Document:

Exhibit 10.2

 

Amended January 15, 2010

 

THIRD
AMENDED AND RESTATED

SEAGATE TECHNOLOGY EXECUTIVE SEVERANCE AND CHANGE IN CONTROL

(CIC) PLAN

 

SECTION 1.
INTRODUCTION.

 

THE THIRD
AMENDED AND RESTATED SEAGATE TECHNOLOGY EXECUTIVE SEVERANCE AND CHANGE IN
CONTROL (CIC) PLAN
(the “Plan” or “Severance
and CIC Plan”) was originally approved by the Board of Directors of SEAGATE TECHNOLOGY (the “Company”)
on August 21, 2008 as the Seagate Technology Executive Officer Severance
and Change in Control (CIC) Plan, and became effective on September 1,
2008.  The Plan was first amended and
restated by the Plan Administrator on April 29, 2009, was next amended and
restated by the Plan Administrator on July 29, 2009 to be effective August 1,
2009, and subsequently amended and restated in the form set forth herein by the
Plan Administrator on January 15, 2010 to be effective January 15,
2010.  The purpose of the Plan is to
provide for the payment of severance benefits to certain eligible executives of
the Company in the event their employment with the Company and any Applicable
Subsidiary (as defined herein), as applicable, is terminated involuntarily, as
provided herein, and to encourage such executives to continue as employees of
the Company or an Applicable Subsidiary, as the case may be, in the event of a
Change in Control (as defined herein). 
Except as otherwise stated herein, this Plan shall supersede any
severance benefit plan, policy or practice previously maintained by the Company
(including, without limitation, the provisions of any employment agreement
between any Eligible Executive and the Company or any Applicable
Subsidiary).  This Plan document also is
the Summary Plan Description for the Plan.

 

SECTION 2.
ELIGIBILITY FOR BENEFITS.

 

(a)                                 General Rules. 
Subject to the requirements set forth in this Section, the Company will
grant severance benefits under the Plan to each Eligible Executive.

 

(i)                                     “Potential Eligible
Executive” refers to all executives employed by the Company or any
Applicable Subsidiary with the Level (as defined below) of vice president or
more senior selected to participate in this Plan as indicated in the Benefits
Schedules attached hereto.  An “Eligible Executive” is any Potential Eligible Executive,
other than those excluded under this Section 2, whose employment with the
Company or any Applicable Subsidiary is either (A) voluntarily terminated
for Good Reason (as defined herein) or (B) involuntarily terminated for a
reason other than Cause (as defined herein) (collectively, a “Termination Event”).  In addition, other than during a period
beginning on the date of the occurrence of a Change in Control and ending at
the end of the Change in Control Period with respect to such Change in Control,
a Potential Eligible Executive must be designated by the Plan Administrator as
an Eligible Executive.  Additionally, an
Eligible Executive shall be eligible for additional benefits under this Plan if
the Termination Event occurs during the Change in Control Period (as defined
herein).  For the avoidance of doubt, a
Potential Eligible Executive who is involuntarily terminated for Cause shall
not be eligible for benefits under this Plan.

 

(ii)                                  In order to be eligible to receive
benefits under the Plan, in addition to meeting the requirements of an “Eligible
Executive” set forth in Section 2(a)(i) above, an Eligible Executive
must execute within 45 days of the Eligible Employee’s receipt thereof (A) a
general waiver and release on the form provided by the Company and (B) an
agreement containing certain covenants on the form provided by the Company and
covering the matters set forth in Section 6 of this Plan, the scope and
applicability of which covenants shall be determined by the Plan Administrator
in its sole discretion (collectively, the “Release and Covenant
Documents”).

 

(iii)                               Any Termination Event that triggers the
payment of benefits under this Plan must occur during the term of this Plan as
specified in Section 9(b); provided that
in any event eligibility for benefits shall continue until the expiration of a
Change in Control Period (as defined below) if a Change in Control Period
commences prior to the time that the Plan is in effect..

 

 

(b)                                 Exceptions. 
A Potential Eligible Executive who otherwise is an Eligible Executive
will not receive benefits under the Plan in any of the following circumstances:

 

(i)                                     The Potential Eligible Executive is
involuntarily terminated for any reason other than a reason specified in Section 2(a)(i).

 

(ii)                                  The Potential Eligible Executive
voluntarily terminates employment with the Company either (A) for a reason
other than Good Reason or (B) for no reason.  Voluntary terminations include, but are not
limited to, death, Disability, resignation, retirement, or failure to return
from a leave of absence on the scheduled date.

 

SECTION 3.
DEFINITIONS.

 

Capitalized terms
used in this Plan, unless defined elsewhere in this Plan, shall have the
following meanings:

 

(a)                                 Accrued Bonus Funding means the funding of the Bonus Plan as a
percent of target funding as approved by the Plan Administrator quarterly based
on actual Company performance versus pre-determined targets, as follows:

 

(i)                                     Q1 Accrued Bonus Funding means the Accrued Bonus Funding as
determined by the Plan Administrator with respect to the first quarter of the
Company’s applicable fiscal year (i.e., following the release of the Company’s
first quarter earnings results, but prior to the release of the Company’s
second quarter earnings results).

