Document:

Exhibit 4.2

[Form of Floating Rate Medium-Term Note]

(FACE OF SECURITY)

[IF A GLOBAL SECURITY, INSERT - THIS SECURITY IS A
GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY
MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO
TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF
ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]

[IF DTC IS THE DEPOSITARY, INSERT — UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO MINNESOTA MINING AND
MANUFACTURING COMPANY, OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

[INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE
CODE AND THE REGULATIONS THEREUNDER.]

CUSIP NO.                      

ISIN No:
                          

Common Code:
               

3M COMPANY

MEDIUM-TERM NOTES, SERIES E

(Floating Rate)

The following terms apply
to this Security, as and to the extent shown below:

	
  PRINCIPAL AMOUNT:

  	
   

  	
  REPAYMENT DATE(S):

  
	
   

  	
   

  	
   

  
	
  STATED MATURITY DATE:

  	
   

  	
  REDEMPTION OR REPAYMENT PRICE(S):

  
	
   

  	
   

  	
   

  
	
  SPECIFIED CURRENCY: U.S.
  dollars for all

  	
   

  	
  BASE RATE: 

  
	
  payments unless otherwise 

  	
   

  	
  ·                 Commercial
  Paper Rate: 

  
	
  specified below:

  	
   

  	
  ·                  Prime Rate:

  
	
  ·                  payments
  of principal and any premium:

  	
   

  	
  ·                  LIBOR:

  
	
  ·                  payments of interest:

  	
   

  	
  - Designated
  LIBOR Page:

  
	
  ·                  Exchange Rate Agent:

  	
   

  	
  - Index
  Currency:

  
	
  Citibank, N.A.

  	
   

  	
  ·                  EURIBOR:

  
	
   

  	
   

  	
  ·                  Treasury Rate:

  
	
  ORIGINAL ISSUE DATE*:

  	
   

  	
  ·                  CMT
  Rate:

  
	
   

  	
   

  	
  - Designated CMT
  Reuters Page:

  
	
  ORIGINAL ISSUE DISCOUNT

  	
   

  	
  - Designated CMT
  Index Maturity: 

  
	
  SECURITY:

  	
   

  	
  ·                  CD Rate:

  
	
  ·                  Total Amount of OID:

  	
   

  	
  ·                  Federal Funds Rate:

  
	
  ·                  Yield to Maturity:

  	
   

  	
  ·                  Eleventh District Cost of Funds
  Rate:

  
	
  ·                  Initial Accrual Period OID:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  REDEMPTION COMMENCEMENT

  	
   

  	
  INDEX MATURITY:

  
	
  DATE:

  	
   

  	
   

  

 

*  This date shall be the issue date of this
Security, unless there is a Predecessor Security, in which case this date shall
be the issue date of the first Predecessor Security.

 2
 

 

	
  SPREAD:

  	
   

  	
  INTEREST PAYMENT DATE(S):
  unless otherwise specified, the third Wednesday of the following:

  
	
   

  	
   

  	
   

  
	
  SPREAD MULTIPLIER:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIAL BASE RATE:

  	
   

  	
  ·                  each of the 12 calendar months in
  each year

  
	
   

  	
   

  	
   

  
	
  INTEREST RESET PERIOD:

  	
   

  	
  ·                  each March, June, September and
  December in each year

  
	
   

  	
   

  	
   

  
	
  ·                  if semi-annual, reset will occur in
  each of the following two months in each year:

  	
   

  	
  ·                  each of the following two calendar
  months in each year:

  
	
  ·                  if annual, reset will occur in the
  following month in each year:

  	
   

  	
  subject to the second paragraph under “Payments Due
  on a Business Day” below

  
	
  ·                  otherwise, reset will occur daily,
  weekly, monthly or quarterly in each year as follows:

  	
   

  	
   

  
	
   

  	
   

  	
  CALCULATION AGENT: Citibank,
  N.A.

  
	
   

  	
   

  	
   

  
	
  INTEREST RESET DATE(S): as
  provided in Section 3(a) on the reverse of this security (unless otherwise
  specified)

  	
   

  	
  DEFEASANCE:

  ·                  Full Defeasance:

  ·                  Covenant Defeasance:

  
	
   

  	
   

  	
   

  
	
  INTEREST DETERMINATION DATE(S): as
  provided in Sections 3(b) through 3(j), as applicable, on the reverse of this
  Security (unless otherwise specified)

  	
   

  	
  MAXIMUM RATE:

  
	
   

  	
   

  	
  MINIMUM RATE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OTHER TERMS:

  

 

Terms left blank or marked “N/A”, “No”, “None” or in a
similar manner do not apply to this Security except as otherwise may be
specified.

Whenever used in this Security, the terms specified
above that apply to this Security have the meanings specified above, unless the
context requires otherwise. Other terms used in this Security that are not
defined herein but that are defined in the Indenture referred to in Section 1
on the reverse of this Security are used herein as defined therein.

 3
 

3M Company, a corporation duly organized and existing
under the laws of the State of Delaware (hereinafter called the “Company”,
which term includes any successor Person under the Indenture), for value
received, hereby promises to pay to Cede & Co., or registered assigns, as
principal the Principal Amount on the Stated Maturity Date and to pay interest
thereon, from the Original Issue Date or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, on the Interest
Payment Date(s) in each year, commencing on the first such date that is at
least 15 calendar days after the Original Issue Date, and at the Maturity of
the principal hereof, at a rate per annum determined in accordance with the
applicable provisions of Section 3 on the reverse hereof, until the principal
hereof is paid or made available for payment. Any premium and any such
installment of interest that is overdue at any time shall also bear interest
(to the extent that the payment of such interest shall be legally enforceable),
at the rate per annum at which the principal then bears interest, from the date
any such overdue amount first becomes due until it is paid or made available
for payment. Notwithstanding the foregoing, interest on any principal, premium
or installment of interest that is overdue shall be payable on demand.

The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the 15th calendar day
(whether or not a Business Day, as such term is defined in Section 3(n) on the
reverse hereof) next preceding such Interest Payment Date (a “Regular Record
Date”). Any interest so payable, but not punctually paid or duly provided
for, on any Interest Payment Date will forthwith cease to be payable to the
Holder on such Regular Record Date and such Defaulted Interest either may be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to the Holder of this Security not less than 10 days
prior to such Special Record Date, or may be paid in any other lawful manner
not inconsistent with the requirements of any securities exchange on which this
Security may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture.

Currency of Payment

Payment of principal of (and premium, if any) and
interest on this Security will be made in the Specified Currency for such
payment, except as provided in this and the next three paragraphs. The
Specified Currency for any payment shall be the currency specified as such on
the face of this Security unless, at the time of such payment, such currency is
not legal tender for the payment of public and private debts in the country
issuing such currency on the Original Issue Date, in which case the Specified
Currency for such payment shall be such coin or currency as at the time of such
payment is legal tender for the payment of public and private debts in such
country, except as provided in the next sentence. If the euro is specified on
the face of this Security as the Specified Currency for any payment, the
Specified Currency for such payment shall be such coin or currency as at the
time of payment is legal tender for the payment of public and private debts in
all EMU Countries (as defined in Section 3(n) on the reverse hereof), provided
that, if on any day there are not at least two EMU Countries, or if on any day
there are at least two EMU Countries but no coin or currency is legal tender
for the payment of

 4
 

public and private debts
in all EMU Countries, then the Specified Currency for such payment shall be
deemed not to be available to the Company on such day.

Except as provided in the next paragraph, any payment
to be made on this Security in a Specified Currency other than U.S. dollars
will be made in U.S. dollars if the Person entitled to receive such payment
transmits a written request for such payment to be made in U.S. dollars to the
Trustee at its Corporate Trust Office, on or before the tenth day before the
payment is to be made. Such written request may be mailed, hand delivered,
telecopied or delivered in any other manner approved by the Trustee. Any such
request made with respect to any payment on this Security payable to a
particular Holder will remain in effect for all later payments on this Security
payable to such Holder, unless such request is revoked on or before the tenth
day before a payment is to be made, in which case such revocation shall be
effective for such and all later payments. In the case of any payment of
interest payable on an Interest Payment Date, such written request must be made
by the Person who is the registered Holder of this Security on the relevant
Regular Record Date.

The U.S. dollar amount of any payment made pursuant to
the preceding paragraph will be determined by the Exchange Rate Agent based
upon the highest bid quotation received by the Exchange Rate Agent as of 11:00
A.M., New York City time, on the second Business Day preceding the applicable
payment date, from three (or, if three are not available, then two) recognized
foreign exchange dealers selected by the Exchange Rate Agent in The City of New
York, in each case for the purchase by the quoting dealer, for U.S. dollars and
for settlement on such payment date of an amount of the Specified Currency for
such payment equal to the aggregate amount of such Specified Currency payable
on such payment date to all Holders of Securities of this or any other series
who elect to receive U.S. dollar payments on such payment date, and at which
the applicable dealer commits to execute a contract. If the Exchange Rate Agent
determines that two such bid quotations are not available on such second
Business Day, such payment will be made in the Specified Currency for such
payment. All currency exchange costs associated with any payment in U.S.
dollars on this Security will be borne by the Holder entitled to receive such
payment, by deduction from such payment.

Notwithstanding the foregoing, if any amount payable
on this Security is payable on any day (including at Maturity) in a Specified
Currency other than U.S. dollars, and if such Specified Currency is not
available to the Company on the two Business Days before such day, due to the
imposition of exchange controls, disruption in a currency market or any other
circumstances beyond the control of the Company, the Company will be entitled
to satisfy its obligation to pay such amount in such Specified Currency by
making such payment in U.S. dollars. The amount of such payment in U.S. dollars
shall be determined by the Exchange Rate Agent on the basis of the noon buying
rate for cable transfers in The City of New York for such Specified Currency
(the “Exchange Rate”) as of the latest day before the day on which such
payment is to be made. Any payment made under such circumstances in U.S.
dollars where the required payment is in other than U.S. dollars will not
constitute an Event of Default under the Indenture or this Security.

 5
 

Manner of Payment – U.S. Dollars

Except as provided in the next paragraph, payment of
any amount payable on this Security in U.S. dollars will be made at the office
or agency of the Company maintained for that purpose in The City of New York
(or at any other office or agency maintained by the Company for that purpose),
against surrender of this Security in the case of any payment due at the
Maturity of the principal hereof (other than any payment of interest that first
becomes due on an Interest Payment Date); provided, however, that,
at the option of the Company and subject to the next paragraph, payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.

Payment of any amount payable on this Security in U.S.
dollars will be made by wire transfer of immediately available funds to an
account maintained by the payee with a bank located in The City of New York, if
(i) the principal of this Security is at least $1,000,000 and
(ii) the Holder entitled to receive such payment transmits a written
request for such payment to be made in such manner to the Paying Agent at its
Corporate Trust Office, Attention: Citibank Agency & Trust Services, on or
before the tenth day before the day on which such payment is to be made; provided
that, in the case of any such payment due at the Maturity of the principal
hereof (other than any payment of interest that first becomes due on an
Interest Payment Date), this Security must be surrendered at the office or
agency of the Company maintained for that purpose in The City of New York (or
at any other office or agency maintained by the Company for that purpose) in
time for the Paying Agent to make such payment in such funds in accordance with
its normal procedures. Any such request made with respect to any payment on
this Security payable to a particular Holder will remain in effect for all
later payments on this Security payable to such Holder, unless such request is
revoked on or before the tenth day before a payment is to be made, in which
case such revocation shall be effective for such and all later payments. In the
case of any payment of interest payable on an Interest Payment Date, such
written request must be made by the Person who is the registered Holder of this
Security on the relevant Regular Record Date. The Company will pay any
administrative costs imposed by banks in connection with making payments by
wire transfer with respect to this Security, but any tax, assessment or other
governmental charge imposed upon any payment will be borne by the Holder of
this Security and may be deducted from the payment by the Company or the Paying
Agent.

