Document:

EXHIBIT 10.10

 

3M COMPENSATION PLAN FOR NON-EMPLOYEE
DIRECTORS

(as amended
through November 8, 2004)

 

PART I

 

GENERAL PROVISIONS

 

A.            OBJECTIVE

 

It is the intent of 3M Company (“3M”) to provide a compensation program
for its nonemployee directors which will attract and retain highly qualified
individuals to serve in this capacity. 
This program shall be called the “Compensation Plan for Nonemployee
Directors” (the “Plan”).

 

B.            COMPONENTS
OF COMPENSATION

 

Compensation for nonemployee directors shall consist of a regular
annual retainer for board service and an annual retainer for the chairman of
each board committee.  This compensation
shall be paid quarterly in any combination of the following alternatives,
provided that the Board of Directors may determine the portion of such
compensation that shall be payable only in the form of 3M Common Stock or
Deferred 3M Common Stock:

 

1.                             Cash

2.                             3M
Common Stock

3.                             Deferred
Cash

4.                             Deferred
3M Common Stock

 

The combination of alternatives for each nonemployee director shall
equal the aggregate Compensation earned by each nonemployee director.

 

C.            ADMINISTRATION

 

The Plan shall be administered by the Compensation Committee (the “Committee”)
of the Board of Directors.  The Committee
shall have full power to formulate additional details and regulations for
carrying out this Plan and to make such amendments or modifications therein as
from time to time they deem proper and in the best interests of 3M, provided
that such amendments or modifications shall not affect the obligation of 3M to
pay to the participants the amounts accrued or credited to such participants’
accounts.  Any decision or interpretation
adopted by the Committee shall be final and conclusive.

 

D.            ELECTION
OF ALTERNATIVES

 

1.             Each nonemployee
director of 3M may elect, by written notice to 3M prior to the beginning of
each Plan Year, to participate in the Compensation alternative provisions of
the Plan.  Any combination of the
alternatives, Cash, 3M Common Stock, Deferred Cash, and/or Deferred 3M Common
Stock, may be elected provided the aggregate of the alternatives elected equals
100 percent of the director’s Compensation; provided, however, that any
election made pursuant to this Part I of the Plan shall be consistent with the
Board of Directors’ determination (if any) of the portion of such Compensation
that shall be payable only in the form of 3M Common Stock or Deferred 3M Common
Stock.

 

2.             The election shall
remain in effect for one year, which shall begin on the January 1st
following 3M’s receipt of such election and terminate on the succeeding
December 31st (“Plan Year”).

 

3.             The Plan Year shall
include Plan Quarters, each Plan Quarter to begin on first day of each calendar
quarter (January, April, July and October). 
This date (beginning of the Plan Quarter) shall be used to value stock
and calculate interest.

 

4.             A director elected to
the Board after the beginning of a Plan Year may elect, by written notice to 3M
within 30 days after such director’s term begins, to participate in the
Compensation alternatives for the remainder of that Plan Year, and election for
succeeding years shall be on the same basis as for other directors.

 

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5.             3M shall supply an
account statement of his/her participation under the Plan to each participant
under the Plan as soon as possible after the end of each Plan Year.

 

6.             Unless otherwise
notified, all notices under this Plan shall be sent in writing to 3M, attention
the Secretary.  All correspondence to the
participants shall be sent to the address which is furnished to the Secretary
by each director.

 

PART II

 

CASH COMPENSATION

 

A.            Each nonemployee
director who elects to participate under the Cash Compensation Provision of the
Plan shall be paid all or the specified part (percentage) of the portion of
his/her Compensation for the Plan Year that is payable in cash, and such cash
payment shall be made on or about the 45th day of each Plan Quarter.

 

B.            If a participant dies
prior to payment in full of all amounts due under the Plan, the balance of the
amount due shall be payable to such participant’s estate in full as soon as
possible following the participant’s death.

 

PART III

 

3M COMMON STOCK

 

A.            Each nonemployee
director may elect to receive all or a specified part (percentage) of his/her
Compensation for the Plan Year in 3M Common Stock, which will be paid on or
about the 45th day of each Plan Quarter.

