,
 transfer, pledge, or otherwise encumber Shares of Restricted Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (d)          If
 any applicable Performance Goals are satisfied and the Restriction Period
 expires without a prior forfeiture of the Shares of Restricted Stock for
 which legended certificates have been issued, either (i) unlegended
 certificates for such Shares shall be delivered to the Participant upon
 surrender of the legended certificates, or (ii) such Shares shall be
 evidenced in such manner as the Committee may deem appropriate, including
 book-entry registration.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

6.3.     Rights of
Shareholder. Except as provided in the applicable Award Agreement,
the applicable Participant shall have, with respect to Shares of Restricted
Stock, all of the rights of a shareholder of the Company holding the class or
series of Common Stock that is the subject of the Restricted Stock, including,
if applicable, the right to vote the Shares and the right to receive any
dividends and other distributions.

SECTION 7. Restricted Stock Units (Including
Performance Units).

7.1.     Nature of Award.
Restricted Stock Units are Awards denominated in Shares that will be settled,
subject to the terms and conditions of the applicable Award Agreement, (a) in
cash, based upon the Fair Market Value of a specified number of Shares, (b) in
Shares, or (c) a combination thereof. Performance
Unitsare Restricted Stock Units, the vesting of which are subject
to the attainment of Performance Goals. In the event that the Committee grants
Performance Units, the performance levels to be achieved for each Performance
Period and the amount of the Award to be distributed shall be conclusively
determined by the Committee.

10

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7.2.     Terms
and Conditions.Restricted Stock Units shall be
subject to the following terms and conditions:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)          The
 Committee shall, prior to or at the time of grant, condition the grant,
 vesting, or transferability of Restricted Stock Units upon the continued
 service of the applicable Participant or the attainment of Performance Goals,
 or the attainment of Performance Goals and the continued service of the
 applicable Participant. In the event that the Committee conditions the grant
 or vesting of Restricted Stock Units upon the attainment of Performance Goals
 (or the attainment of Performance Goals and the continued service of the
 applicable Participant), the Committee may, prior to or at the time of grant,
 designate such an Award as a Qualified Performance-Based Award. The
 conditions for grant, vesting or transferability and the other provisions of
 Restricted Stock Units (including without limitation any Performance Goals
 applicable to Performance Units) need not be the same with respect to each
 Participant. An Award of Restricted Stock Units shall be settled as and when
 the Restricted Stock Units vest or at a later time specified by the Committee
 or in accordance with an election of the Participant, if the Committee so permits.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (b)          Subject
 to the terms of the Plan and the applicable Award Agreement, any Restricted
 Stock Units shall be subject to a vesting period of at least three years
 following the date of grant, providedthat
 vesting during a period of at least one year following the date of grant is
 permissible if vesting is conditioned upon the achievement of Performance
 Goals, and provided,further,
 that Restricted Stock Units may vest in part on a pro rata basis (as
 specified in the applicable Award Agreement) prior to the expiration of any
 vesting period, and provided,further,
 that up to five percent of Shares available for grant as Restricted Stock
 Units (together with all other Shares available for grant as Full-Value
 Awards) may be granted without regard to the foregoing requirements, and the
 Committee may accelerate the vesting and lapse any restrictions with respect
 to Restricted Stock Units granted in respect of such five percent of Shares.                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (c)          Subject
 to the provisions of the Plan and the applicable Award Agreement, during the
 period, if any, set by the Committee, during the Restriction Period the
 Participant shall not be permitted to sell, assign, transfer, pledge, or
 otherwise encumber Restricted Stock Units.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (d)          The
 Award Agreement for Restricted Stock Units may specify whether, to what
 extent, and on what terms and conditions the applicable Participant shall be
 entitled to receive current or deferred payments of cash, Shares, or other
 property corresponding to the dividends payable on the Companys Stock
 (subject to Section 15.5 below).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

SECTION 8.     Other
Stock-Based Awards.Other Stock-Based Awards may be
granted under the Plan, providedthat
any Other Stock-Based Awards that are Awards of Common Stock that are
unrestricted shall only be granted in lieu of other compensation due and
payable to the Participant. Subject to the terms of the Plan and the applicable
Award Agreement, any Other Stock-Based Award that is a Full-Value Award (and is
not an Award of unrestricted stock) shall be subject to a vesting period of at
least three years following the Grant Date; providedthat a vesting period of at least one year is permissible if vesting
is conditioned upon the achievement of Performance Goals, and provided,further, that any Other
Stock-Based Award may vest in part on a pro rata basis prior to the expiration
of any vesting period, and provided,further,
that up to five percent of Shares available for grant as Other Stock
Based-Awards that are Full-Value Awards (together with all other Shares
available for grant as Full-Value Awards) may be granted with a Restriction
Period of at least one year following the Grant Date without regard to the
foregoing requirements.