Manner of Payment – Other Specified Currencies

Payment of any amount payable on this Security in a
Specified Currency other than U.S. dollars will be made by wire transfer of
immediately available funds to such account as is maintained in such Specified
Currency at a bank or other financial institution acceptable to the Company and
the Trustee and as shall have been designated at least ten days prior to the
applicable payment date by the Person entitled to receive such payment; provided
that, in the case of any such payment due at the Maturity of the principal
hereof (other than any payment of interest that first becomes due on an Interest
Payment Date), this Security must be surrendered at the office or agency of the
Company maintained for that purpose in The City of New York (or at any other
office or agency maintained by the Company for that purpose) in time for the
Paying Agent to make such payment in such funds in accordance with its normal
procedures. Such account designation shall be made by transmitting the
appropriate information to the Paying Agent at its Corporate Trust Office,
Attention: Citibank Agency & Trust Services, by mail, hand

 6
 

delivery, telecopier or
in any other manner approved by the Trustee. Unless revoked, any such account
designation made with respect to this Security by the Holder hereof will remain
in effect with respect to any further payments with respect to this Security
payable to such Holder. If a payment in a Specified Currency other than U.S.
dollars with respect to this Security cannot be made by wire transfer because
the required account designation has not been received by the Paying Agent on
or before the requisite date or for any other reason, the Company will cause a
notice to be given to the Holder of this Security at its registered address
requesting an account designation pursuant to which such wire transfer can be
made and such payment will be made within five Business Days after the Paying
Agent’s receipt of such a designation meeting the requirements specified above,
with the same force and effect as if made on the due date. The Company will pay
any administrative costs imposed by banks in connection with making payments by
wire transfer with respect to this Security, but any tax, assessment or other
governmental charge imposed upon any payment will be borne by the Holder of
this Security and may be deducted from the payment by the Company or the Paying
Agent.

Manner of Payment – Global Securities

Notwithstanding any provision of this security or the
Indenture, if this Security is a Global Security, the Company may make any and
all payments of principal, premium and interest on this Security pursuant to
the applicable policies of the Depositary for this Security as permitted in the
Indenture.

Payments Due on a Business Day

Unless otherwise specified on the face of this
Security, the following sentence shall apply to this Security. Notwithstanding
any provision of this Security or the Indenture, if any amount of principal,
premium or interest would otherwise be due on this Security at Maturity on a
day (the “Specified Day”) that is not a Business Day, such amount may be
paid or made available for payment on the next succeeding Business Day with the
same force and effect as if such amount were paid on the Specified Day. The
provisions of this paragraph shall apply to this Security in lieu of the
provisions of Section 113 of the Indenture.

Unless otherwise specified on the face of this
Security, the following sentence shall apply to each Interest Payment Date
other than one that falls on the date of Maturity of the principal hereof. If
any such Interest Payment Date would otherwise be a day that is not a Business
Day, such Interest Payment Date shall be deferred to the next succeeding
Business Day, provided that, if the Base Rate is LIBOR or EURIBOR and the next
succeeding Business Day would fall in the next calendar month, then such
Interest Payment Date will be advanced to the next preceding Business Day.

Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has
been executed by the Trustee by manual signature, this Security shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.

 7
 

IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed.

	
  

  	
  3M COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
  

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  This is one of the
  Securities of the series designated herein and referred to in the Indenture.

  
	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CITIBANK, N.A., as Trustee

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  	
   

  
						

 

 8
 

(Reverse of Security)

1.                                       Securities and Indenture

This Security is one of a duly authorized issue of
securities of the Company (herein called the “Securities”) issued and to be
issued in one or more series under an Indenture, dated as of November 17, 2000
(herein called the “Indenture”, which term shall have the meaning assigned to
it in such instrument), between the Company and Citibank, N.A., as Trustee
(herein called the “Trustee”, which term includes any successor trustee under
the Indenture), and reference is hereby made to the Indenture for a statement
of the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered.

2.                                       Series and Denominations

This Security is one of the series designated on the
face hereof, limited to an aggregate principal amount not to exceed
$3,000,000,000 (or the equivalent thereof in any other currency or currencies
or currency units), which amount may be increased at the option of the Company
if in the future it determines that it may wish to sell additional Securities
of this series. References herein to “this series” mean the series of
securities designated on the face hereof.

The Securities of this series are issuable only in
registered form without coupons in “Authorized Denominations”, which term shall
have the following meaning. For each Security of this series having a principal
amount payable in U.S. dollars, the Authorized Denominations shall be $2,000
and integral multiples of $1,000 in excess thereof. For each Security of this
series having a principal amount payable in a Specified Currency other than
U.S. dollars, the Authorized Denominations shall be the amount of such
Specified Currency equivalent, at the Exchange Rate on the first Business Day
next preceding the date on which the Company accepts the offer to purchase such
Security, to $2,000 and integral multiples of $1,000 in excess thereof.

3.                                       Interest Rate

(a)                                  Interest Rate Reset.
The interest rate on this Security will be reset from time to time, as provided
in this Section 3, and each date upon which such rate is reset as so provided
is hereinafter called an “Interest Reset Date”. Unless otherwise
specified on the face hereof, the Interest Reset Dates with respect to this
Security will be as follows:

(i)                                     if
the Interest Reset Period is daily, each Business Day;

(ii)                                  if
the Interest Reset Period is weekly and the Base Rate is not the Treasury Rate,
the Wednesday of each week;

(iii)                               if
the Interest Reset Period is weekly and the Base Rate is the Treasury Rate,
except as otherwise provided in the definition of “Treasury Interest
Determination Date” in Section 3(n) below, the Tuesday of each week;

 9
 

(iv)                              if
the Interest Reset Period is monthly, the third Wednesday of each month;

(v)                                 if
the Interest Reset Period is quarterly, the third Wednesday of each March,
June, September and December;

(vi)                              if
the Interest Reset Period is semi-annual, the third Wednesday of each of two
months in each year specified under “Interest Reset Period” on the face hereof;
and

(vii)                           if the
Interest Reset Period is annual, the third Wednesday of the month in each year
specified under “Interest Reset Period” on the face hereof;

provided, however, that (x)
the Base Rate in effect from the Original Issue Date to but excluding the first
Interest Reset Date will be the Initial Base Rate and (y) if the Interest Reset
Period is daily or weekly, the Base Rate in effect for each day following the
second Business Day immediately prior to an Interest Payment Date to but
excluding such Interest Payment Date, and for each day following the second
Business Day immediately prior to the day of Maturity of the principal hereof
to but excluding such day of Maturity, will be the Base Rate in effect on such
applicable second Business Day; and provided, further, that, if
any Interest Reset Date would otherwise be a day that is not a Business Day,
such Interest Reset Date shall be the next succeeding day that is a Business
Day, except that, unless otherwise specified on the face hereof, if the Base
Rate is LIBOR or EURIBOR and such next succeeding Business Day falls in the
next succeeding calendar month, such Interest Reset Date shall be the
immediately preceding Business Day.

Subject to applicable provisions of law and except as
otherwise specified herein, on each Interest Reset Date the interest rate on
this Security shall be the rate determined in accordance with such of the
following Sections 3(b) through 3(j) as provide for determination of the Base
Rate for this Security. The Calculation Agent shall determine the interest rate
of this Security in accordance with the applicable Section below.

Unless the Base Rate is LIBOR or EURIBOR, the
Calculation Agent will determine the interest rate of this Security that takes
effect on any Interest Reset Date on a day no later than the Calculation Date
(as defined in Section 3(n) below) corresponding to such Interest Reset Date.
However, the Calculation Agent need not wait until the Calculation Date to
determine such interest rate if the rate information it needs to make such
determination in the manner specified in the applicable provisions of Sections
3(b) through 3(j) hereof is available from the relevant sources specified in
such applicable provisions.

Upon request of the Holder to the Calculation Agent,
the Calculation Agent will provide the interest rate then in effect on this
Security and, if determined, the interest rate that will become effective on
the next Interest Reset Date.

(b)                                 Determination of Commercial Paper
Rate.  If the Base
Rate is the Commercial Paper Rate, the Base Rate that takes effect on any
Interest Reset Date shall equal the Money Market Yield (as defined in Section
3(n) below) of the rate, for the second Business Day immediately preceding such
Interest Reset Date (the “Commercial Paper Interest Determination Date”),
for commercial paper having the Index Maturity, as published in H.15(519) (as
defined

 10
 

in Section
3(n) below) under the heading “Commercial paper — Nonfinancial”. If the
Commercial Paper Rate cannot be determined as described above, the following
procedures will apply in determining the Commercial Paper Rate:

(i)                                     If
the rate described above does not appear in H.15(519) at 3:00 P.M., New York
City time, on the Calculation Date (as defined in Section 3(n) below)
corresponding to such Commercial Paper Interest Determination Date (unless the
calculation is made earlier and the rate is available from that source at that
time), then the Commercial Paper Rate will be the rate, for such Commercial
Paper Interest Determination Date, for commercial paper having the Index
Maturity, as published in H.15 Daily Update (as defined in Section 3(n) below)
or any other recognized electronic source used for displaying that rate, under
the heading “Commercial Paper — Nonfinancial”.

(ii)                                  If
the rate described in clause (i) above does not appear in H.15(519), H.15 Daily
Update or another recognized electronic source at 3:00 P.M., New York City
time, on such Calculation Date (unless the calculation is made earlier and the
rate is available from one of those sources at that time), the Commercial Paper
Rate will be the Money Market Yield of the arithmetic mean of the following
offered rates for U.S. dollar commercial paper that has the Index Maturity and
is placed for an industrial issuer whose bond rating is “AA”, or the equivalent,
from a nationally recognized rating agency: the rates offered as of 11:00 A.M.,
New York City time, on such Commercial Paper Interest Determination Date by
three leading U.S. dollar commercial paper dealers in New York City selected by
the Calculation Agent.

(iii)                               If
fewer than three dealers selected by the Calculation Agent are quoting as
described in clause (ii) above, the Commercial Paper Rate shall be the
Commercial Paper Rate in effect on such Commercial Paper Interest Determination
Date (or, in the case of the first Interest Reset Date, the Initial Base Rate).

The Base Rate determined in accordance with this
Section 3(b) will be adjusted by the addition or subtraction of the Spread, if
any, or by multiplying such Base Rate by the Spread Multiplier, if any.

(c)                                  Determination of Prime Rate.  If the Base Rate is the Prime Rate, the Base
Rate that takes effect on any Interest Reset Date shall equal the rate, for the
second Business Day immediately preceding such Interest Reset Date (the “Prime
Interest Determination Date”), published in H.15(519) under the heading “Bank
prime loan”. If the Prime Rate cannot be determined as described above, the
following procedures will apply in determining the Prime Rate:

(i)                                     If
the rate described above does not appear in H.15(519) at 3:00 P.M., New York
City time, on the Calculation Date corresponding to such Prime Interest
Determination Date (unless the calculation is made earlier and the rate is
available from one of those sources at that time), then the Prime Rate will be
the rate, for such Prime Interest Determination Date, as published in H.15 Daily
Update or another recognized

 11
 

electronic
source used for the purpose of displaying that rate, under the heading “Bank
prime loan”.

(ii)                                  If
the rate described in clause (i) above does not appear in H.15(519), H.15 Daily
Update or another recognized electronic source at 3:00 P.M., New York City
time, on such Calculation Date (unless the calculation is made earlier and the
rate is available from one of those sources at that time), then the Prime Rate
will be the arithmetic mean of the following rates as they appear on the
Reuters Page USPRIME1 (as defined in Section 3(n) below): the rate of
interest publicly announced by each bank appearing on that page as that bank’s
prime rate or base lending rate, as of 11:00 A.M., New York City time, on
such Prime Interest Determination Date.

(iii)                               If
fewer than four of the rates referred to in clause above appear on the Reuters
Page USPRIME1, the Prime Rate will be the arithmetic mean of the Prime Rates or
base lending rates, as of the close of business on such Prime Interest
Determination Date, of three major banks in New York City selected by the
Calculation Agent. For this purpose, the Calculation Agent will use rates
quoted on the basis of the actual number of days in the year divided by a
360-day year.

(iv)                              If
fewer than three banks selected by the Calculation Agent are quoting as
described in clause (iii) above, the Prime Rate shall be the Prime Rate in
effect on such Prime Interest Determination Date (or, in the case of the first
Interest Reset Date, the Initial Base Rate).

The Base Rate determined in accordance with this
Section 3(c) will be adjusted by the addition or subtraction of the Spread, if
any, or by multiplying such Base Rate by the Spread Multiplier, if any.

(d)                                 Determination of LIBOR.  If the Base Rate is LIBOR, the Base Rate that
takes effect on any Interest Reset Date shall be LIBOR on the corresponding
LIBOR Interest Determination Date (as defined in Section 3(n) below) and shall
be determined in accordance with the following provisions:

(i)                                     LIBOR
will be the offered rate appearing on the Designated LIBOR Page (as defined in
Section 3(n) below) as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date for deposits of the Index Currency having the Index Maturity
beginning on such Interest Reset Date.

(ii)                                  If
no rate appears on the Designated LIBOR Page, then LIBOR will be determined on
the basis of the rates, at approximately 11:00 A.M., London time, on such LIBOR
Interest Determination Date, at which deposits of the following kind are
offered to prime banks in the London interbank market by four major banks in
that market selected by the Calculation Agent: deposits of the Index Currency
having the Index Maturity beginning on such Interest Reset Date and in a
Representative Amount (as defined in Section 3(n) below).  The Calculation Agent will request the
principal London office of each such bank to provide a quotation of its rate.
If at least two quotations are

 12
 

provided,
LIBOR for such LIBOR Interest Determination Date will be the arithmetic mean of
the quotations.