 

(ii)                                  Q2 Accrued Bonus Funding means the Accrued Bonus Funding as
determined by the Plan Administrator with respect to the second quarter of the
Company’s applicable fiscal year (i.e., following the release of the Company’s
second quarter earnings results, but prior to the release of the Company’s
third quarter earnings results).

 

(iii)                               Q3 Accrued Bonus Funding means the Accrued Bonus Funding as
determined by the Plan Administrator with respect to the third quarter of the
Company’s applicable fiscal year (i.e., following the release of the Company’s
third quarter earnings results, but prior to the release of the Company’s
fourth quarter earnings results).

 

(iv)                              Q4 Accrued Bonus Funding means the Accrued Bonus Funding as
determined by the Plan Administrator with respect to the fourth quarter of the
Company’s applicable fiscal year (i.e., following the release of the Company’s
fourth quarter earnings results).

 

For the purposes of this Plan, the Accrued Bonus
Funding for a given fiscal year or any portion thereof may not exceed 100% of
target funding, even if the Plan Administrator has determined that the funding
of the Bonus Plan shall accrue at a higher percentage.

 

(b)                                 Applicable Subsidiary means all subsidiaries of the Company
included on Schedule A attached hereto.

 

(c)                                 Beneficial Owner means the definition given in Rule 13d-3
promulgated under the Exchange Act.

 

(d)                                 Board means the Board of Directors of the
Company.

 

(e)                                 Bonus Plan means the Company’s Executive Officer
Performance Bonus Plan, the Executive Performance Bonus Plan or similar cash
incentive bonus plan adopted by the Company as a successor to one or more of
the previously listed bonus plans from time to time.  For the avoidance of doubt, one-time bonuses
paid by the Company to a Potential Eligible Executive that are not paid under
one of the bonus plans described in the preceding sentence shall not be treated
as cash incentive bonuses and therefore shall be excluded from the definition
of “Accrued Bonus Funding,” “Pro Rata Bonus” and “Target Bonus” for purposes of
this Plan.  Examples of such one-time
bonuses are sign-on bonuses, special recognition bonuses and guaranteed
bonuses.  For purposes of this Plan, no
Eligible Executive shall be treated as participating in more than one Bonus
Plan on the date of a Termination Event. 
In the unlikely event that an Eligible Executive is participating in
more than one cash incentive bonus plan that would otherwise qualify as a Bonus

 

2

 

Plan but for the
preceding sentence, the cash incentive bonus plan that would produce the
largest payment under the terms of this Plan shall be treated as the Bonus Plan
for such Eligible Executive.

 

(f)                                   Cause means (i) a Potential Eligible
Executive’s continued failure to substantially perform the material duties of
his or her office (other than as a result of total or partial incapacity due to
physical or mental illness), (ii) embezzlement or theft by a Potential
Eligible Executive of the Company’s property, (iii) the commission of any
act or acts on a Potential Eligible Executive’s part resulting in the conviction
of such Potential Eligible Executive of a felony under the laws of the United
States or any state or foreign jurisdiction, (iv) a Potential Eligible
Executive’s willful malfeasance or willful misconduct in connection with such
Potential Eligible Executive’s duties to Company or any of its subsidiaries or
affiliates or any other act or omission which is materially injurious to the
financial condition or business reputation of the Company or any of its
subsidiaries or affiliates, or (v) a material breach by a Potential
Eligible Executive of any of the material provisions of (A) this Plan, (B) any
non-compete, non-solicitation or confidentiality provisions to which such
Potential Eligible Executive is subject or (C) any policy of the Company
or any of its subsidiaries or affiliates to which such Potential Eligible
Executive is subject.  However, no
termination shall be deemed for Cause under clause (i), (iv) or (v) unless
the Potential Eligible Executive is first given written notice by the Company
of the specific acts or omissions which the Company deems constitute grounds
for a termination for Cause, is provided with at least 30 days after such
notice to cure the specified deficiency and fails to substantially cure such
deficiency within such time frame to the satisfaction of the Plan
Administrator.

 

(g)                                Change in Control means the occurrence of any of the
following events:

 

(i)                                     The sale, exchange, lease or other
disposition of all or substantially all of the assets of the Company to a
person or group of related persons, as such terms are defined or described in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act, that will continue
the business of the Company in the future;

 

(ii)                                  A merger, consolidation or similar
transaction involving the Company and at least one other entity in which the
voting securities of the Company owned by the shareholders of the Company
immediately prior to such merger, consolidation or similar transaction do not
represent, after conversion if applicable, more than fifty percent (50%) of the
total voting power of the surviving controlling entity outstanding immediately
after such merger, consolidation or similar transaction; provided that any
person who (1) was a Beneficial Owner of the voting securities of the
Company immediately prior to such merger, consolidation or similar transaction,
and (2) is a Beneficial Owner of more than 20% of the securities of the
Company immediately after such merger, consolidation or similar transaction,
shall be excluded from the list of “shareholders of the Company immediately
prior to such merger, consolidation or similar transaction” for purposes of the
preceding calculation;

 

(iii)                               Any person or group of related persons,
as such terms are defined or described in Sections 3(a)(9) and 13(d)(3) of
the Exchange Act, is or becomes the Beneficial Owner, directly or indirectly,
of more than 50% of the total voting power of the voting stock of the Company
(including by way of merger, consolidation or otherwise);

 

(iv)                              During any period of two consecutive
years, individuals who at the beginning of such period constituted the Board
(together with any new directors whose election by such Board or whose
nomination for election by the shareholders of the Company was approved by a
vote of a majority of the directors of the Company then still in office, who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board then in office; or

 

(v)                                 A dissolution or liquidation of the
Company.