SECTION
9.     Performance Cash Awards.Performance
Cash Awards may be issued under the Plan, for no cash consideration or for such
minimum consideration as may be required by applicable law, either alone or in
addition to other Awards. A Performance Cash Award is an Award entitling the
recipient to payment of a cash amount subject to the attainment of Performance
Goals. The Committee may, in connection with the grant of a Performance Cash
Award, designate the Award as a Qualified Performance-Based Award. The
conditions for grant or vesting and the other provisions of a Performance Cash
Award (including without limitation any applicable Performance Goals) need not
be the same with respect to each Participant. Performance Cash Awards may be
paid in cash, Shares, other property or any combination thereof, in the

11

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sole
discretion of the Committee as set forth in the applicable Award Agreement. The
performance levels to be achieved for each Performance Period and the amount of
the Award to be distributed shall be conclusively determined by the Committee.

SECTION
10.     Change of Control Provisions.

10.1.     Impact
of Event.Notwithstanding any other provision of this
Plan to the contrary, the provisions of this Section 10 shall apply in the
event of a Change of Control, unless otherwise provided in the applicable Award
Agreement.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)          Upon
 a Change of Control, (i) all then-outstanding Options and SARs shall become
 fully vested and exercisable, and any Full-Value Award (other than a
 Performance Award) shall vest in full, be free of restrictions, and be deemed
 to be earned and immediately payable in an amount equal to the full value of
 such Award, except in each case to the extent that another Award meeting the
 requirements of Section 10.1(b) (any award meeting the requirements of
 Section 10.1(b), a Replacement Award)
 is provided to the Participant pursuant to Section 3.4 to replace such Award
 (any award intended to be replaced by a Replacement Award, a Replaced Award), and (ii) any
 Performance Award that is not replaced by a Replacement Award shall be deemed
 to be earned and immediately payable in an amount equal to the full value of
 such Performance Award (with all applicable Performance Goals deemed achieved
 at the greater of (x) the applicable target level and (y) the level of
 achievement of the Performance Goals for the Award as determined by the
 Committee not later than the date of the Change of Control, taking into
 account performance through the latest date preceding the Change of Control
 as to which performance can, as a practical matter, be determined (but not
 later than the end of the Performance Period)) multiplied by a fraction, the
 numerator of which is the number of days during the applicable Performance
 Period before the date of the Change of Control, and the denominator of which
 is the number of days in the applicable Performance Period; provided,however, that such fraction
 shall be equal to one in the event that the applicable Performance Goals in
 respect of such Performance Award have been fully achieved as of the date of
 such Change of Control.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (b)          An
 Award shall meet the conditions of this Section 10.1(b) (and hence qualify as
 a Replacement Award) if: (i) it is of the same type as the Replaced Award;
 (ii) it has a value at least equal to the value of the Replaced Award as of
 the date of the Change of Control; (iii) if the underlying Replaced Award was
 an equity-based award, it relates to publicly traded equity securities of the
 Company or the Surviving Corporation following the Change of Control; and
 (iv) its other terms and conditions are not less favorable to the Participant
 than the terms and conditions of the Replaced Award (including the provisions
 that would apply in the event of a subsequent Change of Control) as of the
 date of the Change of Control. Without limiting the generality of the
 foregoing, a Replacement Award may take the form of a continuation of the
 applicable Replaced Award if the requirements of the preceding sentence are
 satisfied. The determination whether the conditions of this Section 10.1(b)
 are satisfied shall be made by the Committee, as constituted immediately
 before the Change of Control, in its sole discretion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (c)          Upon
 a Termination of Employment of a Participant occurring in connection with or
 during the two years following the date of a Change of Control, by the
 Company other than for Cause or by the Participant for Good Reason, (i) all
 Replacement Awards held by such Participant shall vest in full, be free of
 restrictions, and be deemed to be earned and immediately payable in an amount
 equal to the full value of such Replacement Award, and (ii) all Options and
 SARs held by the Participant immediately before the Termination of Employment
 that the Participant held as of the date of the Change of Control or that
 constitute Replacement Awards shall remain exercisable until the earlier of
 (1) the third anniversary of the Change of Control and (2) the expiration of
 the stated Term of such Option or SAR; provided,that if the applicable Award Agreement provides for a longer
 period of exercisability, that provision shall control.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