(iii)                               If
fewer than two quotations are provided as described in clause (i) above, LIBOR
for such LIBOR Interest Determination Date will be the arithmetic mean of the
rates for loans of the following kind to leading European banks quoted, at
approximately 11:00 A.M. in the Principal Financial Center (as defined in
Section 3(n) below), on such LIBOR Interest Determination Date, by three major
banks in that financial center selected by the Calculation Agent: loans of the
Index Currency having the Index Maturity beginning on such Interest Reset Date
and in a Representative Amount.

(iv)                              If
fewer than three banks selected by the Calculation Agent are quoting as
described in clause (ii) above, LIBOR will be the LIBOR in effect on such LIBOR
Interest Determination Date (or, in the case of the first Interest Reset Date,
the Initial Base Rate).

The Base Rate determined in accordance with this
Section 3(d) will be adjusted by the addition or subtraction of the Spread, if
any, or by multiplying such Base Rate by the Spread Multiplier, if any. If the
Base Rate is LIBOR and no currency is specified on the face hereof as the Index
Currency, the Index Currency shall be U.S. dollars.

(e)                                  Determination of EURIBOR.  If the Base Rate is EURIBOR, the Base Rate
that takes effect on any Interest Reset Date shall equal the interest rate for
deposits in euros designated as “EURIBOR” and sponsored jointly by the European
Banking Federation and ACI — the Financial Market Association (or any company
established by the joint sponsors for purposes of compiling and publishing that
rate) on the second TARGET Business Day (as defined in Section 3(n) below)
before such Interest Reset Date (a “EURIBOR Interest Determination Date”),
and will be determined in accordance with the following provisions:

(i)                                     EURIBOR
will be the offered rate for deposits in euros having the Index Maturity
beginning on such Interest Reset Date, as that rate appears on Reuters Page
EURIBOR01 (as defined in Section 3(n) below) as of 11:00 A.M., Brussels time,
on such EURIBOR Interest Determination Date.

(ii)                                  If
the rate described in clause (i) above does not appear on Reuters Page
EURIBOR01, EURIBOR will be determined on the basis of the rates, at
approximately 11:00 A.M., Brussels time, on such EURIBOR Interest Determination
Date, at which deposits of the following kind are offered to prime banks in the
Euro-Zone (as defined in Section 3(n) below) interbank market by the principal
Euro-Zone office of each of four major banks in that market selected by the
Calculation Agent: euro deposits having the Index Maturity beginning on such
Interest Reset Date and in a Representative Amount. The Calculation Agent will
request the principal Euro-Zone office of each of these banks to provide a
quotation of its rate. If at least two quotations are provided, EURIBOR for
such EURIBOR Interest Determination Date will be the arithmetic mean of such
quotations.

 13
 

(iii)                               If
fewer than two quotations are provided as described in clause (ii) above,
EURIBOR for such EURIBOR Interest Determination Date will be the arithmetic
mean of the rates for loans of the following kind to leading Euro-Zone banks
quoted, at approximately 11:00 A.M., Brussels time, on such EURIBOR Interest
Determination Date, by three major banks in the Euro-Zone selected by the
Calculation Agent: loans of euros having the Index Maturity beginning on such
Interest Reset Date and in a Representative Amount.

(iv)                              If
fewer than three banks selected by the Calculation Agent are quoting as
described in clause (iii) above, EURIBOR shall be the EURIBOR in effect on such
EURIBOR Interest Determination Date (or, in the case of the first Interest
Reset Date, the Initial Base Rate).

The Base Rate determined in accordance with this
Section 3(e) will be adjusted by the addition or subtraction of the Spread, if
any, or by multiplying such Base Rate by the Spread Multiplier, if any.

(f)                                    Determination of Treasury Rate.  If the Base Rate is the Treasury Rate, the
Base Rate that takes effect on any Interest Reset Date shall equal the rate for
the auction on the corresponding Treasury Interest Determination Date (as
defined in Section 3(n) below) of direct obligations of the United States (“Treasury
Bills”) having the Index Maturity, as that rate appears on Reuters Page
USAUCTION10 or USAUCTION11 under the heading “INVESTRATE”.  If the Treasury Rate cannot be determined as
described above, the following procedures will apply in determining the Treasury
Rate:

(i)                                     If
the rate described above does not appear on either Reuters Page USAUCTION10 or
USAUCTION11 at 3:00 P.M., New York City time, on the Calculation Date
corresponding to such Treasury Interest Determination Date (unless the
calculation is made earlier and the rate is available from that source at that
time), the Treasury Rate will be the Bond Equivalent Yield (as defined in
Section 3(n) below) of the rate, for such Treasury Interest Determination Date
and for Treasury Bills having the Index Maturity, as published in H.15 Daily
Update, or another recognized electronic source used for displaying that rate,
under the heading “U.S. government securities/Treasury bills/Auction high”.

(ii)                                  If
the rate described in clause (i) above does not appear in H.15 Daily Update or
another recognized electronic source at 3:00 P.M., New York City time, on such
Calculation Date (unless the calculation is made earlier and the rate is
available from one of those sources at that time), the Treasury Rate will be
the Bond Equivalent Yield of the auction rate, for such Treasury Interest
Determination Date and for Treasury Bills having the Index Maturity, as
announced by the U.S. Department of the Treasury.

(iii)                               If
the auction rate described in clause (ii) above is not so announced by
3:00 P.M., New York City time, on such Calculation Date, or if no such
auction is held for the relevant week, then the Treasury Rate will be the Bond
Equivalent Yield of the rate, for such Treasury Interest Determination Date and
for Treasury Bills having a

 14

remaining maturity closest to the Index Maturity, as published in
H.15(519) under the heading “U.S. government securities/Treasury
bills/secondary market”.

(iv)                              If the rate described in
clause (iii) above does not appear in H.15(519) at 3:00 P.M., New York
City time, on such Calculation Date (unless the calculation is made earlier and
the rate is available from one of those sources at that time), then the
Treasury Rate will be the rate, for such Treasury Interest Determination Date
and for Treasury Bills having a remaining maturity closest to the Index
Maturity, as published in H.15 Daily Update, or another recognized electronic
source used for displaying that rate, under the heading “U.S. government
securities/Treasury bills /secondary market”.

(v)                                 If the rate described
in clause (iv) above does not appear in H.15 Daily Update, H.15(519) or another
recognized electronic source at 3:00 P.M., New York City time, on such
Calculation Date (unless the calculation is made earlier and the rate is
available from one of those sources at that time), the Treasury Rate will be
the Bond Equivalent Yield of the arithmetic mean of the following secondary
market bid rates for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity: the rates bid as of approximately 3:30 P.M., New
York City time, on such Treasury Interest Determination Date, by three primary
U.S. government securities dealers in New York City selected by the Calculation
Agent.

(vi)                              If fewer than three
dealers selected by the Calculation Agent are quoting as described in clause
(v) above, the Treasury Rate shall be the Treasury Rate in effect on such
Treasury Interest Determination Date (or, in the case of the first Interest
Reset Date, the Initial Base Rate).

The Base Rate determined in accordance with this
Section 3(f) will be adjusted by the addition or subtraction of the Spread, if
any, or by multiplying such Base Rate by the Spread Multiplier, if any,
specified on the face hereof.

(g)                                 Determination of CMT Rate.
If the Base Rate is the CMT Rate, the Base Rate that takes effect on any
Interest Reset Date shall equal the CMT Rate on the second Business Day
immediately preceding such Interest Reset Date (the “CMT Interest
Determination Date”). “CMT Rate” means the following rate displayed on the
Designated CMT Reuters Page (as defined in Section 3(n) below) under the
heading “ . . . Treasury Constant Maturities . . .”, for the Designated CMT
Index Maturity (as defined in Section 3(n) below):

(x)                                   if
the Designated CMT Reuters Page is Reuters Page FRBCMT, the rate for such
CMT Interest Determination Date; or

(y)                                 if
the Designated CMT Reuters Page is Reuters Page FEDCMT, the weekly or monthly
average, as specified on the face hereof, for the week that ends immediately
before the week in which such CMT Interest Determination Date falls, or for the
month that ends immediately before the month in which such CMT Interest
Determination Date falls, as applicable.

If the CMT Rate cannot be determined as described
above, the following procedures will apply in determining the CMT Rate:

 15
 

(i)                                     If the applicable
rate described above is not displayed on the relevant Designated CMT Reuters
Page at 3:00 P.M., New York City time, on the Calculation Date corresponding to
such CMT Interest Determination Date (unless the calculation is made earlier
and the rate is available from that source at that time), then the CMT Rate
will be the applicable Treasury constant maturity rate described above — i.e., for the Designated CMT Index Maturity and for either
such CMT Interest Determination Date or the weekly or monthly average, as
applicable — as published in H.15(519).

(ii)                                  If the applicable
rate described in clause (i) above does not appear in H.15(519) at 3:00 P.M.,
New York City time, on such Calculation Date (unless the calculation is made
earlier and the rate is available from that source at that time), then the CMT
Rate will be the Treasury constant maturity rate, or other U.S. Treasury rate,
for the Designated CMT Index Maturity and with reference to such CMT Interest
Determination Date, that:

(a)                                  is
published by the Board of Governors of the Federal Reserve System, or the U.S.
Department of the Treasury, and

(b)                                 is
determined by the Calculation Agent to be comparable to the applicable rate
formerly displayed on the Designated CMT Reuters Page and published in
H.15(519).

(iii)                               If the rate described in
clause (ii) above does not appear in H.15(519) at 3:00 P.M., New York City
time, on such Calculation Date (unless the calculation is made earlier and the
rate is available from that source at that time), then the CMT Rate will be the
yield to maturity of the arithmetic mean of the following secondary market
offered rates for the most recently issued Treasury Notes (as defined in
Section 3(n) below) having an original maturity of approximately the Designated
CMT Index Maturity, having a remaining term to maturity of not less than the
Designated CMT Index Maturity minus one year and in a Representative Amount:
the offered rates, as of approximately 3:30 P.M., New York City time, on such
CMT Interest Determination Date, of three primary U.S. government securities
dealers in New York City selected by the Calculation Agent. In selecting such
offered rates, the Calculation Agent will request quotations from five such
primary dealers and will disregard the highest quotation — or, if there is
equality, one of the highest — and the lowest quotation — or, if there is
equality, one of the lowest.

(iv)                              If the Calculation Agent
is unable to obtain three quotations of the kind described in clause (iii)
above, the CMT Rate will be the yield to maturity of the arithmetic mean of the
following secondary market offered rates for Treasury Notes having an original
maturity longer than the Designated CMT Index Maturity, having a remaining term
to maturity closest to the Designated CMT Index Maturity and in a
Representative Amount: the offered rates, as of approximately 3:30 P.M., New
York City time, on such CMT Interest Determination Date, of three primary U.S.
government securities dealers in New York City selected by the Calculation
Agent. In selecting such offered rates, the Calculation Agent will request
quotations from five such primary dealers and will disregard the highest
quotation — or, if there is equality, one of the

 16
 

highest — and the lowest quotation — or, if there is equality, one of
the lowest. If two Treasury Notes with an original maturity longer than the CMT
Designated Index Maturity have remaining terms to maturity that are equally
close to the Designated CMT Index Maturity, the Calculation Agent will obtain
quotations for the Treasury Note with the shorter remaining term to maturity.

(v)                                 If fewer than five but
more than two such primary dealers are quoting as described in each of clauses
(iii) and (iv) above, then the CMT Rate for such CMT Interest Determination
Date will be based on the arithmetic mean of the offered rates so obtained, and
neither the highest nor the lowest of such quotations will be disregarded.

(vi)                              If two or fewer primary
dealers selected by the Calculation Agent are quoting as described in clause
(v) above, the CMT Rate shall be the CMT Rate in effect on such CMT Interest
Determination Date (or, in the case of the first Interest Reset Date, the
Initial Base Rate).

The Base Rate determined
in accordance with this Section 3(g) will be adjusted by the addition or
subtraction of the Spread, if any, or by multiplying such Base Rate by the
Spread Multiplier, if any.

(h)                                 Determination of CD Rate.  If the Base Rate is the CD Rate, the Base
Rate that takes effect on any Interest Reset Date shall equal the rate, on the
second Business Day immediately preceding such Interest Reset Date (the “CD
Interest Determination Date”), for negotiable U.S. dollar certificates of
deposit having the Index Maturity as published in H.15(519) under the heading “CDs
(secondary market)”. If the CD Rate cannot be determined as described above,
the following procedures will apply in determining the CD Rate:

(i)                                     If the rate
described above does not appear in H.15(519) at 3:00 P.M., New York City
time, on the Calculation Date corresponding to such CD Interest Determination
Date (unless the calculation is made earlier and the rate is available from
that source at that time), then the CD Rate shall be the rate described above
as published in H.15 Daily Update, or another recognized electronic source used
for displaying that rate, under the heading “CDs (secondary market)”.