 

B.            3M shall insure that
an adequate number of 3M common shares (i.e., Treasury) are available for
distribution to those nonemployee directors electing to participate in this
provision.

 

C.            Only whole numbers of
shares will be paid, with any fractional share amounts paid in cash.

 

D.            For purposes of
computing the number of shares to be paid each quarter, the value of each share
of 3M Common Stock will be the closing price on the New York Stock Exchange as
of the beginning of each Plan Quarter.

 

E.             If a participant dies
prior to payment in full of all amounts due under the Plan, the balance of the
amount due shall be payable to the participant’s estate in full as soon as
possible following the participant’s death.

 

PART IV

 

DEFERRED COMPENSATION

 

A.            Each nonemployee
director may elect to have all or a specified part (percentage) of his/her
Compensation for the Plan Year deferred as Deferred Cash and/or Deferred 3M
Common Stock until the participant ceases to be a director; provided, however,
that the portion of such Compensation that the Board of Directors has
determined shall be payable only in the form of 3M Common Stock or Deferred 3M
Common Stock may not be deferred as Deferred Cash.

 

B.            For each director who
has made the Deferred Cash election, 3M shall establish a memorandum account
and shall credit such account for the Compensation due on the 45th day of each
Plan Quarter.

 

1.             Interest shall be
credited to each memorandum account from the date of deposit, at the end of
each Plan Quarter, and immediately preceding any distribution.

 

2.             Interest shall be
calculated using:

 

a.             The prime rate of
interest charged by Wells Fargo Bank as of the first day of each Plan Quarter.

 

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b.             The memorandum
account balance as of the end of the preceding Plan Quarter, or, if applicable,
as of the date of any distribution.

 

3.             Distribution from the
Deferred Cash account shall be in cash as provided in paragraph D below.

 

C.            For each director who
has made the Deferred 3M Common Stock election, 3M shall establish a memorandum
account and shall credit such account with 3M common stock equivalents
(including fractional share equivalents) which could have been purchased on the
first day of the Plan Quarter using the closing price of 3M Common Stock on the
New York Stock Exchange on the last business day immediately preceding such
date.

 

1.             3M common stock
equivalents equal to dividends paid on 3M Common Stock shall be credited to
each memorandum account on each dividend payment date.  The share equivalents shall be determined by
using the closing price of 3M Common Stock on the New York Stock Exchange on
the sixth business day preceding the dividend record date (day preceding
ex-dividend on New York Stock Exchange).

 

2.             Appropriate
adjustment shall be made to the memorandum account for stock splits, stock
dividends, merger, consolidation, payment of dividends in other than cash, and
similar circumstances affecting 3M Common Stock.

 

3.             Distribution of each
participant’s Deferred Stock account shall be in 3M Common Stock (whole shares
only with any fractional share amounts paid in cash) equal to the number of
common stock equivalents credited to such account in accordance with paragraph
D below.

 

D.            DISTRIBUTIONS

 

1.             Amounts deferred before 2005.  Distribution of the participant’s memorandum
account(s) attributable to Compensation earned and deferred in Plan Years ending
before January 1, 2005 shall be as follows:

 

a.                             In
five equal annual installments on January 1 of each year following the year in
which the participant ceases to be a director; or

 

b.                             If
approved by the Committee, in some other number of equal annual installments
(not to exceed ten); or

 

c.                             If
approved by the Committee, in a lump sum on a date within the ten-year period
following the year in which the participant ceases to be a director.

 

Each installment or lump sum payment shall also include amounts earned
either as dividends, appreciation, or interest on the outstanding account
balance to the distribution date.  The
method of distribution approved by the Committee shall be irrevocable.

 

2.             Amounts deferred after 2004.  Unless the participant has elected a
different time and form of payment for the Compensation deferred for one or
more Plan Years, distribution of the participant’s memorandum account(s)
attributable to Compensation earned and deferred in Plan Years beginning after
December 31, 2004 shall be made in five annual installments on the first
business day of January in each of the first five years following the year in
which the participant ceases to be a director. 
The amount of each installment payment shall be determined by dividing
the amount of such memorandum account(s) as of the immediately preceding
December 31 by the number of installment payments remaining to be paid.