10.2.     Definition
of Change of Control.For purposes of the Plan, a Change of Controlshall mean any of the
following events:

| |                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)          Any
 individual, entity or group (within the meaning of Section 13(d)(3) or
 14(d)(2) of the Act) (a Person)
 becomes the Beneficial Owner (within the meaning of Rule 13d-3 promulgated

12

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | under the
 Act) or 30% or more of either (i) the then-outstanding shares of Common Stock
 of the Company (the Outstanding Company
 Common Stock) or (ii) the combined voting power of the
 then-outstanding voting securities of the Company entitled to vote generally
 in the election of directors (the Outstanding
 Company Voting Securities); providedthat, for purposes of this subsection (a), the following
 acquisitions shall not constitute a Change of Control: (1) an acquisition
 directly from the Company; (2) an acquisition by the Company or a Subsidiary;
 (3) an acquisition by any employee benefit plan (or related trust) sponsored
 or maintained by the Company or any Subsidiary; (4) any acquisition by an
 underwriter temporarily holding securities pursuant to an offering of such
 securities or (5) an acquisition pursuant to a transaction that complies with
 Sections 10.2(c)(i), 10.2(c)(ii), and 10.2(c)(iii) below;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (b)          Individuals
 who, on the Effective Date, constitute the Board (the Incumbent Directors) cease for any
 reason to constitute at least a majority of the Board; providedthat any person becoming a
 director subsequent to the Effective Date whose election, or nomination for
 election by the Companys shareholders, was approved by a vote of at least a
 majority of the Incumbent Directors then on the Board (either by a specific
 vote or by approval of the proxy statement of the Company in which such
 person is named as a nominee for director, without written objection to such
 nomination) shall be considered an Incumbent Director; but excluding, for
 this purpose, any such individual whose initial assumption of office occurs
 as a result of either an actual or threatened election contest with respect
 to the election or removal of directors or other actual or threatened solicitation
 of proxies or consents by or on behalf of any Person other than the Board; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (c)          The
 consummation of a reorganization, merger, statutory share exchange or
 consolidation (or similar corporate transaction) involving the Company or a
 Subsidiary, the sale or other disposition of all or substantially all of the
 Companys assets, or the acquisition of assets or stock of another entity (a Business Combination), unless
 immediately following such Business Combination: (i) substantially all of the
 individuals and entities who were Beneficial Owners, respectively, of the
 Outstanding Company Common Stock and the Outstanding Company Voting
 Securities immediately prior to such Business Combination beneficially own,
 directly or indirectly, more than 50% of, respectively, the then-outstanding
 shares of common stock and the total voting power of (A) the corporation
 resulting from such Business Combination (the Surviving Corporation) or (B) if applicable, the
 ultimate parent corporation that directly or indirectly has beneficial
 ownership of 80% or more of the voting securities eligible to elect directors
 of the Surviving Corporation (the Parent
 Corporation), in substantially the same proportion as their
 ownership, immediately prior to the Business Combination, of the Outstanding
 Company Common Stock and the Outstanding Company Voting Securities, as the
 case may be, (ii) no Person (other than any employee benefit plan (or related
 trust) sponsored or maintained by the Surviving Corporation or the Parent
 Corporation), is or becomes the Beneficial Owner, directly or indirectly, of
 30% or more of the outstanding shares of common stock and the total voting
 power of the outstanding securities eligible to elect directors of the Parent
 Corporation (or, if there is no Parent Corporation, the Surviving
 Corporation) and (iii) at least a majority of the members of the Board of the
 Parent Corporation (or, if there is no Parent Corporation, the Surviving
 Corporation) following the consummation of the Business Combination were
 Incumbent Directors at the time of the Boards approval of the initial
 agreement providing for such Business Combination; or
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (d)          Approval
 by the shareholders of the Company of a complete liquidation or dissolution
 of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

10.3.     Section
409A of the Code.Notwithstanding the foregoing, if
any Award is subject to Section 409A of the Code, this Section 10 shall be
applicable only to the extent specifically provided in the Award Agreement and
as permitted pursuant to Section 11.6.