(ii)                                  If the rate described
in clause (i) above does not appear in H.15(519), H.15 Daily Update or another
recognized electronic source at 3:00 P.M., New York City time, on such
Calculation Date (unless the calculation is made earlier and the rate is
available from one of those sources at that time), then CD Rate shall be the
arithmetic mean of the following secondary market offered rates for negotiable
U.S. dollar certificates of deposit of major U.S. money center banks having a
remaining maturity closest to the Index Maturity and in a Representative
Amount: the rates offered as of 10:00 A.M., New York City time, on such CD
Interest Determination Date, by three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in New York City, as selected by the
Calculation Agent.

(iii)                               If fewer than three
dealers selected by the Calculation Agent are quoting as described in clause
(ii) above, the CD Rate will be the CD Rate in effect on such CD

 17
 

Interest Determination Date (or, in the case of the first Base Reset
Date, the Initial Base Rate).

The Base Rate determined
in accordance with this Section 3(h) will be adjusted by the addition or
subtraction of the Spread, if any, or by multiplying such Base Rate by the
Spread Multiplier, if any.

(i)                                     Determination of Federal Funds Rate.  If the Base Rate is the Federal Funds Rate,
the Base Rate that takes effect on any Interest Reset Date shall equal the
rate, on the second Business Day immediately preceding such Interest Reset Date
(the “Federal Funds Interest Determination Date”), for Federal Funds as
published in H.15(519) opposite the heading “Federal funds (effective)”, as
that rate is displayed on Reuters Page FEDFUNDS1 under the heading “Effect.”  If the Federal Funds Rate cannot be determined
as described above, the following procedures will apply in determining the
Federal Funds Rate:

(i)                                     If the rate
described above is not displayed on Reuters Page FEDFUNDS1 at 3:00 P.M., New
York City time, on the Calculation Date corresponding to such Federal Funds
Interest Determination Date (unless the calculation is made earlier and the
rate is available from that source at that time), then the Federal Funds Rate
will be the rate described above as published in H.15 Daily Update, or another
recognized electronic source used for displaying that rate, under the heading “Federal
funds (effective)”.

(ii)                                  If the rate described
in clause (i) above is not displayed on Reuters Page FEDFUNDS1 and does not
appear in H.15 (519), H.15 Daily Update or another recognized electronic source
at 3:00 P.M., New York City time, on such Calculation Date (unless the
calculation is made earlier and the rate is available from one of those sources
at that time), the Federal Funds Rate will be the arithmetic mean of the rates
for the last transaction in overnight, U.S. dollar federal funds arranged,
before 9:00 A.M., New York City time, on such Federal Funds Interest Determination
Date, by three leading brokers of U.S. dollar federal funds transactions in New
York City selected by the Calculation Agent.

(iii)                               If fewer than three
brokers selected by the Calculation Agent are quoting as described in clause
(ii) above, the Federal Funds Rate will be the Federal Funds Rate in effect on
such Federal Funds Interest Determination Date (or, in the case of the first
Interest Reset Date, the Initial Base Rate).

The interest rate
determined in accordance with this Section 3(i) will be adjusted by the
addition or subtraction of the Spread, if any, or by multiplying such Base Rate
by the Spread Multiplier, if any.

(j)                                     Determination of 11th District Rate.
If the Base Rate is the Eleventh District Cost of Funds Rate (the “11th
District Rate”), the Base Rate that takes effect on any Interest Reset Date
shall equal the 11th District Rate on the 11th District Interest Determination
Date (as defined in Section 3(n) below) corresponding to such Interest Reset
Date. The 11th District Rate on any 11th District Interest Determination Date
shall be the rate equal to the monthly weighted average cost of funds for the
calendar month immediately before the month in

 18
 

which such date falls, as displayed on Reuters
Page COFI/ARMS under the heading “DistCOFI” as of 11:00 A.M., San
Francisco time, on such date.  If the
11th District Rate cannot be determined as described above, the following
procedures will apply in determining the 11th District Rate:

(i)                                     If the rate
described above does not appear on Reuters Page COFI/ARMS on such 11th District
Interest Determination Date, then the 11th District Rate on such date will be
the monthly weighted average cost of funds paid by institutions that are
members of the Eleventh Federal Home Loan Bank District for the calendar month
immediately preceding the month in which such date falls, as most recently
announced by the Federal Home Loan Bank of San Francisco as such monthly
weighted average cost of funds.

(ii)                                  If the Federal Home
Loan Bank of San Francisco fails to announce the cost of funds described in
clause (i) above on or before such 11th District Interest Determination Date,
the 11th District Rate that takes effect on such Interest Reset Date will be
the 11th District Rate in effect on such 11th District Interest Determination
Date (or, in the case of the first Interest Reset Date, the Initial Base Rate).

The interest rate
determined in accordance with this Section 3(j) will be adjusted by the
addition or subtraction of the Spread, if any, or by multiplying such Base Rate
by the Spread Multiplier, if any.

(k)                                  Minimum and Maximum Limits.  Notwithstanding the foregoing, the rate at
which interest accrues on this Security (i) shall not at any time be higher
than the Maximum Rate, if any, or less than the Minimum Rate, if any, specified
on the face hereof, in each case on an accrual basis, and (ii) shall not at any
time be higher than the maximum rate permitted by New York law, as the same may
be modified by United States law of general application.

(l)                                     Calculation of Interest.  Payments of interest hereon with respect to
any Interest Payment Date or at the Maturity of the principal hereof will
include interest accrued to but excluding such Interest Payment Date or the
date of such Maturity, as the case may be. Accrued interest from the date of
issue or from the last date to which interest has been paid or duly provided
for shall be calculated by the Calculation Agent by multiplying the Principal
Amount by an accrued interest factor. Such accrued interest factor shall be
computed by adding the interest factors calculated for each day from and
including the Original Issue Date or from and including the last date to which
interest has been paid or duly provided for, to but excluding the date for
which accrued interest is being calculated. The interest factor for each such
day shall be expressed as a decimal and computed by dividing the interest rate
(also expressed as a decimal) in effect on such day by 360, if the Base Rate is
the Commercial Paper Rate, Prime Rate, LIBOR, EURIBOR, CD Rate, Federal Funds
Rate or 11th District Rate, or by the actual number of days in the year, if the
Base Rate is the Treasury Rate or CMT Rate.

All percentages resulting
from any calculation with respect to this Security will be rounded upward or
downward, as appropriate, to the next higher or lower one hundred-thousandth of
a percentage point (e.g., 9.876541% (or .09876541) being rounded down to
9.87654% (or .0987654) and 9.876545% (or .09876545) being rounded up to
9.87655% (or

 19
 

.0987655) ). All
amounts used in or resulting from any calculation with respect to this Security
will be rounded upward or downward, as appropriate, to the nearest cent, in the
case of U.S. dollars, or to the nearest corresponding hundredth of a unit, in
the case of a currency other than U.S. dollars, with one-half cent or one-half
of a corresponding hundredth of a unit or more being rounded upward.

(m)                               Calculation Agent and Exchange Rate
Agent. The Company has initially appointed the institutions
named on the face of this Security as Calculation Agent and Exchange Rate
Agent, respectively, to act as such agents with respect to this Security, but
the Company may, in its sole discretion, appoint any other institution
(including any Affiliate of the Company) to serve as any such agent from time
to time. The Company will give the Trustee prompt written notice of any change
in any such appointment. Insofar as this Security provides for any such agent
to obtain rates, quotes or other data from a bank, dealer or other institution
for use in making any determination hereunder, such agent may do so from any
institution or institutions of the kind contemplated hereby notwithstanding
that any one or more of such institutions are any such agent, Affiliates of any
such agent or Affiliates of the Company.

All determinations made
by the Calculation Agent or the Exchange Rate Agent may be made by such agent
in its sole discretion and, absent manifest error, shall be conclusive for all
purposes and binding on the Holder of this Security and the Company. Neither
the Calculation Agent nor the Exchange Rate Agent shall have any liability
therefor.

(n)                                 Definitions of Calculation Terms.
As used in this Security, the following terms have the meanings set forth
below:

“Bond Equivalent Yield”
means a yield expressed as a percentage and calculated in accordance with the
following formula:

	
  Bond Equivalent Yield =

  	
    D x N

  	
   x 100,

  
	
  360 - (DxM)

  

 

where

·                                          “D”
equals the annual rate for Treasury Bills quoted on a bank discount basis and
expressed as a decimal;

·                                          “N”
equals 365 or 366, as the case may be; and

·                                          “M”
equals the actual number of days in the period from and including the relevant
Interest Reset Date to but excluding the next succeeding Interest Reset Date.

“Business Day”
means, for this Security, a day that meets the requirements set forth in each
of clauses (i) through (v) below, in each case to the extent such requirements
apply to this Security as specified below:

(i)                                     is a Monday,
Tuesday, Wednesday, Thursday or Friday that is not a day on which banking
institutions in The City of New York generally are authorized or obligated by
law, regulation or executive order to close;

 20
 

(ii)                                  if the Base Rate is
LIBOR, is also a London Business Day;

(iii)                               if the Specified
Currency for payment of principal of or interest on this Security is other than
U.S. dollars or euros, is also a day on which banking institutions in the
principal financial center of the country issuing such Specified Currency are
not authorized or obligated by law, regulation or executive order to close;

(iv)                              if the Base Rate is
EURIBOR or if the Specified Currency for payment of principal of or interest on
this Security is euros, or the Base Rate is LIBOR for which the Index Currency
is euros, is also a TARGET Business Day; and

(v)                                 solely with respect to
any payment or other action to be made or taken at any Place of Payment outside
The City of New York, is a Monday, Tuesday, Wednesday, Thursday or Friday that
is not a day on which banking institutions in such Place of Payment generally
are authorized or obligated by law, regulation or executive order to close.

Solely when used in the
third paragraph under the heading “Currency of Payment” on the face of this
Security, the meaning of the term “Business Day” shall be determined as if the
Base Rate for this Security is neither LIBOR nor EURIBOR. With respect to any
particular location, the close of business on any day on which business is not
being conducted at that location shall be deemed to mean 5:00 P.M., New York
City time, on that day.

The “Calculation Date”
corresponding to any Commercial Paper Interest Determination Date, Prime
Interest Determination Date, LIBOR Interest Determination Date, EURIBOR
Interest Determination Date, Treasury Interest Determination Date, CMT Interest
Determination Date, CD Interest Determination Date, Federal Funds Interest
Determination Date or 11th District Interest Determination Date, as the case
may be, means the earlier of:

(i)                                     the
tenth calendar day after such interest determination date or, if any such day
is not a Business Day, the next succeeding Business Day; and

(ii)                                  the
Business Day immediately preceding the Interest Payment Date or the date of
Maturity of the principal hereof, whichever is the day on which the next
payment of interest will be due.

The Calculation Date
corresponding to any Interest Reset Date means the Calculation Date
corresponding to the relevant interest determination date immediately preceding
such Interest Reset Date.

“Designated CMT Index
Maturity” means, if the Base Rate is the CMT Rate, the Index Maturity for
this Security and will be the original period to maturity of a U.S. Treasury
security specified on the face hereof, provided that, if no such
original maturity period is so specified, the Designated CMT Index Maturity
will be 2 years.

“Designated CMT Reuters
Page” means, if the Base Rate is the CMT Rate, the Reuters Page specified
on the face hereof that displays Treasury constant maturities as reported in
H.15(519), provided that, if no Reuters Page is so specified, then the
applicable page will be

 21
 

Reuters Page FEDCMT
and provided, further, that if Reuters Page FEDCMT applies but it
is not specified on the face hereof whether the weekly or monthly average
applies, the weekly average will apply.

“Designated LIBOR Page”
means the display on the Reuters 3000 Xtra Service, or any successor service,
on the “LIBOR01” page or “LIBOR02” page, as specified on the face hereof, or
any replacement page or pages on which London interbank rates of major banks for
the relevant index currency are displayed.

The “11th District
Interest Determination Date” corresponding to a particular Interest Reset
Date will be the last working day, in the first calendar month immediately
preceding such Interest Reset Date, on which the Federal Home Loan Bank of San
Francisco publishes the monthly average cost of funds paid by member
institutions of the Eleventh Federal Home Loan Bank District for the second
calendar month immediately preceding such Interest Reset Date.