 

Effective for Plan Years commencing on or after January 1, 2005, each
participant may elect to receive the Compensation deferred for a Plan Year (and
any earnings thereon) in either a lump sum payment on the first business day of
any of the first through tenth years following the year in which such
participant ceases to be a director or in some other number of annual installments
(not to exceed ten) on the first business day of January in each of the same
number of years following the year in which such participant ceases to be a
director.

 

Any election made by a participant pursuant to this paragraph D shall
be made by written notice to 3M prior to the beginning of the Plan Year during
which the Compensation being deferred is earned, and shall be irrevocable.

 

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E.             If a participant dies
prior to payment in full of all amounts due under the Plan, the balance of the
amount due shall be payable to the participant’s estate in full as soon as
possible following the participant’s death; provided that, if a participant
shall have designated an alternate beneficiary, the remaining balance of
amounts payable under the Plan shall be payable to the participant’s
beneficiary in full as soon as possible following the participant’s death.

 

4EXHIBIT
10.11

 

3M 1992
DIRECTORS STOCK OWNERSHIP PROGRAM

(as amended through November 8,
2004)

 

SECTION 1 PURPOSE

 

The purpose of this Program is to attract and retain well-qualified
persons for service as nonemployee directors of the Company and to promote
identity of interest between directors and stockholders of the Company.

 

It is intended that the 1992 Directors Stock
Ownership Program will provide for the granting to participants of restricted
stock grants and other stock awards.  It
is also intended that the Program will allow participants to elect voluntarily
to defer and convert a portion or all of their retainer fees for services as a
director into Common Stock for payment upon retirement, death, or disability.

 

SECTION 2 DEFINITIONS

 

(a)                                  “Agreement” shall
mean the agreement entered into between the Company and a Participant at the
time of the grant or award of any rights under the Program by the Committee, or
other written evidence issued by the Company to the Participant.

(b)                                 “Board of Directors” shall
mean the Board of Directors of the Company.

(c)                                  “Committee” shall
mean the Compensation Committee of the Board of Directors who shall administer
the Program as provided in Section 7.

(d)                                 “Common Stock” shall
mean the common stock, with a par value of $0.01 per share, of the Company.

(e)                                  “Common Stock
Equivalents” shall mean the number of unissued shares of Common Stock
determined by the formulae provided in Section 4.

(f)                                    “Company” shall
mean 3M Company.

(g)                                 “Conditions” shall
mean the condition that the Restricted Period stipulated by the Committee at
the time of grants of Restricted Stock shall have expired or terminated and
that any other conditions prescribed by the Committee regarding a Participant’s
continued membership on the Board of Directors of the Company or the Company’s
performance during the Restricted Period shall have been satisfied, or any
other conditions stipulated by the Committee with respect to Stock Awards.

(h)                                 “Deferral Election”
shall mean the voluntary election by any Participant to have all or any portion
of the Participant’s Retainer Fee deferred in payment and converted to a number
of Common Stock Equivalents, made in accordance with the provisions of the
Compensation Plan for Nonemployee Directors.

(i)                                     “Deferred Stock”
shall mean the Participant’s right to have issued a certificate for Common
Stock upon the occurrence of any of those events set forth in Section 4,
equal in number of shares to the Common Stock Equivalents determined by the
Participant’s Deferral Election, and Dividend Equivalents until the date of
such occurrence.

(j)                                     “Dividend
Equivalents” shall mean that sum of cash or Common Stock of equivalent value
equal to the amount of cash or stock dividends paid upon Common Stock subject
to any grants or awards under the Program, prior to such time as the
Participant otherwise becomes entitled thereto as a holder of record.

(k)                                  “Fair Market Value”
shall mean the average of the high and low prices for Common Stock as reported
on the New York Stock Exchange Composite Transactions, rounded upwards to the
nearest $0.05.