 

Notwithstanding
the foregoing, a restructuring of the Company for the purpose of changing the
domicile of the Company (including, but not limited to, any change in the
structure of the Company resulting from the process of moving its domicile from
the Cayman Islands to Ireland or from and to other jurisdictions),
reincorporation of the Company or other similar transaction involving the
Company (a “Restructuring Transaction”) will not constitute a Change in Control
if, immediately after the Restructuring Transaction, the shareholders of the
Company immediately prior to such Restructuring Transaction represent, directly
or indirectly, more than fifty percent (50%) of the total voting power of the
surviving publicly-traded entity.

 

3

 

(h)                                Change in Control Period means the following:

 

(i)                                     if the Change in Control is preceded by
the Company’s entry into a definitive agreement regarding the Change in
Control, the period beginning on the date that the Company enters into a
definitive agreement with respect to a Change in Control and ending on the date
that is 24 months following the effective date of the Change in Control that is
the subject of such definitive agreement; and

 

(ii)                                  if the Change in Control is not preceded
by the Company’s entry into a definitive agreement regarding the Change in
Control, the period beginning on the date of the applicable triggering event
set forth in Section 3(g) above and ending 24 months after the date
of such triggering event.

 

For the avoidance
of doubt, no enhanced benefits payable to an Eligible Executive due to a
Termination Event occurring within a Change in Control Period shall be paid
prior to the effective date of a Change in Control.

 

(i)                                   Code means the Internal Revenue Code of 1986,
as amended.  Any specific reference to a
section of the Code shall be deemed to include any regulations and other
Treasury Department guidance promulgated thereunder.

 

(j)                                   Company means Seagate Technology, an exempted
limited liability company incorporated under the laws of the Cayman Islands,
and any successor as provided in Section 9(c) hereof.

 

(k)                               Disability means the physical or mental
incapacitation such that for a period of six consecutive months or for an
aggregate of nine months in any 24-month consecutive period, a Potential
Eligible Executive is unable to substantially perform his or her duties.  Any question as to the existence of that
Potential Eligible Executive’s physical or mental incapacitation as to which
the Potential Eligible Executive or the Potential Eligible Executive’s
representative and the Company cannot agree shall be determined in writing by a
qualified independent physician mutually acceptable to the Potential Eligible
Executive and the Company.  If the
Potential Eligible Executive and the Company cannot agree as to a qualified
independent physician, each shall appoint such a physician and those two
physicians shall select a third who shall make such determination in
writing.  The determination of “Disability”
made in writing to the Company and the Potential Eligible Executive shall be
final and conclusive for all purposes of the benefits under this Plan.

 

(l)                                    Exchange Act means the Securities Exchange Act of
1934, as amended.

 

(m)                             Good Reason means a Potential Eligible Executive’s
resignation of his or her employment with the Company or an Applicable
Subsidiary as a result of the occurrence of one or more of the following
actions, which such action or actions remain uncured for at least 30 days
following written notice from such Potential Eligible Executive to the Company
describing the occurrence of such action or actions and asserting that such
action or actions constitute grounds for a Good Reason resignation which notice
must be provided by the Potential Eligible Executive no later than 90 days
after the initial existence of such condition, provided that such resignation
occurs no later than 60 days after the expiration of the cure period: (i) without
such Potential Eligible Executive’s express written consent, any material
diminution in the level of such Potential Eligible Executive’s authority or
duties; (ii) without such Potential Eligible Executive’s express written
consent, a reduction of 10% or more in the level of the base salary or employee
benefits to be provided to such Potential Eligible Executive, other than a
reduction implemented with the consent of such Potential Eligible Executive or
a reduction that is equivalent to reduction in base salaries and/or employee
benefits, as applicable, imposed on all other executives of the Company at a
similar level within the Company; (iii) the relocation of such Potential
Eligible Executive to a principal place of employment that increases such
Potential Eligible Executive’s one-way commute by more than 50 miles from such
Potential Eligible Executive’s current principal place of employment, without
such Potential Eligible Executive’s express written consent; or (iv) the
failure of any successor to the business of the Company or to substantially all
of the assets and/or business of the Company to assume the Company’s
obligations under this Plan as required by Section 9(c).

 

(n)                                IRS means the Internal Revenue Service.

 

(o)                                 Level means an executive’s level or title as
designated by the Plan Administrator in its sole discretion and in accordance
with this Plan as in effect on the Termination Date (or if greater, immediately
preceding either a Change in Control or termination for Good Reason, as
applicable).