“EMU Countries”
means, at any time, the countries (if any) then participating in the European
Economic and Monetary Union (or any successor union) pursuant to the Treaty on
European Union of February 1992 (or any successor treaty), as it may be amended
from time to time.

“Euro-Zone” means,
at any time, the region comprised of the EMU Countries.

“H.15(519)” means
the weekly statistical release entitled “Statistical Release H.15 (519)”, or
any successor publication, published by the Board of Governors of the Federal
Reserve System.

“H.15 Daily Update”
means the daily update of H.15 (519) available through the worldwide web site
of the Board of Governors of the Federal Reserve System, at http://www.
federalreserve.gov/releases/h15/update, or any successor site or publication.

The “LIBOR Interest
Determination Date” corresponding to any Interest Reset Date means the
second London Business Day preceding such Interest Reset Date, unless the Index
Currency is pounds sterling, in which case the LIBOR Interest Determination
Date will be the Interest Reset Date.

“London Business Day”
means any day on which dealings in the Index Currency are transacted in the
London interbank market.

“Money Market Yield”
means a yield expressed as a percentage and calculated in accordance with the following
formula:

	
  Money Market Yield =

  	
   D x 360

  	
   x 100,

  
	
  360 - (DxM)

  

 

where

 22
 

·                                          “D”
equals the per annum rate for commercial paper quoted on a bank discount basis
and expressed as a decimal; and

·                                          “M”
equals the actual number of days in the period from and including the relevant
Interest Reset Date to but excluding the next succeeding Interest Reset Date.

“Principal Financial
Center” means means (i) the capital city of the country issuing the
specified currency, or (ii) the capital city of the country to which the index
currency, if applicable, relates, except, in each case, that with respect to
U.S. dollars, Australian dollars, Canadian dollars, Euros, South African rand
and Swiss francs, the “Principal Financial Center” shall be The City of New
York, Sydney, Toronto, London (solely in the case of the index currency),
Johannesburg and Zurich, respectively.

“Representative
Amount” means an amount that, in the Calculation Agent’s judgment, is
representative of a single transaction in the relevant market at the relevant
time.

“Reuters Page”
means the display on the Reuters 3000 Xtra Service, or any successor service,
on the page or pages specified in this Security, or any replacement page or
pages on that service.

“Reuters Page USPRIME1”
means the display on the Reuters 3000 Xtra Service, or any successor service, on
the “USPRIME1” page, or any replacement page or pages on which prime rates or
base lending rates of major U.S. banks are displayed.

“TARGET Business Day”
means any day on which the Trans-European Automated Real-Time Gross Settlement
Express Transfer (TARGET) System, or any successor system, is open for
business.

The “Treasury Interest
Determination Date” corresponding to any Interest Reset Date means the day
of the week in which such Interest Reset Date falls on which Treasury bills
would normally be auctioned. If, as the result of a legal holiday, an auction
is so held on the Friday in the week immediately preceding the week in which
such Interest Reset Day falls, such Friday will be the corresponding Treasury
Interest Determination Date.

“Treasury Notes”
means direct, noncallable, fixed rate obligations of the U.S. government.

References in this
Security to U.S. dollars shall mean, as of any time, the coin or currency that is
then legal tender for the payment of public and private debts in the United
States of America.

References in this
Security to the euro shall mean, as of any time, the coin or currency (if any)
that is then legal tender for the payment of public and private debts in all
EMU Countries.

References in this
Security to a particular currency other than U.S. dollars and euros shall mean,
as of any time, the coin or currency that is then legal tender for the payment
of public and private debts in the country issuing such currency on the
Original Issue Date.

 23
 

References in this
Security to a particular heading or headings on any of Designated CMT Reuters
Page, H.15(519), H.15 Daily Update, Reuters Page FEDFUNDS1, Reuters Page
USAUCTION10, Reuters Page USAUCTION11 or Reuters Page COFI/ARMS include any
successor or replacement heading or headings as determined by the Calculation
Agent.

4.                                       Redemption at the Company’s
Option

Unless a Redemption
Commencement Date is specified on the face hereof, this Security shall not be
redeemable at the option of the Company before the Stated Maturity Date. If a
Redemption Commencement Date is so specified, and unless otherwise specified on
the face hereof, this Security is subject to redemption upon not less than 30
days’ nor more than 60 days’ notice at any time and from time to time on or
after the Redemption Commencement Date, in each case as a whole or in part, at
the election of the Company and at the applicable Redemption Price specified on
the face hereof (expressed as a percentage of the principal amount of this
Security to be redeemed), together with accrued interest to the Redemption
Date, but interest installments due on or prior to such Redemption Date will be
payable to the Holder of this Security, or one or more Predecessor Securities,
of record at the close of business on the relevant Regular Record Date, all as
provided in the Indenture.

5.                                       Repayment at the Holder’s Option

Except as otherwise may
be provided on the face hereof, if one or more Repayment Dates are specified on
the face hereof, this Security will be repayable in whole or in part in an
amount equal to any Authorized Denomination (provided that the remaining
principal amount of any Security surrendered for partial repayment shall at
least equal an Authorized Denomination), on any such Repayment Date, in each
case at the option of the Holder and at the applicable Repayment Price
specified on the face hereof (expressed as a percentage of the principal amount
to be repaid), together with accrued interest to the applicable Repayment Date
(but interest installments due on or prior to such Repayment Date will be
payable to the Holder of this Security, or one or more Predecessor Securities,
of record at the close of business on the relevant Regular Record Date as provided
in the Indenture). If this Security provides for more than one Repayment Date,
and the Holder exercises its option to elect repayment, the Holder shall be
deemed to have elected repayment on the earliest repayment date after all
conditions to such exercise have been satisfied, and references herein to the
applicable Repayment Date shall mean such earliest Repayment Date.

In order for the exercise
of such option to be effective and this Security to be repaid, the Company must
receive at the applicable address of the Paying Agent set forth below (or at
such other place or places of which the Company shall from time to time notify
the Holder of this Security), on any Business Day at least 30 but not more than
45 days prior to the applicable Repayment Date (or, if either such calendar day
is not a Business Day, the next succeeding Business Day), either (i) this
Security, with the form below entitled “Option to Elect Repayment” duly
completed and signed, or (ii) a telegram, telex, facsimile transmission or letter
from a member of a national securities exchange or the National Association of
Securities Dealers, Inc., a commercial bank or a trust company in the United
States of America setting forth (a) the name, address and telephone number of
the Holder of this Security, (b) the principal

 24
 

amount of this
Security and the amount of this Security to be repaid, (c) a statement that the
option to elect repayment is being exercised thereby and (d) a guarantee
stating that the Company will receive this Security, with the form below
entitled “Option to Elect Repayment” duly completed and signed, not later than
five Business Days after the date of such telegram, telex, facsimile
transmission or letter (provided that this Security and form duly
completed and signed are received by the Company by such fifth Business Day).
Any such election shall be irrevocable. The address to which such deliveries
are to be made is Citibank, N.A., Attention: Agency and Trust, 388 Greenwich
Street, 14th Floor, New York, NY 10013 (or at such other places as the Company
or the Paying Agent shall notify the Holder of this Security). All questions as
to the validity, eligibility (including time of receipt) and acceptance of any
Security for repayment will be determined by the Company, whose determination
will be final and binding. Upon any partial repayment, this Security shall be
cancelled and a new Security or Securities for the remaining principal amount
hereof shall be issued in the name of the Holder of this Security.

6.                                       Transfer and Exchange

As provided in the
Indenture and subject to certain limitations therein set forth, the transfer of
this Security is registrable in the Security Register, upon surrender of this
Security for registration of transfer at the office or agency of the Company at
the corporate trust office of the Trustee in the City of New York or at the
office of the Paying Agent in New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his or her attorney
duly authorized in writing, and thereupon one or more new Securities of this
series and of like tenor and terms, of Authorized Denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.

As provided in the
Indenture and subject to certain limitations therein set forth, Securities of
this series are exchangeable for a like aggregate principal amount of
Securities of this series and of like tenor of a different Authorized
Denomination, as requested by the Holder surrendering the same.

No service charge shall
be made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.

Prior to due presentment
of this Security for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not
this Security be overdue, and neither the Company nor the Trustee nor any such
agent shall be affected by notice to the contrary.

If this Security is a
Global Security, this Security shall be subject to the provisions of the
Indenture relating to Global Securities, including the limitations in Section
305 thereof on transfers and exchanges of Global Securities.  In
addition to the provisions of Section 305 of the Indenture, if at any time an
Event of Default has occurred and is continuing with respect to this Security
and such Event of Default has not been cured or waived pursuant to the
provisions of

 25
 

the Indenture, the Company will execute, and the Trustee, upon receipt of
a Company Order for the authentication and delivery of definitive Securities,
will authenticate and deliver, Securities in definitive form and in an
aggregate principal amount equal to the principal amount of the Global Security
or Securities in exchange for such Global Security or Securities.

7.                                       Defeasance.

The Indenture contains
provisions for defeasance at any time of the entire indebtedness of this
Security or certain restrictive covenants and Events of Default with respect to
this Security, in each case upon compliance with certain conditions set forth
in the Indenture. If so specified on the face hereof, either or both of such
provisions are applicable to this Security, as so specified.

8.                                       Remedies.

If an Event of Default
with respect to Securities of this series shall occur and be continuing, the
principal of the Securities of this series may be declared due and payable in
the manner and with the effect provided in the Indenture.

No reference herein to
the Indenture and no provision of this Security or of the Indenture shall alter
or impair the obligation of the Company, which is absolute and unconditional,
to pay the principal of (and premium, if any) and interest on this Security at
the times, place and rate, and in the coin or currency, herein prescribed.

9.                                       Modification and Waiver.

The Indenture permits,
with certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of the
Holders of the Securities of each series to be affected under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding of each series to be affected.

Under the Indenture, the
Holders of a majority in aggregate principal amount of the Outstanding
Securities of this series or any other series of Outstanding Securities may, on
behalf of all Holders of that series, waive compliance by the Company with
certain restrictive covenants of the Indenture, and waive any past Event of
Default under the Indenture, but in each case only with respect to that series,
except an Event of Default in the payment of the principal of or any premium or
interest on and Securities of that series or an Event of Default under any
provision of the Indenture which itself cannot be modified or amended without
the consent of the holders of each Outstanding Security of that series. Any
such consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.

 26
 

10.                                 Governing Law.

This security and the indenture
shall be governed by and construed in accordance with the laws of the State of
New York.

 27
 

CUSIP NO.                  

ORIGINAL
ISSUE DATE:                  

3M COMPANY

MEDIUM-TERM NOTE,
SERIES E

OPTION TO
ELECT REPAYMENT

TO BE COMPLETED
ONLY IF THIS SECURITY IS REPAYABLE

AT THE OPTION OF THE HOLDER AND THE HOLDER

ELECTS TO EXERCISE SUCH RIGHT

The undersigned
hereby irrevocably requests and instructs the Company to repay the Security
referred to in this notice (or the portion thereof specified below) at the
applicable Repayment Price, together with interest to the Repayment Date, all
as provided for in such Security, to the undersigned, whose name, address and
telephone number are as follows:

(please print name of the undersigned)

(please print address of the undersigned)

(please print
telephone number of the undersigned)

If such Security provides
for more than one Repayment Date, the undersigned requests repayment on the
earliest Repayment Date after the requirements for exercising this option have
been satisfied, and references in this notice to the Repayment Date mean such
earliest Repayment Date. Terms used in this notice that are defined in such
Security are used herein as defined therein.

For such Security to be
repaid the Company must receive at the applicable address of the Paying Agent
set forth below or at such other place or places of which the Company shall
from time to time notify the Holder of such Security, any Business Day not
later than the 30th or earlier than the 45th calendar day prior to the
Repayment Date (or, if either such calendar day is not a Business Day, the next
succeeding Business Day), (i) such Security, with this “Option to Elect
Repayment” form duly completed and signed, or (ii) a telegram, telex, facsimile
transmission or letter from a member of a national securities exchange or the
National Association of Securities Dealers, Inc., a commercial bank or a trust
company in the United States of America setting forth (a) the name, address and
telephone number of the Holder of such Security, (b) the principal amount of
such Security and the amount of such Security to be repaid, (c) a statement
that the option to elect repayment is being exercised thereby and (d) a
guarantee stating that such Security to be repaid with the form entitled “Option
to Elect Repayment” on the addendum to the Security duly completed and signed
will be received by the Company not later than five Business Days after the
date of such telegram, telex, facsimile transmission or letter (provided that such
Security and form duly completed and signed are received by the Company by such
fifth Business Day). The address to which such deliveries are to be made is:

 28
 

Citibank, N.A.