(l)                                     “Participant”
shall mean each and every nonemployee member of the Board of Directors to the
extent a grant of Restricted Stock or Stock Award is determined appropriate by
the Committee, or to the extent that the nonemployee director shall make a
Deferral Election with respect to any or all of the directors Retainer Fee.

(m)                               “Program” shall mean the
Company’s 1992 Directors Stock Ownership Program.

(n)                                 “Program Effective
Date” shall mean the date fixed by the Board of Directors upon which the
Program becomes effective after approval by stockholders.

(o)                                 “Restricted Period”
shall mean that period of time determined by the Committee and provided in the
applicable Conditions stated in the Restricted Stock Agreement of a Participant
regarding the incremental or complete lapse of the restrictions.

(p)                                 “Restricted Stock”
shall mean that Common Stock granted to a Participant in a Restricted Stock
Agreement and subject to the Conditions, as so determined by the Committee,
during the Restricted Period of the grant.

(q)                                 “Retainer Fee” shall
mean those fees paid by the Company to nonemployee directors for services
rendered and shall include fees for acting as committee chair, as well as
annual retainer fees.

(r)                                    “Retirement Date”
shall be the date a Participant retires as a member of the Board of Directors
of the Company.

(s)                                  “Stock Award” shall
mean any award of Common Stock under the Program and may include Restricted
Stock awards or other awards of Common Stock as determined appropriate by the
Committee.

 

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SECTION 3 PARTICIPATION

 

A nonemployee director may participate in the
Program in one or both of two ways: (i) by making a Deferral Election to have
all or a portion of the Participant’s Retainer Fee converted into Deferred
Stock, in accordance with the provisions of the Compensation Plan for
Nonemployee Directors, or (ii) by receiving a grant of Restricted Stock or
Stock Award by act of the Committee.  A
Participant may make the Deferral Election by authorizing the Company to
convert all or a portion of the Retainer Fee otherwise payable in cash or
Common Stock into a number of Common Stock Equivalents, which will then create
an obligation of the Company to accrue a liability to the Participant and to
deliver the Deferred Stock to the Participant at a future date as determined by
Section 4 of the Program.

 

A nonemployee director shall also become a
Participant to the extent that the Committee shall make a grant to a nonemployee
director of Restricted Stock or a Stock Award. 
The Committee shall determine the number of shares of Common Stock to be
the subject of a grant to each Participant. 
However, no more than 3,500 shares would be granted to any one
Participant under the Program by way of Restricted Stock or Stock Awards.

 

SECTION 4 DEFERRED STOCK

 

(a)                                  Common Stock Equivalents.  In the event that the Participant shall have
made a Deferral Election in accordance with the requirements of the
Compensation Plan for Nonemployee Directors, the appropriate amount of Retainer
Fee shall be converted to Common Stock Equivalents by dividing that amount of
Retainer Fee payable to the Participant by the Fair Market Value at the time
and in the manner specified in the Compensation Plan for Nonemployee Directors.

(b)                                 Payment of Deferred Stock.  Common Stock Equivalents shall become
Deferred Stock and shall be reflected on the books and records of the Company
as an obligation to issue and deliver a number of shares of Common Stock at a future
date following the retirement, resignation, or other termination of Participant’s
membership on the Board of Directors for any cause whatsoever, as determined
under the provisions of the Compensation Plan for Nonemployee Directors.  No stock certificate shall be created or
registered until the date for delivery specified above, and the Participant
shall generally not have any of the rights and privileges of a stockholder as
to such Deferred Stock, except that the Deferred Stock will earn Dividend Equivalents
rights as provided in Section 15.

(c)                                  No Forfeiture.  Deferred Stock shall not be subject to
forfeiture for any reason and shall be issued and delivered to Participant as
provided above or as provided in Section 9.

 

SECTION 5 RESTRICTED STOCK

 

(a)                                  Restricted Stock
granted by the Committee shall be designated as such and shall be evidenced by
Agreements in such forms as the Committee shall approve, which Agreements shall
comply with and be subject to the terms and conditions of this Program.