 

4

 

(p)                                 Non-U.S. Eligible Executive means any Eligible Executive not
employed in the United States of America, including its territories and
possessions, on the date of a Termination Event.

 

(q)                                 Pay means the Eligible Executive’s monthly
base pay at the rate in effect on the Termination Date (or if greater, the last
regularly scheduled payroll period immediately preceding either a Change in
Control or termination for Good Reason, as applicable).

 

(r)                                 Payment Confirmation Date means the latest of the following
applicable dates: (A) the date of the Termination Event, (B) the
Termination Date, (C) the effective date of the Covenants (as defined in Section 6),
(D) the date of receipt of executed Release and Covenant Documents by the
Company or (E) the end of any waiting period or revocation period as
required by applicable law in order for the general waiver and release required
by Section 2(a)(ii) of this Plan to be effective.

 

(s)                                 Plan means this Third Amended and Restated
Seagate Technology Executive Severance and CIC Plan.

 

(t)                                   Prior Year Bonus for an Eligible Executive whose
Termination Event occurs in the first quarter of the applicable fiscal year and
outside of a Change in Control Period shall be calculated as set forth in this Section 3(t):

 

(i)                                     If the Termination Event occurs prior to
determination of the Q4 Accrued Bonus Funding for the then most recently
completed fiscal year, the amount of the Prior Year Bonus shall be determined
based on the Q3 Accrued Bonus Funding for such year, not to exceed 100%,
multiplied by the Eligible Executive’s then current annual target bonus,
without pro-ration.

 

(ii)                                  If the Termination Event occurs following
determination of the Q4 Accrued Bonus Funding for the then most recently
completed fiscal year, but prior to the actual payment of an incentive under a
Bonus Plan for such year, the amount of the Prior Year Bonus shall be
determined based on the Q4 Accrued Bonus Funding for such year, not to exceed
100%, multiplied by the Eligible Executive’s then current annual target bonus,
without pro-ration.

 

(iii)                               Other than as described in Sections
3(t)(i)-(ii) above, no Prior Year Bonus shall be paid to any Eligible
Executive.

 

(u)                                Pro Rata Bonus for an Eligible Executive who is not a
Non-U.S. Eligible Executive and whose Termination Event occurs outside of a
Change in Control Period shall be calculated in relation to the fiscal year
during which termination takes place, as set forth in this Section 3(u):

 

(i)                                     If the Termination Event occurs prior to
determination of the Q1 Accrued Bonus Funding and the Eligible Executive either
was a “covered employee” within the meaning of Section 162(m) of the
Code for the last fiscal year of the Company completed prior to the Termination
Event or, based on such Eligible Executive’s compensation paid through the date
of the Termination Event, such Eligible Executive is projected, in the sole and
reasonable determination of the Plan Administrator, to be a “covered employee”
within the meaning of Section 162(m) of the Code assuming he or she
remained employed by the Company through the end of the then current fiscal
year (and so for purposes of this Plan shall be considered to be “subject to Section 162(m) of
the Code”), the amount of the Pro Rata Bonus shall be based on the Q1 Accrued
Bonus Funding, once determined, multiplied by the Eligible Executive’s then
current annual target bonus, prorated for the number of days employed during
the fiscal year of the Termination Event divided by 360.

 

(ii)                                  If the Termination Event occurs prior to
determination of the Q1 Accrued Bonus Funding and the Eligible Office is not
subject to Section 162(m) of the Code, the amount of the Pro Rata
Bonus shall be determined based on the Eligible Executive’s then current annual
target bonus, prorated for the number of days employed during the fiscal year
of the Termination Event divided by 360.

 

(iii)                               If the Termination Event occurs following
determination of the Q1 Accrued Bonus Funding, but prior to determination of
the Q2 Accrued Bonus Funding, the amount of the Pro Rata Bonus shall be
determined based on the Q1 Accrued Bonus Funding multiplied by the Eligible
Executive’s then current annual target bonus, prorated for the number of days
employed during the fiscal year of the Termination Event divided by 360.

 

5

 

(iv)                              If the Termination Event occurs following
determination of the Q2 Accrued Bonus Funding, but prior to determination of
the Q3 Accrued Bonus Funding, the amount of the Pro Rata Bonus shall be
determined based on the Q2 Accrued Bonus Funding multiplied by the Eligible
Executive’s then current annual target bonus, prorated for the number of days
employed during the fiscal year of the Termination Event divided by 360.

 

(v)                                 If the Termination Event occurs following
determination of the Q3 Accrued Bonus Funding, but prior to the fiscal year
end, the amount of the Pro Rata Bonus shall be determined based on the Q3
Accrued Bonus Funding multiplied by the Eligible Executive’s then current
annual target bonus, prorated for the number of days employed during the fiscal
year of the Termination Event divided by 360, provided in any event that the
prorate factor does not exceed 1.00.

 

(vi)                              Other than as described in Sections
3(u)(i)-(v) above, no Pro Rata Bonus shall be paid to any Eligible
Executive.