SECTION
11.     Qualified Performance-Based Awards;
Performance Cash Awards.

11.1.     Qualified
Performance-Based Awards.The provisions of this Plan
are intended to ensure that all Options and Stock Appreciation Rights granted
hereunder to any Participant who is or may be a covered employee (within the
meaning of Section 162(m)(3) of the Code) in the tax year in which such Option
or Stock Appreciation Right is expected to be deductible to the Company qualify
for the Section 162(m) Exemption, and all such Awards shall therefore be
considered Qualified Performance-Based Awards

13

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and this Plan
shall be interpreted and operated consistent with that intention. When granting
any Award other than an Option or Stock Appreciation Right, the Committee may
designate such Award as a Qualified Performance-Based Award, based upon a
determination that (a) the recipient is or may be a covered employee (within
the meaning of Section 162(m)(3) of the Code) with respect to such Award, and
(b) the Committee wishes such Award to qualify for the Section 162(m)
Exemption, and the terms of any such Award (and of the grant thereof) shall be
consistent with such designation. Within 90 days after the commencement of a
Performance Period or, if earlier, prior to the expiration of 25% of a
Performance Period, the Committee will designate one or more Performance
Periods, determine the Participants for the Performance Periods, and establish
the Performance Goals for the Performance Periods on terms consistent with
Section 1.2(ff)(iii).

11.2.     Performance
Goals and Other Conditions.Each Qualified
Performance-Based Award (other than an Option or Stock Appreciation Right)
shall be earned, vested, and/or payable (as applicable) upon the achievement of
one or more Performance Goals, together with the satisfaction of any other
conditions, such as continued employment, as the Committee may determine to be
appropriate. Moreover, no Qualified Performance-Based Award may be amended, nor
may the Committee exercise any discretionary authority it may otherwise have
under this Plan with respect to a Qualified Performance-Based Award under this
Plan, in any manner that would cause the Qualified Performance-Based Award to
cease to qualify for the Section 162(m) Exemption; provided,that (i) the Committee may provide, either in
connection with the grant of the applicable Award or by amendment thereafter,
that achievement of such Performance Goals will be waived upon the death or
disability of the Participant (or under any other circumstance with respect to
which the existence of such possible waiver will not cause the Award to fail to
qualify for the Section 162(m) Exemption), and (ii) the provisions of Section
10 shall apply notwithstanding this Section 11.2.

11.3.     Limits
on Board and Administrator Authority.Neither the full
Board nor the Administrator shall be permitted to exercise authority granted to
the Committee to the extent that the grant or exercise of such authority to or
by the Board or the Administrator would cause an Award designated as a
Qualified Performance-Based Award not to qualify for, or to cease to qualify
for, the Section 162(m) Exemption.

11.4.     Section
16(b).The provisions of this Plan are intended to
ensure that no transaction under the Plan is subject to (and not exempt from)
the short-swing recovery rules of Section 16(b) of the Act (Section 16(b)). Accordingly, the
composition of the Committee shall be subject to such limitations as the Board
deems appropriate to permit transactions pursuant to this Plan to be exempt
(pursuant to Rule 16b-3 promulgated under the Act) from Section 16(b), and no
delegation of authority by the Committee shall be permitted if such delegation
would cause any such transaction to be subject to (and not exempt from) Section
16(b).

11.5.     Awards
Valid Notwithstanding Committee Composition.Notwithstanding
any other provision of the Plan to the contrary, if for any reason the
appointed Committee does not meet the requirements of Rule 16b-3 or Section
162(m) of the Code, such noncompliance with the requirements of Rule 16b-3 and
Section 162(m) of the Code shall not affect the validity of Awards, grants,
interpretations of the Plan, or other actions of the Committee.