(b)                                 Restricted Stock, in
addition to the Conditions stated and determined by the Committee in the
Agreement, may or may not have a stated purchase price.  The purchase price determined by the
Committee, in its sole discretion, if any, shall be clearly set forth in the
Agreement presented to a Participant, along with any and all other applicable
Conditions.

(c)                                  If the Committee
shall fix a purchase price for Restricted Stock in addition to other Conditions
therefor, no shares of Common Stock shall be issued upon the satisfaction of
Conditions until full payment has been made to the Company and the Participant
has remitted to the Company the required federal and state withholding taxes,
if any.  Payment of the purchase price
may be made in whole, or in part, in shares of Common Stock, pursuant to such
terms and conditions as may be established from time to time by the
Committee.  If payment is made in shares
of Common Stock, such stock shall be valued at one hundred percent (100%) of Fair
Market Value on the day the restrictions lapse, and the number of shares
required to effect payment of the purchase price shall be withheld from the
shares of Common Stock otherwise deliverable. 
Similarly, any applicable withholding taxes may be paid upon the lapse
of restrictions upon Restricted Stock by the withholding of shares of Common
Stock otherwise deliverable.

(d)                                 At the time a grant of
Restricted Stock is made, the Committee, in its sole discretion, shall
establish a Restricted Period and such additional Conditions as may be deemed
appropriate for the incremental lapse or complete lapse of restrictions with
respect to all or any portion of the shares of Common Stock represented by the
Restricted Stock.  The Committee may
also, in its sole discretion, shorten or terminate the Restricted Period or
waive any Conditions with respect to all or any portion of the shares of Common
Stock represented by the Restricted Stock. 
Notwithstanding the foregoing, all restrictions set forth in the Conditions
shall lapse or terminate with respect to all Common Stock represented in the
grant of Restricted Stock in the event of the death or total disability of a
Participant (as defined in Section 9 below) or the occurrence of a Change
in Control (as defined in Section 14 below).

(e)                                  A stock certificate
for the number of shares of Common Stock represented in the grant of Restricted
Stock to a Participant shall be registered in the Participant’s name but shall
be held in custody by the

 

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Company for the Participant’s account. 
The Participant shall generally have the rights and privileges of a
stockholder as to such Restricted Stock, including the right to vote such
Restricted Stock, except that, subject to the provisions of Section 9
below, the following restrictions shall apply: (i) the Participant shall not be
entitled to delivery of the certificate until the expiration or termination of
the Restricted Period. the satisfaction of any other Conditions prescribed by
the Committee, if any, and the payment in full of the purchase price, if any;
(ii) none of the Restricted Stock may be sold, transferred, assigned, pledged,
or otherwise encumbered or disposed of during the Restricted Period and until
the satisfaction of other Conditions prescribed by the Committee, if any; and
(iii) all of the Restricted Stock shall be forfeited and all rights of the
Participant shall terminate without further obligation on the part of the
Company unless the Participant shall have remained a nonemployee member of the
Board of Directors until the expiration or termination of the Restricted Period
and the satisfaction of other Conditions prescribed by the Committee, if any.

(f)                                    At the sole
discretion of the Committee, Dividend Equivalents may be either currently paid
or withheld by the Company for the Participant’s account, and interest may be
paid on the amount of cash dividends withheld at a rate and under such terms as
determined by the Committee.  Cash or
stock dividends so withheld by the Committee shall not be subject to forfeiture.  Upon the forfeiture of the Restricted Stock,
such shares of Common Stock represented in the grant of Restricted Stock shall
be transferred to the Company without further action by the Participant.

(g)                                 Upon the expiration or
termination of the Restricted Period and the satisfaction of other Conditions
prescribed by the Committee, if any, or at such earlier time as provided for in
Section 9 below, the restrictions applicable to the Restricted Stock shall
lapse and a stock certificate for the number of shares of Common Stock
represented in the grant of Restricted Stock shall be delivered to the
Participant or the Participant’s beneficiary, representative, or estate, as the
case may be, free of all restrictions, except any that may be imposed by law, subject
as well to the obligation of the Participant to pay the purchase price, and
applicable withholding taxes, if any, as provided in this Section.  The Company shall not be required to deliver
any fractional share of Common Stock but will pay, in lieu thereof, the Fair
Market Value (as of the date the last Conditions lapse) of such fractional
share.