 

(v)                                  Severance Period means the number of months of Pay,
rounded to the nearest whole month, used for calculating the Eligible Executive’s
severance benefits, as specified in the Benefits Schedules attached
hereto.  Notwithstanding the foregoing,
in the event that the Eligible Executive becomes eligible to receive additional
benefits in connection with the occurrence of a Change in Control, the
Severance Period shall be twelve months from the Payment Confirmation Date.

 

(w)                               Target Bonus means the Eligible Executive’s most
recently approved target bonus level (expressed as a percentage of base pay)
with respect to the Bonus Plan, multiplied by the Eligible Executive’s Pay.

 

(x)                                 Termination Date means the last date on which the
Eligible Executive is in active employment status with the Company or any of
its affiliates or subsidiaries as determined by the Plan Administrator in its
sole and reasonable discretion.

 

(y)                                 WARN Act means the federal Worker Adjustment and
Retraining Notification Act and any other comparable law applicable under the
laws of any state or foreign jurisdiction.

 

SECTION 4. AMOUNT
OF BENEFIT.

 

Severance benefits
payable under the Plan are as follows:

 

(a)                                  Subject to Section 6(f), Eligible
Executives will receive the benefits described in Sections 7 and 8 of the Plan
and in the Benefit Schedules attached hereto. 
The level of benefits applicable to an Eligible Executive shall be based
upon his or her Level (and corresponding salary grade).  In the event of any circumstances relating to
the Eligible Executive’s Level and assigned salary grade that may result in a
difference in the level of benefits applicable to an Eligible Executive under
the Plan, the Eligible Executive’s salary grade shall control for purposes of
placing the Eligible Executive in a specific “Tier” of benefits set forth in
the Benefits Schedules.

 

(b)                                  Notwithstanding any other provision of
the Plan to the contrary, any benefits payable to an Eligible Executive under
this Plan shall be in lieu of any severance benefits payable by the Company to
such individual under any other arrangement covering the individual, unless
expressly otherwise agreed to by the Company in writing.  Further, in the event that the Eligible
Executive is entitled to receive severance benefits under any agreement or
contract with the Company, any plan, policy, program or other arrangement
adopted or established by the Company, under the WARN Act or other applicable
law providing for payments from the Company or its subsidiaries or affiliates
on account of termination of employment, including pay in lieu of advance
notice of termination, or as otherwise legally required to be paid to any
Non-U.S. Eligible Executive (“Other Benefits”),
any severance benefits payable hereunder shall be reduced by the Other
Benefits.

 

SECTION 5. TIME OF
PAYMENT AND FORM OF BENEFIT; INDEBTEDNESS.

 

(a)                                  Benefits under this Plan shall be paid
according to the schedule specified in the Benefits Schedules attached hereto,
subject to Section 6(f) and the following provisions:

 

6

 

(i)                                     Any increase to the cash severance
benefits payable on account of the occurrence of a Termination Event during a
Change in Control Period (such as when the Termination Event occurs following
the entry into a definitive agreement for a Change in Control, but prior to the
consummation of the Change in Control) shall be paid (A) as soon as date
administratively practicable following the determination of such increased cash
severance benefits has occurred with respect to lump sum severance payments or (B) on
the remaining payment date(s) with respect to installment payment
severance payments.

 

(ii)                                  Unless otherwise required by applicable
law, in no event shall payment of any Plan benefit be due prior to the Eligible
Executive’s Payment Confirmation Date, and any payment shall be deemed to be
timely made if paid within 20 business days of such date.

 

(iii)                               Notwithstanding anything to the contrary
in this Section 5(a), except for a Termination Event occurring during a
Change in Control Period, the Plan Administrator may in its sole discretion,
determine an alternate payment schedule for any reason, including, without
limitation, to comply with Section 409A of the Code.  For a Termination Event occurring during a
Change in Control Period, the Plan Administrator may determine an alternate
payment schedule only to ensure compliance with applicable law, including but
not limited to Section 409A of the Code.

 

(b)                                  Subject to compliance with Section 409A
of the Code and other applicable law, if an Eligible Executive is indebted to
the Company at his or her Termination Date, the Company reserves the right to
offset any severance payments under the Plan by the amount of such
indebtedness.

 

SECTION 6. ELIGIBLE
EXECUTIVE COVENANTS

 

Severance benefits
payable under the Plan are subject to the following covenants made by each
Eligible Executive (the “Covenants”),
the scope and applicability of which covenants shall be determined by the Plan
Administrator in its sole discretion, but in any event shall not be
substantially greater than as set forth in this Section 6:

 

(a)                                 Non-Competition. 
During the Severance Period, an Eligible Executive will not directly or
indirectly:

 

(i)                                     engage in any business that competes with
the business of the Company, or its subsidiaries (including, without
limitation, any businesses which the Company or its subsidiaries have specific
plans to conduct in the future and as to which such Eligible Executive is aware
of such planning) in any geographical area which is within 100 miles of any
geographical area in which the Company or its subsidiaries conduct such
business (a “Competitive Business”);

 

(ii)                                  enter the employ of, or render any
services to, any person or entity (or any division of any person or entity) who
or which engages in a Competitive Business;

 

(iii)                               acquire a financial interest in, or
otherwise become actively involved with, any Competitive Business, directly or
indirectly, as an individual, partner, shareholder, officer, director,
principal, agent, trustee or consultant; or

 

(iv)                              interfere with, or attempt to interfere
with, business relationships (whether formed before, on or after the date of
this Agreement) between the Company or any of its subsidiaries and customers,
clients, suppliers, partners, members or investors of the Company or its
subsidiaries.