11.6.     Section
409A of the Code.It is the intention of the Company
that no Award shall be deferred compensation subject to Section 409A of the
Code, unless and to the extent that the Committee specifically determines
otherwise as provided in the immediately following sentence, and the Plan and
the terms and conditions of all Awards shall be interpreted accordingly. The
terms and conditions governing any Awards that the Committee determines will be
subject to Section 409A of the Code, including any rules for elective or
mandatory deferral of the delivery of cash or Shares pursuant thereto and any
rules regarding treatment of such Awards in the event of a Change of Control,
shall be set forth in the applicable Award Agreement, and shall comply in all
respects with Section 409A of the Code.

SECTION
12.     Term, Amendment, and Termination.

12.1.     Effectiveness.The Plan was approved by the Board on June 26, 2008
(the Effective Date), subject
to and contingent upon approval by the shareholders of the Company.

12.2.     Termination.The Plan will terminate on the tenth anniversary of
the Effective Date. Awards outstanding as of such termination date shall not be
affected or impaired by the termination of the Plan.

14

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12.3.     Amendment
of Plan.The Board or the Committee may amend, alter,
or discontinue the Plan, but no amendment, alteration, or discontinuation shall
be made which would materially impair the rights of any Participant with
respect to a previously granted Award without such Participants consent,
except such an amendment made to comply with applicable law, including, without
limitation, Section 409A of the Code or stock exchange rules. In addition, no
such amendment shall be made without the approval of the Companys shareholders
(a) to the extent that such approval is required (i) by applicable law or by
the listing standards of the Applicable Exchange as in effect as of the
Effective Date or (ii) by applicable law or under the listing standards of the
Applicable Exchange as may be required after the Effective Date, (b) to the
extent that such amendment would materially increase the benefits accruing to
Participants under the Plan, (c) to the extent that such amendment would
materially increase the number of securities which may be issued under the
Plan, (d) to the extent that such amendment would materially modify the
requirements for participation in the Plan, or (e) to the extent that such
amendment would accelerate the vesting of any Restricted Stock or Restricted
Stock Units under the Plan except as otherwise provided in the Plan.

12.4.     Amendment
of Awards.Subject to Section 5.12, the Committee may
unilaterally amend the terms of any Award theretofore granted; provided,that no such amendment shall
cause a Qualified Performance-Based Award to cease to qualify for the Section
162(m) Exemption, nor shall any such amendment, without the Participants
consent, materially impair the rights of any Participant with respect to an
Award, except such an amendment made to cause the Plan or Award to comply with
applicable law, stock exchange rules, or accounting rules.

SECTION
13.     Forfeiture.

13.1.     Forfeiture.All Awards under this Plan shall be subject to
forfeiture or other penalties pursuant (a) to the Medtronic, Inc. Incentive
Compensation Forfeiture Policy, as amended from time to time, and (b) such
other forfeiture and/or penalty conditions and provisions as determined by the
Committee and set forth in the applicable Award Agreement.

13.2.     Effect
of Change of Control.Notwithstanding the foregoing
provisions, unless otherwise provided by the Committee in the applicable Award
Agreement, this Section 13 shall not be applicable to any Participant following
a Change of Control.

SECTION
14.     Unfunded Status of Plan.Unfunded
Status; Committee Authority. It is presently intended that the Plan will
constitute an unfunded plan for incentive and deferred compensation. The
Committee may authorize the creation of trusts or other arrangements to meet
the obligations created under the Plan to deliver Shares or make payments;
provided, that unless the Committee otherwise determines, the existence of such
trusts or other arrangements is consistent with the unfunded status of the
Plan.

SECTION
15.     General Provisions.

15.1.     Conditions
for Issuance.The Committee may require each
Participant purchasing or receiving Shares pursuant to an Award to represent to
and agree with the Company in writing that such person is acquiring the Shares
without a view to the distribution thereof. The certificates for such Shares
may include any legend which the Committee deems appropriate to reflect any
restrictions on transfer. Notwithstanding any other provision of the Plan or
agreements made pursuant thereto, the Company shall not be required to issue or
deliver any certificate or certificates for Shares under the Plan prior to
fulfillment of all of the following conditions: (a) listing or approval for
listing upon notice of issuance of such Shares on the Applicable Exchange, (b)
any registration or other qualification of such Shares of the Company under any
state or federal law or regulation, or the maintaining in effect of any such
registration or other qualification which the Committee shall, in its absolute
discretion upon the advice of counsel, deem necessary or advisable, and (c)
obtaining any other consent, approval, or permit from any state or federal
governmental agency which the Committee shall, in its absolute discretion after
receiving the advice of counsel, determine to be necessary or advisable.