 

SECTION 6 OTHER STOCK AWARDS

 

(a)                                  The Committee may, in
its sole discretion, grant Stock Awards other than Restricted Stock grants, and
such Stock Awards may be granted singly, in combination or in tandem with, in
replacement of, or as alternatives to grants or rights under this Program or
any compensation plan of the Company, including the plan of any acquired
entity.

(b)                                 If the Committee shall
stipulate Conditions with respect to such Stock Awards, the Conditions will be
set forth in Agreements evidencing the grant, and such Agreements shall comply
with and be subject to the terms and conditions of this Program.

(c)                                  If Conditions with
respect to such Stock Awards shall require the surrender or forfeiture of other
grants or rights under this Program or any other compensation plan of the
Company, then the Participant shall not have any rights under such Stock Awards
until the grants or rights exchanged have been fully and effectively
surrendered or forfeited.

 

SECTION 7 ADMINISTRATION

 

The Program shall be administered under the
direction of the Committee.  In
administering the Program, it will be necessary to follow various laws and
regulations.  It may be necessary from
time to time to change or waive requirements of the Program to conform with the
law, to meet special circumstances not anticipated or covered in the Program,
or to carry on successful operation of the Program, and in connection
therewith, the Committee shall have the full power and authority to:

 

(a)                                  Prescribe, amend, and
rescind rules and regulations relating to the Program, establish procedures
deemed appropriate for its administration, and make any and all other
determinations not herein specifically authorized which may be necessary or
advisable for its effective administration.

(b)                                 Make any amendments to
or modifications of the Program which may be required or necessary to make the
Program set forth herein comply with the provisions of any laws, federal or
state, or any regulations issued thereunder, and to cause the Company at its
expense to take any action related to the Program which may be required under
such laws or regulations.

(c)                                  Contest on behalf of
the Participants or the Company, at the sole discretion of the Committee and at
the expense of the Company, any ruling or decision on any issue related to the
Program, and conduct any such contest and any resulting litigation to a final
determination, ruling, or decision.

 

SECTION 8 SHARES SUBJECT TO THE PROGRAM

 

(a)                                  For each calendar
year, including the calendar year within which the Program Effective Date
falls, no more than 100,000 shares of the issued Common Stock, including
treasury shares, shall be available for Issuance under the Program.

 

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(b)                                 In no event, however,
except as subject to adjustment as provided in the foregoing subparagraph,
shall more than 800,000 shares of Common Stock be cumulatively available for
issuance under the Program.

(c)                                  The payment of
dividends and Dividend Equivalents in conjunction with outstanding awards shall
not be counted against the shares available for issuance.

(d)                                 Shares of Common Stock
issued under the Program may consist in whole or in part of authorized and
unissued shares or of treasury shares, and no fractional shares shall be issued
under the Program.  Cash may be paid in
lieu of any fractional shares issuable under the Program.

(e)                                  In the event of a
reclassification or stock split after the Program Effective Date, the foregoing
absolute numbers of shares shall be appropriately adjusted.

 

SECTION 9 TERMINATION OF RIGHTS UNDER THE PROGRAM

 

(a)                                  Participation
hereunder shall cease and all rights under the Program as regards Restricted
Stock or other Stock Awards are automatically forfeited by the Participant upon
the date of termination of membership as a nonemployee member of the Board of
Directors for any cause other than: (i) retirement, (ii) because of physical or
mental disability as determined by the Committee, or (iii) death.  Deferred Stock shall not be subject to
forfeiture for any reason.

(b)                                 If the Participant
dies, either prior to or following retirement, and has not yet received the
stock certificate for the shares of Common Stock represented by the grant of
Deferred Stock, Restricted Stock, or other Stock Award, then all restrictions
imposed by the Restricted Period or other Conditions prescribed by the
Committee, if any, shall automatically lapse and a stock certificate shall be
delivered to the Participant’s beneficiary, representative, or estate, as the
case may be, as provided in Section 5(g) herein.