 

Notwithstanding anything to the contrary in this Plan,
an Eligible Executive may, directly or indirectly own, solely as a passive
investment, securities of any person engaged in the business of the Company or
its subsidiaries which are actively traded on a public securities market
(including the OTCBB and similar over-the-counter market) if such Eligible
Executive (i) is not a controlling person of, or a member of a group which
controls, such person and (ii) does not, directly or indirectly, own 5% or
more of any class of such actively traded securities of such person.

 

(b)                                 Non-Solicitation of Clients. 
During the Severance Period, an Eligible Executive will not, whether on
such Eligible Executive’s own behalf or on behalf of or in conjunction with any
person, company, business entity or 

 

7

 

other organization
whatsoever, directly or indirectly solicit or assist in soliciting in
competition with the Company, the business of any client or prospective client:

 

(i)                                     with whom such Eligible Executive had
personal contact or dealings on behalf of the Company during the one year
period preceding such Eligible Executive’s Termination Date;

 

(ii)                                  with whom employees reporting to such
Eligible Executive have had personal contact or dealings on behalf of the
Company during the one year immediately preceding such Eligible Executive’s
Termination Date; or

 

(iii)                               for whom such Eligible Executive had
direct or indirect responsibility during the one year immediately preceding
such Eligible Executive’s Termination Date.

 

(c)                                 Non-Solicitation of Employees. 
During the Severance Period, an Eligible Executive will not, whether on
such Eligible Executive’s own behalf or on behalf of or in conjunction with any
person, company, business entity or other organization whatsoever, directly or
indirectly:

 

(i)                                     solicit or encourage any employee of the
Company or its subsidiaries to leave the employment of the Company or its
subsidiaries; or

 

(ii)                                  encourage to cease to work with the
Company or its subsidiaries any consultant then under contract with the Company
or its subsidiaries.

 

(d)                                  During the term of an Eligible Executive’s
employment with the Company, such Eligible Executive will have access to and
become acquainted with the Company’s and its affiliates’ confidential and
proprietary information, including but not limited to, information or plans
regarding the Company’s and its affiliates’ customer relationships, personnel
or sales, marketing and financial operations and methods, trade secrets,
formulas, devices, secret inventions, processes and other compilations of
information, records and specifications (collectively, “Proprietary
Information”).  During the
Severance Period, an Eligible Executive shall not disclose any of the Company’s
or its affiliates’ Proprietary Information, directly or indirectly, or use it
in any way except in the course of performing services for the Company and its
affiliates, as authorized in writing by the Company or as required to be
disclosed by applicable law.  All files,
records, documents, computer-recorded information, drawings, specifications,
equipment and similar items relating to the business of the Company or its affiliates,
whether prepared by an Eligible Executive or otherwise coming into such
Eligible Executive’s possession, shall remain the exclusive property of the
Company or its affiliates, as the case may be. 
Notwithstanding the foregoing, Proprietary Information shall not include
information that is or becomes generally public knowledge other than as a
result of a breach of this Section 6(d) or any obligation that the
Eligible Executive has to protect the confidentiality of the Proprietary
Information of the Company and its affiliates.

 

(e)                                  It is expressly understood and agreed
that although each Eligible Executive and the Company consider the restrictions
contained in the Covenants to be reasonable, if a final judicial determination
is made by a court of competent jurisdiction that the time or territory or any
other restriction contained in the Covenants is an unenforceable restriction
against an Eligible Executive, for which injunctive relief is unavailable, the
provisions of the Covenants shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such maximum
extent as such court may judicially determine or indicate to be
enforceable.  Furthermore, such a
determination shall not limit the Company’s ability to cease providing payments
or benefits during the remainder of any Severance Period or to seek recovery of
any prior payments or benefits made hereunder, if applicable, unless a court of
competent jurisdiction has expressly declared that action to be unlawful.  Alternatively, if any court of competent
jurisdiction finds that any restriction contained in the Covenants is
unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained in the Covenants or other provisions of this Plan.

 

(f)                                    All benefits payable to an Eligible
Executive are contingent upon his or her full compliance with the foregoing
obligations during the Severance Period. 
Accordingly, if the Eligible Executive, at any time, violates any
Covenants, any proprietary information or confidentiality obligation to the
Company (including Section 6(d) above), including his or her
obligations under the Company’s At-Will Employment, Confidential Information
and Invention 

 

8

 

Assignment
Agreement (or any such similar agreement), or any other obligations under this
Plan, (i) any remaining benefits under this Plan will terminate
immediately upon written notice from the Company of such violation and (ii) to
the extent the Eligible Executive has received any benefits under the Plan
prior to the date of such written notice, the Eligible Executive shall deliver
to the Company, within 30 days, an amount equal to the aggregate of all such
benefits.