15.2.     Additional
Compensation Arrangements.Nothing contained in the
Plan shall prevent the Company or any Subsidiary or Affiliate from adopting
other or additional compensation arrangements for its employees.

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15.3.     No
Contract of Employment.The Plan shall not constitute
a contract of employment, and adoption of the Plan shall not confer upon any
employee any right to continued employment, nor shall it interfere in any way
with the right of the Company or any Subsidiary or Affiliate to terminate the
employment of any employee at any time.

15.4.     Required
Taxes.No later than the date as of which an amount
first becomes includible in the gross income of a Participant for federal,
state, local, or foreign income or employment or other tax purposes with
respect to any Award under the Plan, such Participant shall pay to the Company,
or make arrangements satisfactory to the Company regarding the payment of, any
federal, state, local, or foreign taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Company, withholding obligations may be settled with Shares, including Shares
that are part of the Award that gives rise to the withholding requirement,
having a Fair Market Value on the date of withholding equal to the minimum
amount (and not any greater amount) required to be withheld for tax purposes,
all in accordance with such procedures as the Committee establishes. The
obligations of the Company under the Plan shall be conditioned on such payment
or arrangements, and the Company and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment
otherwise due to such Participant. The Committee may establish such procedures
as it deems appropriate, including making irrevocable elections, for the
settlement of withholding obligations with Common Stock.

15.5.     Limit
on Dividend Reinvestment and Dividend Equivalents.Reinvestment
of dividends in additional Restricted Stock Units to be settled in Shares, and
the payment of Shares with respect to dividends to Participants holding Awards
of Restricted Stock Units, shall only be permissible if sufficient Shares are
available under Section 3 for such reinvestment or payment (taking into account
then outstanding Awards). In the event that sufficient Shares are not available
for such reinvestment or payment, such reinvestment or payment shall be made in
the form of a grant of Restricted Stock Units equal in number to the Restricted
Stock Units or Shares that would have been obtained by such payment or
reinvestment, the terms of which Restricted Stock Units shall provide for
settlement in cash and for dividend equivalent reinvestment in further
Restricted Stock Units on the terms contemplated by this Section 15.5.

15.6.     Written
Materials; Electronic Documents.Electronic documents
may be substituted for any written materials required by the terms of the Plan,
including, without limitation, Award Agreements.

15.7.     Designation
of Death Beneficiary.The Committee shall establish
such procedures as it deems appropriate for a Participant to designate a
beneficiary to whom any amounts payable in the event of such Participants
death are to be paid or by whom any rights of such Participant after such
Participants death may be exercised. If no beneficiary designation is in
effect for a Participant at the time or his or her death, any such amounts
shall be paid to, and any such rights may be exercised by, the estate of the
Participant.

15.8.     Subsidiary
Employees.In the case of a grant of an Award to any
employee of a Subsidiary of the Company, the Company may, if the Committee so
directs, issue or transfer the Shares, if any, covered by the Award to the
Subsidiary, for such lawful consideration as the Committee may specify, upon
the condition or understanding that the Subsidiary will transfer the Shares to
the employee in accordance with the terms of the Award specified by the
Committee pursuant to the provisions of the Plan. All Shares underlying Awards
that are forfeited or canceled shall revert to the Company.

15.9.     Governing
Law.The Plan and all Awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of
the State of Minnesota, without reference to principles of conflict of laws.

15.10.     Non-Transferability.Except as otherwise provided in Section 5.10 or by the
Committee, Awards under the Plan are not transferable except by will or by laws
of descent and distribution.