Attention: Agency & Trust 

388 Greenwich Street

14th Floor

New York, New York 10013

or at such other place as
the Company or the Paying Agent shall notify the holder of such Security.

If less than the
entire principal amount of such Security is to be repaid, specify the portion
thereof (which shall equal any Authorized Denomination) that the Holder elects
to have repaid:

and specify the
denomination or denominations (which shall equal any Authorized Denomination)
of the Security or Securities to be issued to the Holder in respect of the
portion of such Security not being repaid (in the absence of any specification,
one Security will be issued in respect of the portion not being repaid):

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Notice: The signature to this Option to Elect
  Repayment must correspond with the name of the Holder as written on the face
  of such Security in every particular without alteration or enlargement or any
  other change whatsoever.

  

 

 29
 

ABBREVIATIONS

The following
abbreviations, when used in the inscription on the face of this Security, shall
be construed as though they were written out in full according to applicable
laws or regulations.

	
   

  	
  TEN COM

  	
  -

  	
  as tenants in common

  
	
   

  	
  TEN ENT

  	
  -

  	
  as tenants by the entireties

  
	
   

  	
  JT TEN

  	
  -

  	
  as joint tenants with the right of survivorship and
  not as tenants in common

  

 

	
   

  	
  UNIF GIFT MIN ACT

  	
  -

  	
   

  	
  Custodian

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Cust)

  	
   

  	
  (Minor)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  under Uniform Gifts to Minors Act

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (State)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Additional abbreviations may also be used though not
  in the above list.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
								

 

 30
 

ASSIGNMENT

FOR VALUE
RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto                                                                                                                                 
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

(Please Print or
Typewrite Name and Address

Including Postal Zip Code of Assignee)

the attached Security and
all rights thereunder, and hereby irrevocably constitutes and appoints                                                                                   
to transfer said Security on the books of the Company, with full power of
substitution in the premises.

Dated:

Signature Guaranteed

	
   

  	
   

  	
   

  
	
  NOTICE: Signature must be guaranteed.

  	
   

  	
  NOTICE: The signature to this assignment must
  correspond with the name of the Holder as written upon the face of the
  attached Security in every particular, without alteration or enlargement or
  any change whatever.

  

 

 31Exhibit
4.1

AMENDED AND RESTATED

ORLEANS HOMEBUILDERS, INC. 2004
OMNIBUS

STOCK INCENTIVE PLAN

As Adopted by the Board of Directors

(Effective as of August 26, 2004;
Amended and Restated as of June 6, 2006)

1.             Purpose.  Orleans Homebuilders, Inc., a Delaware
corporation (the “Company”), adopted the Orleans Homebuilders, Inc. 2004
Omnibus Stock Incentive Plan on August 26, 2005 (the “Original Plan”), which
replaced all other stock option and award plans of the Company (other than the
Orleans Homebuilders, Inc. Stock Award Plan), which plans were deemed to have
been amended and restated and incorporated into the Orleans Homebuilders, Inc.
2004 Omnibus Stock Incentive Plan, so that outstanding grants made under any
such prior plan, if forfeited, result in the shares that were subject to such
grants being again available for grants hereunder, as provided pursuant to
Section 6, below.  The Company adopted
this amendment and restatement of the Orleans Homebuilders, Inc. 2004 Omnibus
Stock Incentive Plan (as amended and restated, the “Plan”) on June 6, 2006 as
set forth herein to increase the number of shares of Company common stock
available under the Plan, subject to the approval of the Company’s
shareholders.

The Plan is intended to
recognize the contributions made to the Company by employees (including
employees who are members of the Board of Directors) of the Company or any
Affiliate (as defined herein), to provide such persons with additional
incentive to devote themselves to the future success of the Company or an
Affiliate, and to improve the ability of the Company or an Affiliate to
attract, retain, and motivate individuals upon whom the Company’s sustained
growth and financial success depend. 
Through the Plan, the Company will provide such persons with an opportunity
to acquire or increase their proprietary interest in the Company, and to align
their interest with the interests of shareholders, through receipt of rights to
acquire the Company’s Common Stock, par value $0.10 per share (the “Common
Stock”) and through the transfer or issuance of Common Stock or other Awards
(as defined herein).  In addition, the
Plan is intended as an additional incentive to directors of the Company or of
any Affiliate who are not employees of the Company or an Affiliate to serve on
the Board of Directors of the Company or on the boards of directors (or any
similar governing body) of an Affiliate and to devote themselves to the future
success of the Company by providing them with an opportunity to acquire or
increase their proprietary interest in the Company through the receipt of
rights to acquire Common Stock. 
Furthermore, the Plan may be used to encourage consultants and advisors
of the Company to further the success of the Company.

2.             Definitions.  Unless the context clearly indicates
otherwise, the following capitalized terms when used in the Plan shall have the
following meanings:

(a)           “Affiliate”
means a corporation which is a parent corporation or a subsidiary corporation
with respect to the Company within the meaning of Section 424(e) or (f) of the
Code, of any successor provision, and, for purposes of Grants other than ISOs,
any corporation, partnership, joint venture or other entity in which the
Company, directly or indirectly, has an equity interest and which the Committee
determines should be treated as an Affiliate for purposes of the Plan.

(b)           “Award”
shall mean a transfer of Common Stock made pursuant to the terms of the Plan
subject to such terms, benefits or restrictions as the Committee shall specify
in the Grant Document.

(c)           “Board”
or “Board of Directors” means the Board of Directors of the Company.

(d)           “Capitalization
Adjustment” means the adjustment to the number or class of shares subject to
any Grant and the Option Price, exercise price, purchase price or other payment
or deemed payment required in connection with any Grant, as permitted to be
made pursuant to the provisions of Section 13 of the Plan.

(e)           “Change
of Control” shall be deemed to have occurred upon the earliest to occur of the
following dates:

(i)            the
date the stockholders of the Company (or the Board of Directors, if stockholder
action is not required) approve a plan or other arrangement pursuant to which
the Company will be dissolved or liquidated; or

(ii)           the
date the stockholders of the Company (or the Board of Directors, if stockholder
action is not required) approve a definitive agreement to sell or otherwise
dispose of substantially all of the assets of the Company; or

(iii)          the
date the stockholders of the Company (or the Board of Directors, if stockholder
action is not required) and the stockholders of the other constituent
corporation (or its board of directors if stockholder action is not required)
have approved a definitive agreement to merge or consolidate the Company with
or into such other corporation, other than, in either case, a merger or
consolidation of the Company in which holders of shares of the Company’s Common
Stock immediately prior to the merger or consolidation will have at least a
majority of the voting power of the surviving corporation’s voting securities
immediately after the merger or consolidation, which voting securities are to
be held in the same proportion as such holders’ ownership of Common Stock of
the Company immediately before the merger or consolidation; or

(iv)          the
date any entity, person or group, within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act (other than (A) the Company or any of its
subsidiaries or any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries, (B) Jeffrey P. Orleans or
family members of Jeffrey P. Orleans (all such persons being referred to as “Orleans
Family Members”), (C) any entity a majority of the equity in which is owned by
Orleans Family Members), or (D) any trust as to which a majority of the
beneficiaries are Orleans Family Members), shall have become the 

 2
 

beneficial
owner of, or shall have obtained voting control over, more than fifty percent
(50%) of the outstanding shares of the Company’s Common Stock.

(f)            “Code”
means the Internal Revenue Code of 1986, as amended, or any successor statute,
and the rules and regulations issued pursuant to that statute or any successor
statute.

(g)           “Committee”
shall have the meaning set forth in Section 3 of the Plan.

(h)           “Covered
Employee” means any Employee who is treated as a “covered employee” for
purposes of Code Section 162(m).

(i)            “Disability”
means a condition of a Grantee that constitutes a “disability” as that term is
defined in Section 22(e)(3) of the Code.

(j)            “Employee”
means an employee of the Company or an Affiliate.

(k)           “Fair
Market Value” means, with respect to a share of the Common Stock:

(i)            if
the Common Stock is listed on a national securities exchange or included in the
NASDAQ National Market System, the closing price thereof on the relevant date;
or

(ii)           if
the Common Stock is not so listed or included, the mean between the last
reported “bid” and “asked” prices thereof on the relevant date, as reported on
NASDAQ; or

(iii)          if
not so reported, as reported by the National Daily Quotation Bureau, Inc. or as
reported in a customary financial reporting service, as applicable and as the
Committee determines.

Provided, however, that if the Common Stock is not
traded in a public market, the Fair Market Value of a share shall be as
determined in good faith by the Committee, taking into account all relevant
facts and circumstances.

(l)            “Fiscal
Year Grant Limitation” means the limitation on the number of shares of Common
Stock that may be subject to Grants made to any one person during any one
fiscal year of the Company, which limitation shall be 250,000 shares, subject
to a permitted Capitalization Adjustment.

(m)          “Grant”
shall mean any Option, Award or SAR granted under the Plan.

(n)           “Grantee”
shall mean a person to whom an Option, Award or SAR has been granted pursuant
to the Plan.

(o)           “Grant
Document” shall mean the document provided to a Grantee by the Company
describing and establishing the terms of any Grant made pursuant to the Plan.

 3
 

(p)           “ISO” means an Option
granted under the Plan which is intended to qualify as an “incentive stock
option” within the meaning of Section 422(b) of the Code.

(q)           “Exchange Act” means the Securities Exchange
Act of 1934, as amended, or any successor statute, and the rules and
regulations issued pursuant to that statute or any successor statute.

(r)            “Non-Employee Director” shall mean a member
of the Board who is a “non-employee director” as that term is defined in
paragraph (b)(3) of Rule 16b-3 (as defined herein) and an “outside director” as
that term is defined in Treasury Regulations Section 1.162-27 promulgated under
the Code.

(s)           “Non-Employee Director Committee” means a
committee designated by the Board to act as the Committee with respect to the
Plan that consists solely of two or more Non-Employee Directors.

(t)            “Non-qualified Stock Option” means an
Option granted under the Plan which is not intended to qualify, or otherwise
does not qualify, as an ISO.  The term
Non-qualified Stock Option shall also be applicable to any portion of an option
that does not qualify for treatment as an ISO.

(u)           “Option” means either an ISO or a
Non-qualified Stock Option granted under the Plan.

(v)           “Option Price” means the price at which
Shares may be purchased upon exercise of an Option, as set forth in the Grant
Document.

(w)          “Rule 16b-3” means Rule 16b-3 promulgated
under the Exchange Act, or any successor rule.

(x)            “SAR” means a stock appreciation right
granted under the Plan, as defined in Section 11 hereof.

(y)           “Section 16 Officers” means any person who
is an “officer” within the meaning of Rule 16a-1(f) promulgated under the
Exchange Act or any successor rule, and who is subject to the reporting
requirements under Section 16 of the Exchange Act with respect to the Company’s
Common Stock.

(z)            “Securities Act” means the Securities Act
of 1933, as amended, or any successor statute, and the rules and regulations
issued pursuant to that statute or any successor statute.

(aa)         “Shares” means the shares of Common Stock
(including hypothetical shares of Common Stock referenced under the terms of a
Grant Document applicable to an SAR) which are subject to any Grant made under
the Plan.

3.             Administration of
the Plan.  The Board may administer
the Plan and/or it may, in its discretion, designate a committee or committees
composed of two or more of directors to 

 4
 

operate and
administer the Plan with respect to all or a designated portion of the
participants.  To the extent that the
Committee is empowered to grant options to Section 16 Officers or persons whose
compensation might have limits on deductibility under Code Section 162(m), the
Board may, at its discretion, appoint a separate Non-Employee Director to
administer the Plan with respect to those persons.   Any such committee designated by the Board,
and the Board itself in its administrative capacity with respect to the Plan,
is referred to as the “Committee.”

(a)           Meetings.  The Committee shall hold meetings at such
times and places as it may determine. 
The Committee may take action only upon the agreement of a majority of
the whole Committee.  Any action which
the Committee shall take through a written instrument signed by all its members
shall be as effective as though it had been taken at a meeting duly called and
held.

(b)           Exculpation.  No member of the Board of Directors shall be
personally liable for monetary damages for any action taken or any failure to
take any action in connection with the administration of the Plan or making any
Grants under the Plan, provided that this Subsection 3(b) shall not apply to
(i) any breach of such member’s duty of loyalty to the Company or its
stockholders, (ii) acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law, (iii) acts or omissions that would
result in liability under Section 174 of the General Corporation Law of the
State of Delaware, as amended, and (iv) any transaction from which the member
derived an improper personal benefit.