 

SECTION 7.
CONTINUATION OF EMPLOYMENT BENEFITS.

 

(a)                                 Health Plan Benefits Continuation.

 

(i)                                     Each Eligible Executive who is enrolled
in a health, vision or dental plan sponsored by the Company may be eligible to
continue coverage (the “Continued Coverage”)
under such health, vision or dental plan (or to convert to an individual
policy) under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).  The Company
will notify the individual of any such right to continue health coverage at the
time of termination.  In the event that
an Eligible Executive is not eligible to receive Continued Coverage through the
Company (either because such Eligible Executive is not enrolled in any plan
sponsored by the Company or because such Eligible Executive will be covered by
a statutory scheme for continued health, vision or dental coverage that will
not be an obligation of the Company), it is understood and agreed that this Section 7(a) shall
not be applicable to such Eligible Executive and, with respect to a Termination
Event occurring during a Change in Control Period, he or she shall not be
eligible to receive the COBRA Premiums (as defined below).

 

(ii)                                  Subject to Section 6(f), solely in
connection with the Continued Coverage triggered by a Termination Event during
a Change in Control Period, the Company will pay to the Eligible Executive who
is not a Non-U.S. Eligible Executive a lump sum cash payment in an amount equal
to 2.0 times the before-tax annual cost of such Eligible Executive’s premiums
to cover the Eligible Executive and his or her eligible dependents, if any, in
effect as of the Termination Event (the “Continued Coverage
Premiums”).  The Continued
Coverage Premiums will include the coverage premium cost of an Eligible
Executive’s dependents if, and only to the extent that, such dependents were
enrolled in a health, vision or dental plan sponsored by the Company prior to
the Eligible Executive’s Termination Date and such dependents’ premiums under
such plans were paid by the Company prior to the Eligible Executive’s
Termination Date.  No provision of this
Plan will affect the continuation coverage rules under COBRA or any other
applicable law.  Therefore, the period
during which an Eligible Executive must elect to continue the Company’s group
medical, vision or dental coverage at his or her own expense under COBRA or
other applicable law, the length of time during which Continued Coverage will
be made available to the Eligible Executive, and all other rights and
obligations of the Eligible Executive under COBRA or any other applicable law
(except the obligation to pay the Continued Coverage Premiums) will be applied
in the same manner that such rules would apply in the absence of this
Plan.  It is expressly understood and
agreed that the Eligible Executive will be solely responsible for the entire
payment of premiums required under COBRA or other applicable law.

 

(b)                                 Other Employee Benefits. 
All non-health benefits (such as life insurance and disability coverage)
terminate as of the Eligible Executive’s Termination Date (except to the extent
that any conversion privilege is available thereunder).

 

SECTION 8. EXCISE
TAXES

 

(a)                                  In the event that any benefits payable to
an Eligible Executive pursuant to this Plan (“Payments”)
(i) constitute “parachute payments” within the meaning of Section 280G
of the Code, and (ii) but for this Section 8 would be subject to the
excise tax imposed by Section 4999 of the Code, or any comparable
successor provisions (the “Excise Tax”),
then the Eligible Executive’s payments hereunder shall be either (a) provided
to the Eligible Executive in full, or (b) provided to the Eligible
Executive as to such lesser extent which would result in no portion of such
benefits being subject to the Excise Tax, whichever of the foregoing amounts,
when taking into account applicable federal, state, local and foreign income
and employment taxes, the Excise Tax, and any other applicable taxes, results
in the receipt by the Eligible Executive, on an after-tax basis, of the
greatest amount of benefits, notwithstanding that all or some portion of such
benefits may be taxable under the Excise Tax. 
Unless the Company and the Eligible Executive otherwise agree in writing,
any determination required under this Section 8 shall be made in writing
in good faith by a recognized accounting firm selected by the Company (the “Accountants”).  In the
event of a reduction of benefits hereunder, the Accountants shall determine
which benefits shall be reduced so as to achieve the principle set forth in the
preceding 

 

9

 

sentence.  For purposes of making the calculations
required by this Section 8, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of the Code
and other applicable legal authority. 
The Company and the applicable Eligible Executive shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section 8.  The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 8.

 

(b)                                  If, notwithstanding any reduction
described in Section 8(a), the IRS determines that an Eligible Executive
is liable for the Excise Tax as a result of the receipt of any payments made
pursuant to this Plan, then the Eligible Executive shall be obligated to pay
back to the Company, within thirty (30) days after a final IRS determination or
in the event that the Eligible Executive challenges the final IRS
determination, a final judicial determination, a portion of the Payments equal
to the “Repayment Amount.”  The Repayment Amount shall be the smallest
such amount, if any, as shall be required to be paid to the Company so that the
Eligible Executive’s net after-tax proceeds with respect to the Payments (after
taking into account the payment of the Excise Tax and all other applicable
taxes imposed on such benefits) shall be maximized.  The Repayment Amount shall be zero if a
Repayment Amount of more than zero would not result in the Eligible Executive’s
net after-tax proceeds with respect to the Payments being maximized.  If the Excise Tax is not eliminated pursuant
to this Section 8(b), the Eligible Executive shall pay the Excise Tax.