 

SECTION 10 DELIVERY OF STOCK CERTIFICATES

 

Within sixty (60) days after the complete
satisfaction of Conditions applicable to Restricted Stock or any other Stock
Award, the Company will have delivered to Participants certificates
representing all stock purchased or received thereunder.

 

The Company shall not, however, be required
to issue or deliver any certificates for its Common Stock prior to the
admission of such stock to listing on any stock exchange on which stock may at
that time be listed or required to be listed, or prior to registration under
the Securities Act of 1933.  The
Participant shall have no interest in Common Stock until certificates for such
stock are issued or transferred to the Participant and the Participant becomes
the holder of record.

 

SECTION 11 TRANSFERABILITY

 

Rights and grants under the Program may not
be assigned, transferred (other than a transfer by will or the laws of descent
and distribution as provided in Section 9), pledged, or hypothecated
(whether by operation of law or otherwise), and shall not be subject to
execution, attachment, or similar process. 
Any attempted assignment, transfer (other than a transfer by will or
laws of descent and distribution), pledge, hypothecation, other disposition of
Restricted Stock or other Stock Awards under the Program, or levy of attachment
or similar process upon Restricted Stock or other Stock Awards shall constitute
an immediate cancellation of the rights and grants under the Program.

 

SECTION 12 STOCK DIVIDEND, STOCK SPLIT, REDUCTION IN SHARES,
MERGER, OR CONSOLIDATION

 

If a record date for a stock dividend, split,
or reduction in the number of shares of stock should occur after the Program
Effective Date during the period of continued exercisability of any rights
under the Program, appropriate adjustment shall be made to give effect thereto
on an equitable basis.

 

It the Company is merged into or consolidated
with one or more corporations during the period of continued exercisability of
any rights under the Program, appropriate adjustments shall be made to give
effect thereto on an equitable basis in terms of issuance of shares of the
corporation surviving the merger or the consolidated corporation, as the case
may be.

 

In the event that within such period there
shall be any change in the number or kind of the issued shares of stock (of the
class optioned or granted hereunder), or of any issued capital stock or other securities
into which such shares shall have been converted, or for which they shall have
been exchanged, and such change shall occur otherwise than through a stock
dividend or split-up or combination of shares of stock of the Company, then if
(and only if) the Committee shall, in its sole discretion, determine that such
change equitably requires an adjustment in the number or kind or purchase price
of shares of stock then subject to rights under this Program, such adjustment
as the Committee shall, in its sole discretion, determine is equitable, shall
be made and shall be effective and binding for all purposes of such outstanding
rights.

 

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SECTION 13 WITHDRAWAL, AMENDMENT, OR TERMINATION OF THE PLAN

 

The Program shall terminate when and as
determined by the Board of Directors, and no rights under the Program shall be
granted after the date of termination. 
Such termination shall not adversely affect rights under the Program
theretofore granted.

 

The Board of Directors may at any time
withdraw or amend the Plan, except that there shall be no withdrawal or
amendment which shall adversely affect rights under the Program theretofore
granted, and no amendment shall be made without prior approval of the
stockholders which would (i) permit the issuance of Restricted Stock before
payment of the purchase price as determined herein or by the Committee, if any
be so determined, (ii) increase the number of shares to be offered, (iii)
reduce the price per share at which Restricted Stock may be sold. if a purchase
price is determined by the Committee, or (iv) increase the amount of Deferred
Stock above 100% of the Participant’s Retainer Fee.

 

SECTION 14 CHANGE IN CONTROL

 

(a)                                  For purposes of this Section 14,
the following words and phrases shall have the meanings indicated below, unless
the context clearly indicates otherwise:

(i)                                     “Person”
shall have the meaning associated with that term as it is used in Sections
13(d) and 14(d) of the Act.

(ii)                                  “Affiliates
and Associates” shall have the meanings assigned to such terms in Rule 12b-2
promulgated under Section 12 of the Act.