(c)           Indemnification.  Service on the Committee shall constitute
service as a member of the Board.  Each
member of the Committee shall be entitled, without further act on the member’s
part, to indemnity from the Company and limitation of liability to the fullest
extent provided by applicable law and by the Company’s Articles of Incorporation
and/or Bylaws in connection with or arising out of any action, suit or
proceeding with respect to the administration of the Plan or the issuance of
any Grant thereunder in which the member may be involved by reason of the
member being or having been a member of the Committee, whether or not the
member continues to be such member of the Committee at the time of the action,
suit or proceeding.

(d)           Interpretation and Authority of the
Committee.  The Committee shall have
the power and authority to (i) interpret the Plan, (ii) adopt, amend and revoke
policies, rules and/or regulations for its administration that are not
inconsistent with the express terms of the Plan, and (iii) waive requirements
relating to formalities or other matters that do not either modify the
substance of the rights intended to be granted by means of Grants made under
the Plan or constitute a material amendment for any purpose under the
Code.  In addition, the Committee shall,
subject to any specific provisions or limitations applicable under the Plan,
have the authority to make such adjustments to the terms and conditions of any
Grants made under the Plan in order to take into account any facts and
circumstances that influence the effectiveness of the Plan as a method of
providing appropriate current performance incentives for recipients of Grants,
including, but not limited to, any facts and circumstances related to levels of
compensation and bonuses paid by other similarly situated employers, and
current needs of the Company to encourage the retention of valued Employees and
to reward high levels of performance by such Employees.  Any such actions by the Committee shall be
final, binding and conclusive on all parties in interest.

 5
 

4.             Grants of Options
under the Plan.  Grants of Options
under the Plan may be in the form of a Non-qualified Stock Option, an ISO or a
combination thereof, at the discretion of the Committee.

5.             Eligibility.  All Employees, members of the Board, members
of the boards of directors (or any similar governing body) of any Affiliate and
consultants and advisors to the Company or any Affiliate shall be eligible to
receive Grants hereunder.  Consultants
and advisors shall be eligible only if they render bona fide services to the
Company unrelated to the offer or sale of securities.  The Committee, in its sole discretion, shall
determine whether an individual qualifies as an Employee.

6.             Shares Subject to
Plan.  The aggregate maximum number
of Shares as to which Grants may be issued pursuant to the Plan is 400,000
(subject to a permitted Capitalization Adjustment).  The Shares shall be issued from authorized
and unissued Common Stock or Common Stock held in or hereafter acquired for the
treasury of the Company.  If a Grant
terminates or expires without having been fully exercised for any reason or has
been conveyed back to the Company pursuant to the terms of a Grant Document,
the Shares as to which the Grant was not exercised or the Shares that were
conveyed back to the Company shall again be available for issuance pursuant to
the terms of one or more Grants pursuant to the Plan.

7.             Fiscal Year Grant
Limitation.  Notwithstanding anything
herein to the contrary, no Grantee shall be issued Grants during any one fiscal
year of the Company for shares of Common Stock in excess of the Fiscal Year
Grant Limitation.

8.             Term of the Plan.  The Plan (as amended and restated) is
effective as of June 6, 2006, the date on which it was adopted by the Board,
subject to the approval of the Plan within one year after such date (the “Approval
Date”) by the shareholders in the manner required by state law.  If the Plan as amended and restated is not so
approved by the shareholders, the Plan (as amended and restated) and all Grants
issued under the Plan (as amended and restated) in excess of the limitation set
forth in Section 6 of the Original Plan shall be null and void as of the close
of business on the Approval Date and the Original Plan shall continue in full
force and effect as if this amendment and restatement had not been adopted.  No Grants may be issued under the Plan on or
after August 26, 2014.

9.             Options.  Each Option granted under the Plan shall be a
Non-qualified Stock Option unless the Option shall be specifically designated
at the time of grant to be an ISO.  If
any Option designated an ISO is determined for any reason not to qualify as an
incentive stock option within the meaning of Section 422 of the Code, such
Option shall be treated as a Non-qualified Stock Option for all purposes under
the provisions of the Plan.  Options
granted pursuant to the Plan shall be evidenced by the Grant Documents in such
form as the Committee shall approve from time to time, which Grant Documents
shall comply with and be subject to the following terms and conditions and such
other terms and conditions as the Committee shall require from time to time
which are not inconsistent with the terms of the Plan.  No ISO shall be granted to any person who
does not qualify as an employee of the Company or an Affiliate within the
meaning of Code Section 422.

 6
 

(a)           Number
of Option Shares.  Each Grant
Document shall state the number of Shares to which it pertains.  A Grantee may receive more than one Option,
which may include Options which are intended to be ISOs and Options which are
not intended to be ISOs, but only on the terms and subject to the conditions
and restrictions of the Plan. 
Notwithstanding anything herein to the contrary, no Grantee shall be
granted Options during any one fiscal year of the Company for more than the
Fiscal Year Grant Limitation.

(b)           
Option Price.  Each Grant Document
shall state the Option Price, which, for a Non-qualified Stock Option, shall,
unless otherwise specified in the Grant Document, be the Fair Market Value of
the Shares on the date the Option is granted and, for an ISO, shall in all
cases be at least 100% of the Fair Market Value of the Shares on the date the
Option is granted as determined by the Committee in accordance with this
Subsection 9(b); and provided, further, that if an ISO is granted to a Grantee
who then owns, directly or by attribution under Section 424(d) of the Code,
shares possessing more than ten percent of the total combined voting power of
all classes of stock of the Company or an Affiliate, then, to the extent
required by Section 424(d) of the Code, the Option Price shall be at least 110%
of the Fair Market Value of the Shares on the date the Option is granted.

(c)           Exercise.  No Option shall be deemed to have been
exercised prior to the receipt by the Company of written notice of such
exercise and, unless arrangements satisfactory to the Company have been made
for payment through a broker in accordance with procedures permitted by rules
or regulations of the Federal Reserve Board, receipt of payment in full of the
Option Price for the Shares to be purchased. 
Each such notice shall specify the number of Shares to be purchased and,
unless the Shares are covered by a then current registration statement or a
Notification under Regulation A under the Securities Act, shall contain the
Grantee’s acknowledgment, in form and substance satisfactory to the Company,
that (i) such Shares are being purchased for investment and not for
distribution or resale (other than a distribution or resale which, in the
opinion of counsel satisfactory to the Company, may be made without violating
the registration provisions of the Securities Act), (ii) the Grantee has been
advised and understands that (A) the Shares have not been registered under the
Securities Act and are “restricted securities” within the meaning of Rule 144
under the Securities Act and are subject to restrictions on transfer, and (B)
the Company is under no obligation to register the Shares under the Securities
Act or to take any action which would make available to the Grantee any
exemption from such registration, (iii) such Shares may not be transferred
without compliance with all applicable federal and state securities laws, and
(iv) an appropriate legend referring to the foregoing restrictions on transfer
and any other restrictions imposed under the Grant Documents may be endorsed on
the certificates.  Notwithstanding the
foregoing, if the Company determines that issuance of Shares should be delayed
pending registration under federal or state securities laws, the receipt of an
opinion of counsel satisfactory to the Company that an appropriate exemption
from such registration is available, the listing or inclusion of the Shares on
any securities exchange or an automated quotation system, or the consent or
approval of any governmental regulatory body whose consent or approval is
necessary in connection with the issuance of such Shares, the Company may defer
exercise of any Option granted hereunder until any of the events described in
this sentence has occurred.

(d)           Medium
of Payment.  Subject to the terms of
the applicable Grant Document, a Grantee shall pay for Shares (i) in cash, (ii)
by certified or cashier’s check payable

 7
 

to the order
of the Company, or (iii) by such other mode of payment as the Committee may
approve, including payment through a broker in accordance with procedures
permitted by rules or regulations of the Federal Reserve Board.  The Grantee may also exercise the Option in
any other manner as is approved by the Committee or as specifically provided
for in the applicable Grant Document. 
Furthermore, the Committee may provide in a Grant Document that payment
may be made in whole or in part in shares of the Company’s Common Stock held by
the Grantee.  If payment is made in whole
or in part in shares of the Company’s Common Stock, then the Grantee shall
deliver to the Company certificates registered in the name of such Grantee
representing the shares owned by such Grantee, free of all liens, claims and
encumbrances of every kind and having an aggregate Fair Market Value on the
date of delivery that is at least as great as the Option Price of the Shares
(or relevant portion thereof) with respect to which such Option is to be
exercised by the payment in shares of Common Stock, endorsed in blank or
accompanied by stock powers duly endorsed in blank by the Grantee.  In the event that certificates for shares of
the Company’s Common Stock delivered to the Company represent a number of
shares in excess of the number of shares required to make payment for the
Option Price of the Shares (or relevant portion thereof) with respect to which
such Option is to be exercised by payment in shares of Common Stock, the stock
certificate or certificates issued to the Grantee shall represent (i) the
Shares in respect of which payment is made, and (ii) such excess number of
shares.  Notwithstanding the foregoing,
the Committee may impose from time to time such limitations and prohibitions on
the use of shares of the Common Stock to exercise an Option as it deems
appropriate.

(e)           Termination
of Options.

(i)            No
Option shall be exercisable after the first to occur of the following:

A.            Expiration
of the Option term specified in the Grant Document, which, in the case of an
ISO, shall not occur after (i) ten (10) years from the date of grant, or (ii)
five (5) years from the date of grant if the Grantee on the date of grant owns,
directly or by attribution under Section 424(d) of the Code, shares possessing
more than ten percent of the total combined voting power of all classes of
stock of the Company or of an Affiliate;

B.            Except
to the extent otherwise provided in a Grantee’s Grant Document, a finding by
the Committee, after full consideration of the facts presented on behalf of
both the Company and the Grantee, that the Grantee has been engaged in
disloyalty to the Company or an Affiliate, including, without limitation,
fraud, embezzlement, theft, commission of a felony or proven dishonesty in the
course of his employment or service, or has disclosed trade secrets or
confidential information of the Company or an Affiliate.  In such event, in addition to immediate
termination of the Option, the Grantee shall automatically forfeit all Shares
for which the Company has not yet delivered the share certificates upon refund
by the Company of the Option Price. 
Notwithstanding anything herein to the contrary, the Company may
withhold delivery of share certificates pending the resolution of any inquiry
that could lead to a finding resulting in a forfeiture;

 8
 

C.            The
date, if any, set by the Committee as an accelerated expiration date in the event
of the liquidation or dissolution of the Company;

D.            The
occurrence of such other event or events as may be set forth in this Plan or
the Grant Document as causing an accelerated expiration of the Option; or

E.             Except
as otherwise set forth in the Grant Document and subject to the foregoing
provisions of this Subsection 9(e)(i), the applicable date set forth below in
connection with the Grantee’s termination of employment or service with the
Company or any Affiliate.  For these
purposes the applicable date is:  (1)
where the Grantee resigns from his or her employment or service with the
Company or any Affiliate without such resignation having been solicited by the
Company or the Affiliate, as the case may be, the date of such resignation; (2)
where the Grantee’s termination of employment or service with the Company or
any Affiliate is due to the Grantee’s death or Disability, the date that is one
hundred eighty (180) days following such termination; (3) where the Grantee’s
termination of employment or service with the Company or any Affiliate is due
to the Grantee’s retirement, the second anniversary of such termination; (4)
where the Grantee is a member of the Board or of any board of directors (or
similar governing body) of an Affiliate and is not an Employee and such Grantee’s
service is terminated for any reason other than Disability or death, 90 days
following the date of such termination of service; and (5) in all other cases,
30 days after the Grantee’s termination of employment or service with the
Company or any Affiliate.  The only
Options that may be exercised subsequent to the Grantee’s termination of
employment or service with the Company or an Affiliate are those Options which
were exercisable on the last date of such employment or service and not Options
which, if the Grantee were still employed or rendering service during such post
termination period, would become exercisable, unless the Grant Document
specifically provides to the contrary or the Committee otherwise approves.  The terms of an executive severance agreement
or other agreement between the Company and a Grantee, approved by the Committee
or the Board, whether entered into prior or subsequent to the grant of an
Option, which provide for Option exercise dates later than those set forth in
Subsection 9(e)(i) shall be deemed to be Option terms approved by the Committee
and consented to by the Grantee.

(ii)           Notwithstanding
the foregoing, the Committee may extend the period during which all or any
portion of an Option may be exercised to a date no later than the Option term
specified in the Grant Document; provided, however, that any change pursuant to
this Subsection 9(e)(ii) which would cause an ISO to become a Non-qualified
Stock Option may be made only with the consent of the Grantee.

(iii)          Notwithstanding
anything to the contrary contained in the Plan or a Grant Document, an ISO
shall be treated as a Non-qualified Stock Option to the extent such ISO is
exercised at any time after the expiration of the time period permitted under
the Code for the exercise of an ISO.