15.11.     Foreign
Employees and Foreign Law Considerations.The
Committee may grant Awards to Eligible Individuals who are foreign nationals,
who are located outside the United States, who are United States citizens or
resident aliens on global assignments in foreign nations, who are not
compensated from a payroll maintained in the United States, or who are
otherwise subject to (or could cause the Company to be subject to) legal or
regulatory provisions of countries or jurisdictions outside the United States,
on such terms and conditions different from those specified in the Plan as may,
in the judgment of the Committee, be necessary or desirable to foster and
promote achievement of the purposes of the Plan, and, in furtherance

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of such
purposes, the Committee may make such modifications, amendments, procedures, or
subplans as may be necessary or advisable to comply with such legal or
regulatory provisions.

15.12.     No
Rights to Awards; Non-Uniform Determinations.No
Participant or Eligible Individual shall have any claim to be granted any Award
under the Plan. The Company, its Affiliates, or the Committee shall not be
obligated to treat Participants or Eligible Individuals uniformly, and
determinations made under the Plan may be made by the Committee selectively
among Participants and/or Eligible Individuals, whether or not such Participants
and Eligible Individuals are similarly situated.

15.13.     Relationship
to Other Benefits.No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare, or benefit plan of the
Company or any Affiliate unless provided otherwise in such plan.

15.14.     Expenses.The expenses of administering the Plan shall be borne
by the Company and its Subsidiaries or Affiliates.

15.15.     Titles
and Headings.The titles and headings of the Sections
in the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.

15.16.     Fractional
Shares.No fractional Shares shall be issued, and the
Committee shall determine, in its sole discretion, whether cash shall be given
in lieu of fractional Shares or, subject to Section 3, whether such fractional
Shares shall be eliminated by rounding up or down.

15.17.     Government
and Other Regulations.Notwithstanding any other
provision of the Plan:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)          No
 Participant who acquires Shares pursuant to the Plan may, during any period
 of time that such Participant is an affiliate of the Company (within the
 meaning of regulations promulgated pursuant to the Securities Act of 1933
 (the 1933 Act)), offer or
 sell such Shares, unless such offer and sale are made (i) pursuant to an
 effective registration statement under the 1933 Act, which is current and
 includes the Shares to be sold, or (ii) pursuant to an appropriate exemption
 from the registration requirements of the 1933 Act, such as that set forth in
 Rule 144 promulgated under the 1933 Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (b)          If
 at any time the Committee shall determine that the registration, listing, or
 qualification of the Shares covered by an Award upon the Applicable Exchange
 or under any foreign, federal, state, or local law or practice, or the
 consent or approval of any governmental regulatory body, is necessary or
 desirable as a condition of, or in connection with, the granting of such
 Award or the purchase or receipt of Shares thereunder, no Shares may be
 purchased, delivered, or received pursuant to such Award unless and until
 such registration, listing, qualification, consent, or approval shall have
 been effected or obtained free of any condition not acceptable to the
 Committee. Any Participant receiving or purchasing Shares pursuant to an
 Award shall make such representations and agreements and furnish such
 information as the Committee may request to assure compliance with the
 foregoing or any other applicable legal requirements. The Company shall not
 be required to issue or deliver any certificate or certificates for Shares
 under the Plan prior to the Committees determination that all related
 requirements have been fulfilled. The Company shall in no event be obligated
 to register any Shares or any other securities pursuant to the 1933 Act or
 applicable state or foreign law or to take any other action in order to cause
 the issuance and delivery of such certificates to comply with any such law,
 regulation, or requirement.

15.18.     Additional
Provisions.Each Award Agreement may contain such
other terms and conditions as the Committee may determine; providedthat such other terms and
conditions are not inconsistent with the provisions of the Plan.

15.19.     No
Limitations on Rights of the Company.The grant of any
Award shall not in any way affect the right or power of the Company to make
adjustments, reclassifications, or changes in its capital or business structure
or to merge, consolidate, dissolve, liquidate, sell, or transfer all or any
part of its business or assets. The Plan shall not restrict the authority of
the Company, for proper corporate purposes, to draft, grant, or assume Awards,
other than under the Plan, with respect to any person.

15.20.     Severability.In the event any provision of the Plan shall be held
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

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15.21.     Blackout
Periods.Notwithstanding any other provision of this
Plan or any Award to the contrary, the Company shall have the authority to
establish any blackout period that the Company deems necessary or advisable
with respect to any or all Awards.

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