(iii)                               “Act”
means the Securities Exchange Act of 1934.

(iv)                              “Continuing
Directors” shall have the meaning assigned to such term in Article Thirteenth
of the Company’s Certificate of Incorporation.

(v)                                 “Code”
means the Internal Revenue Code of 1986, as amended.

(b)                                 Notwithstanding any
other provision of this Program to the contrary, all restrictions regarding the
Restricted Period or the satisfaction of other Conditions prescribed by the
Committee, if any, with respect to grants of Stock Awards, shall automatically
lapse, expire, and terminate and the Participant shall be immediately entitled
to receive a stock certificate for the number of shares of Common Stock
represented in the grant of Stock Awards as provided in Section 6 herein
upon the occurrence of a Change in Control. 
Similarly, Deferred Stock shall immediately be issued and delivered to
the Participant by the Company upon the occurrence of a Change in Control.

(c)                                  For purposes of this Section 14,
a Change in Control of the Company shall be deemed to have occurred if:

(i)                                     any
Person (together with its Affiliates and Associates), other than a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, is or becomes the “beneficial owner” (as that term is defined in Rule
13d-3 promulgated under the Act), directly or indirectly, of securities of the
Company representing thirty percent (30%) or more of the combined voting power
of the Company’s then outstanding securities, unless a majority of the
Continuing Directors of the Company’s Board of Directors prior to that time
have determined in their sole discretion that, for purposes of this Program, a
Change in Control of the Company has not occurred; or

(ii)                                  the
Continuing Directors of the Company’s Board of Directors shall at any time fail
to constitute a majority of the members of such Board of Directors.

(d)                                 In the event that the
provisions of this Section 14 result in “payments” that are finally
determined to be subject to the excise tax imposed by Section 4999 of the
Code, the Company shall pay to each Participant an additional amount such that
the net amount retained by such Participant following the lapse of
restrictions, if any, and delivery of Common Stock under this Section that
resulted in such “payments,” after allowing for the amount of such excise tax
and any additional federal, state, and local income taxes paid on the
additional amount, shall be equal to the net amount that would otherwise have
been retained by the Participant following the lapse of restrictions, if any,
and delivery of Common Stock under this Section if there were no excise
tax imposed by Section 4999 of the Code.

(e)                                  The Company shall pay
to each Participant the amount of all reasonable legal and accounting fees and
expenses incurred by such Participant in seeking to obtain or enforce his
rights under this Section 14, or in connection with any income tax audit
or proceeding to the extent attributable to the application of Section 4999
of the Code to the payments made pursuant to this Section 14, unless a
lawsuit commenced by the Participant for such purposes is dismissed by the
court as being spurious or frivolous. 
The Company shall also pay to each Participant the amount of all
reasonable tax and financial planning fees and expenses incurred by such
Participant in connection with such Participant’s receipt of payments pursuant
to this Section 14.

 

SECTION 15 DIVIDENDS AND DIVIDEND EQUIVALENTS

 

The Committee may provide that awards under
the Program earn dividends or Dividend Equivalents.  Such Dividend Equivalents may be paid
currently or may be credited to a Participant’s account.  In addition, dividends paid on outstanding
awards or issued shares may be credited to a Participant’s account rather than
paid currently.  Any crediting of
dividends or Dividend Equivalents may be subject to such restrictions and
conditions as the Committee may establish, including reinvestment in additional
shares or share equivalents.

 

5

 

SECTION 16 UNFUNDED PLAN

 

Unless otherwise determined by the Committee,
the Program shall be unfunded and shall not create (or be construed to create)
a trust or a separate fund or funds.  The
Program shall not establish any fiduciary relationship between the Company and
any Participant or other person.  To the
extent any person holds any rights by virtue of a grant under the Program, such
right (unless otherwise determined by the Committee) shall be no greater than
the right of an unsecured general creditor of the Company.

 

SECTION 17 FUTURE RIGHTS

 

No person shall have any claim or rights to
be granted an award under the Program.

 

6

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