(f)            Transfers.  Except as otherwise provided in this
Subsection 9(f), no Option granted under the Plan may be transferred, except by
will or by the laws of descent and distribution, and, during the lifetime of
the person to whom an Option is granted, such Option may be exercised only by
the Grantee.  Notwithstanding the
foregoing, an Option, other than an ISO, shall be transferable pursuant to a “domestic
relations order” as defined in the Code or Title 

 9
 

I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder, and also shall be transferable, without payment of consideration,
to (a) immediate family members of the holder (i.e., spouse or former spouse,
parents, issue, including adopted and “step” issue, or siblings), (b) trusts
for the benefit of immediate family members, and (c) partnerships whose only
partners are such family members, and (d) to any transferee permitted by a rule
adopted by the Committee or approved by the Committee in an individual
case.  Any transferee will be subject to
all of the conditions set forth in the Option prior to its transfer.

(g)           Limitation
on ISO Grants.  To the extent that
the aggregate Fair Market Value of the shares of Common Stock (determined at
the time the ISO is granted) with respect to which ISOs under all incentive
stock option plans of the Company or its Affiliates are exercisable for the
first time by the Grantee during any calendar year exceeds $100,000, such ISOs
shall, to the extent of such excess, be treated as Non-qualified Stock Options.

(h)           Other
Provisions.  Subject to the
provisions of the Plan, the Grant Documents shall contain such other
provisions, including, without limitation, provisions authorizing the Committee
to accelerate the exercisability of all or any portion of an Option granted
pursuant to the Plan, additional restrictions upon the exercise of the Option
or additional limitations upon the term of the Option, as the Committee deems
advisable.

10.           Change of Control.  In the event of a Change of Control, Options
and SARs granted pursuant to the Plan shall become immediately exercisable in
full, and all Awards shall become fully vested, but only if such vesting is
specified in the applicable Grant Document. 
In addition, the Committee may take whatever action it deems necessary
or desirable with respect to outstanding Grants, including, without limitation,
with respect to Options and SARs, accelerating the expiration or termination
date in the applicable Grant Document to a date no earlier than thirty (30)
days after notice of such acceleration is given to the Grantees; provided,
however, that such accelerated expiration date may not be earlier than the date
as of which the Grant has become fully vested and exercisable.

11.           Stock Appreciation
Rights (SARs).

(a)           General.  Subject to the terms and conditions of the
Plan, the Committee may, in its sole and absolute discretion, grant a right
(which right shall be referred to as an “SAR”), which may or may not be granted
in conjunction with an Option, which right shall entitle the Grantee to receive
a payment upon exercise equal to the excess of the Fair Market Value of a
specified number of Shares, determined as of the date the SAR is exercised,
over the “purchase price” specified in the Grant Document applicable to the
SAR.  The SAR may be exercisable in whole
or in part, and at such times and under such circumstances as are set forth in
the Grant Document applicable to the SAR. 
In the event an SAR is granted in conjunction with an Option, the
exercise of the SAR shall result in a cancellation of the Option to the same
extent as the SAR is exercised, and the exercise of the Option shall result in
a cancellation of the SAR to the same extent as the Option is exercised, and
the terms and conditions, including the number of Shares subject to the SAR,
the “purchase price” and the times and circumstances in which the SAR may be
exercised, shall be the same as are applicable to the Option.  Except as may otherwise be provided in a
Grant Document, such payment may be made, as determined by the Committee in
accordance with Subsection 12(c) below and set forth in the applicable Grant 

 10
 

Document,
either in Shares or in cash or in any combination thereof.  For purposes of the annual and aggregate limitations
on shares of Common Stock that may be subject to Grants under the Plan, the
grant of an SAR not in conjunction with an Option shall be treated as though
such SAR constituted an Option.

(b)           Grant.  Each SAR shall relate either to a specific
Option granted under the Plan or to a hypothetical Option that could have been
granted under the Plan.  Where an SAR is
granted in conjunction with an Option granted under the Plan, the Grant
Document applicable to the Option shall include provisions indicating the SAR
rights.  Where an SAR is granted
independent of an Option granted under the Plan, the Grant Document applicable
to such SAR shall indicate the relevant terms and conditions applicable to the
SAR, including, but not limited to, the number of hypothetical Shares subject
to the terms of the SAR, the “purchase price” to be taken into account upon
exercise of the SAR, and such other terms and conditions as would be permitted
or as are required with respect to the grant of an Option under the Plan.  SARs shall be exercisable at such times and
under such terms and conditions as the Committee, in its sole and absolute
discretion, shall determine; provided, however, that an SAR that is granted
concurrent with an Option shall be exercisable only at such times and by such
individuals as the related Option may be exercised under the Plan and the Grant
Document.

(c)           Payment.  The Committee shall have sole discretion to
determine whether payment in respect of SARs exercised by any Grantee shall be
made in shares of Common Stock, or in cash, or in a combination thereof.  If payment is made in Common Stock, the
number of shares which shall be issued pursuant to the exercise of SARs shall
be determined by dividing the amount of the payment provided for in Section
11(a) above by the Fair Market Value of a share of Common Stock on the exercise
date of the SARs.  No fractional share of
Common Stock shall be issued on exercise of an SAR; cash may be paid by the
Company to the person exercising an SAR in lieu of any such fractional share,
if the Committee so determines.  If
payment on exercise of an SAR is to be made in cash, the person exercising the
SAR shall receive such cash payment as soon as practicable following the date
of exercise.

12.           Terms and Conditions
of Awards.  Awards granted pursuant
to the Plan shall be evidenced by written Grant Documents in such form as the
Committee shall from time to time approve, which Grant Documents shall comply
with and be subject to the following terms and conditions and such other terms
and conditions which the Committee shall from time to time require which are
not inconsistent with the terms of the Plan.

(a)           Number
of Shares.  Each Grant Document shall
state the number of Shares or other units or rights to which it pertains.

(b)           Purchase
Price.  Each Grant Document shall
specify the purchase price, if any, which applies to the Award.  If the Board specifies a purchase price, the
Grantee shall be required to make payment on or before the payment date
specified in the Grant Document.  A
Grantee shall make payment (i) in cash, (ii) by certified check payable to the
order of the Company, or (iii) by such other mode of payment as the Committee
may approve.

(c)           Grant.  In the case of an Award which provides for a
grant of Shares without any payment by the Grantee, the grant shall take place
on the date specified in the Grant 

 11
 

Document.  In the case of an Award which provides for a
payment, the grant shall take place on the date the initial payment is
delivered to the Company, unless the Committee or the Grant Document otherwise
specifies.  Stock certificates evidencing
Shares granted pursuant to an Award shall be issued in the sole name of the
Grantee.  Notwithstanding the foregoing,
as a precondition to a grant, the Company may require an acknowledgment by the
Grantee as required with respect to Options under Subsection 9(c).

(d)           Conditions.  The Committee may specify in a Grant Document
any conditions under which the Grantee of that Award shall be required to
convey to the Company the Shares covered by the Award.  Upon the occurrence of any such specified
condition, the Grantee shall forthwith surrender and deliver to the Company the
certificates evidencing such Shares as well as completely executed instruments
of conveyance.  The Committee, in its
discretion, may provide that certificates for Shares transferred pursuant to an
Award be held in escrow by the Company or its designee until such time as each
and every condition has lapsed and that the Grantee be required, as a condition
of the Award, to deliver to such escrow agent or the Company officer stock
transfer powers covering the Shares subject to the Award duly endorsed by the
Grantee.  Unless otherwise provided in
the Grant Document or determined by the Committee, dividends and other distributions
made on Shares held in escrow shall be deposited in escrow, and held in escrow
until such time as the Shares on which the distributions were made are released
from escrow.  Stock certificates
evidencing Shares subject to conditions shall bear a legend to the effect that
the Shares evidenced thereby are subject to repurchase by, or conveyance to,
the Company in accordance with the terms applicable to such Shares under an
Award made pursuant to the Plan, and that the Shares may not be sold or otherwise
transferred.

(e)           Lapse
of Conditions.  Upon termination or
lapse of all forfeiture conditions, the Company shall cause certificates
without the legend referring to the Company’s repurchase or acquisition right
(but with any other legends that may be appropriate) evidencing the Shares
covered by the Award to be issued to the Grantee upon the Grantee’s surrender
to the Company of the legended certificates held by the Grantee.

(f)            Rights
as Shareholder.  Upon payment of the
purchase price, if any, for Shares covered by an Award and compliance with the
acknowledgment requirement of Subsection 9(c), the Grantee shall have all of
the rights of a shareholder with respect to the Shares covered thereby,
including the right to vote the Shares and (subject to the provisions of
Subsection 12(d)) to receive all dividends and other distributions paid or made
with respect thereto, except to the extent otherwise provided by the Committee
or in the Grant Document.

13.           Adjustments on
Changes in Capitalization.

(a)           Capitalization
Adjustments.  In the event that the
outstanding Shares are changed by reason of a reorganization, merger,
consolidation, recapitalization, reclassification, stock split-up, combination
or exchange of shares and the like (not including the issuance of Common Stock
on the conversion of other securities of the Company which are convertible into
Common Stock) or dividends payable in shares of Common Stock, a Capitalization
Adjustment may be made by the Committee as it deems appropriate in the aggregate
number and/or class of shares available under the Plan, in the number of
shares, class of shares and price per share subject to outstanding Grants and
to any limitations on grants set forth in the Plan and stated in 

 12
 

terms of
numbers of Shares.  Unless the Committee
makes other provisions for the equitable settlement of outstanding Grants, if
the Company shall be reorganized, consolidated, or merged with another
corporation, or if all or substantially all of the assets of the Company shall
be sold or exchanged, a Grantee shall at the time of issuance of the stock
under such corporate event be entitled to receive, with respect to or upon the
exercise of his or her Grant, as the case may be, the same number and kind of
shares of stock or the same amount of property, cash or securities as the
Grantee would have been entitled to receive upon the occurrence of any such
corporate event as if the Grantee had been, immediately prior to such event,
the holder of the number of shares covered by his or her Grant; provided,
however, that with respect to an SAR, the Grantee shall only be entitled to
receive payment in the form of property other than cash to the extent such
settlement of the SAR is provided for in the applicable Grant Document.

(b)           Fractional
Shares.  Any adjustment under this
Section 13 in the number of Shares subject to Grants shall apply
proportionately to only the unexercised portion of any Option or SAR granted
hereunder.  If a fraction of a Share
would result from any such adjustment, the fraction shall be eliminated, unless
the Committee otherwise determines.

(c)           Committee
Authority.  The Committee shall have
authority to determine the Capitalization Adjustments to be made under this
Section, which may include both adjustments to the number of shares and class
of the Company stock to be issued in connection with or on the exercise of
Grants, all Plan grant limitations stated in terms of numbers of Shares, and
any such determination by the Committee shall be final, binding and conclusive.

14.           Amendments and
Termination of Plan.

(a)           Amendment
to and Termination of Plan. The Board may amend the Plan from time to time
in such manner as it may deem advisable or may terminate the Plan, at its
discretion.  Nevertheless, the Board may
not change the class of persons eligible to receive an ISO or increase the
maximum number of Shares as to which Grants may be issued under the Plan, or to
any individual under the Plan in any year, without obtaining approval, within
twelve months before or after such action, by the shareholders in the manner
required by state law.  No amendment to
or termination of the Plan shall adversely affect any outstanding Grant,
however, without the consent of the Grantee.

(b)           Amendment
to Grant Documents.  Subject to the
provisions of the Plan, the Committee shall have the right to amend any Grant
Document issued to a Grantee, subject to the Grantee’s consent, if such
amendment is not favorable to the Grantee or if such amendment has the effect
of changing an ISO to a Non-qualified Stock Option; provided, however, that the
consent of the Grantee shall not be required for any amendment made pursuant to
Subsection 9(e)(i)(C) or Section 10 of the Plan, as applicable.

15.           No Commitment to
Retain.  The making of a Grant
pursuant to the Plan shall not be construed to imply or to constitute evidence
of any agreement, express or implied, on the part of the Company or any
Affiliate to retain the Grantee as an employee, director, consultant or advisor
of the Company or any Affiliate, or in any other capacity.

 13
 

16.           Withholding of Taxes.  In connection with any event relating to any
Grant under the Plan, the Company shall have the right to (a) require the
recipient to remit or otherwise make available to the Company an amount
sufficient to satisfy any federal, state and/or local withholding tax
requirements prior to the delivery or transfer of any certificates for such
Shares, or (b) take whatever other action it deems necessary to protect its
interests with respect to tax liabilities, including, without limitation,
withholding any Shares, funds or other property otherwise due to the
Grantee.  The Company’s obligations under
the Plan shall be conditioned on the Grantee’s compliance, to the Company’s
satisfaction, with any withholding requirement.

 14

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