 

(c)                                  Notwithstanding any other provision of
this Section 8, if (i) there is a reduction in the payments to an
Eligible Executive as described in this Section 8, (ii) the IRS later
determines that the Eligible Executive is liable for the Excise Tax, the
payment of which would result in the maximization of the Eligible Executive’s
net after-tax proceeds (calculated as if the Eligible Executive’s benefits had
not previously been reduced), and (iii) the Eligible Executive pays the
Excise Tax, then the Company shall pay to the Eligible Executive those payments
which were reduced pursuant to this Section 8 as soon as administratively
possible after the Eligible Executive pays the Excise Tax so that the Eligible
Executive’s net after-tax proceeds with respect to the payment of the Payments
are maximized.

 

SECTION 9. RIGHT TO
INTERPRET PLAN; AMEND AND TERMINATE; OTHER ARRANGEMENTS; BINDING NATURE OF PLAN.

 

(a)                                 Exclusive Discretion. 
The “Plan Administrator” shall be the
Compensation Committee of the Board.  The
Plan Administrator shall have the exclusive discretion and authority to
establish rules, forms, and procedures for the administration of the Plan, and
to construe and interpret the Plan and to decide any and all questions of fact,
interpretation, definition, computation or administration arising in connection
with the operation of the Plan, including, but not limited to, the eligibility
to participate in the Plan, the designation of the salary grade(s) relating
to each applicable “Tier” of benefits under the Plan as set forth in the
Benefits Schedules, the amount of benefits paid under the Plan, the timing of
payments under the Plan and the scope and applicability of the covenants
contained in the Release and Covenant Documents.  The rules, interpretations, computations and
other actions of the Plan Administrator shall be binding and conclusive on all
persons.  For decisions made by the Plan
Administrator that do not affect benefits payable under the Plan on account of
the occurrence of a Termination Event during the Change in Control Period, the
Plan Administrator’s decisions shall not be subject to review unless they are
found to be arbitrary or capricious.  For
decisions made by the Plan Administrator prior to the occurrence of a Change in
Control that do affect benefits payable under the Plan on account of the
occurrence of a Termination Event during the Change in Control Period, the Plan
Administrator’s decisions shall not be subject to review unless they are found
to be unreasonable or not to have been made in good faith.  For decisions made by the Plan Administrator
at or after the occurrence of a Change in Control that affect benefits payable under
the Plan on account of the occurrence of a Termination Event during the Change
in Control Period, the Plan Administrator’s decisions shall be subject to
review.  As used in this Section 9(a),
“review” shall mean review as provided by
applicable law; further, nothing in this Section 9(a) is intended to
abridge any of the rights under Article 12 of this Plan.  The Plan Administrator may appoint one or
more individuals and delegate such of its powers and duties as it deems
desirable to any such individual(s), in which case every reference herein made
to the Plan Administrator shall be deemed to mean or include the appointed
individual(s) as to matters within their jurisdiction.

 

(b)                                 Term Of Plan; Termination or
Suspension; Amendment; Binding Nature Of Plan.

 

(i)                                     This Plan shall be effective until July 31,
2010 and shall be extended thereafter for successive one-year periods unless
the Company, by resolution of the Board or the Plan Administrator, in its sole
discretion elects

 

10

 

not to renew the Plan
prior to the date that the Plan is then scheduled to expire.  The Company may also terminate or suspend the
Plan at any time and for any reason or no reason, which termination or
suspension, as applicable, shall become effective at the end of the term
described in this Section 9(b)(i), provided, however,
that no such termination or suspension shall effect the Company’s obligation to
complete the delivery of benefits hereunder to any Potential Eligible Executive
who becomes an Eligible Executive prior to the effective time of such
termination or suspension; and further provided,
that during the Change in Control Period, the Plan shall not be terminated or
suspended.

 

(ii)                                  The Company reserves the right to amend
this Plan or the benefits provided hereunder at any time and in any manner; provided, however, that no such amendment shall materially
adversely affect the interests or rights of any Eligible Executive whose
Termination Date has occurred prior to amendment of the Plan; and further provided, that during the Change in Control Period,
the Plan shall not be amended and no Potential Eligible Executive shall have
benefits materially reduced due to a change in classification without the
written consent of the Potential Eligible Executive or Potential Eligible
Executives so affected.  Subject to the
foregoing rights of the Company set forth in this Section 9(b), this Plan
establishes and vests in each Eligible Executive a contractual right to the
benefits to which such Eligible Executive is entitled hereunder, enforceable by
the Eligible Executive against the Company.

 

(iii)                              Any action amending, suspending or
terminating the Plan shall be in writing and approved by the Plan Administrator
or its delegate, except to the extent that this Plan specifies that such action
shall be taken by the Board.

 

(c)                                 Binding Effect On Successor To
Company.  This Plan shall be binding upon any successor
or assignee, whether direct or indirect, by purchase, merger, consolidation or
otherwise, to all or substantially all the business or assets of the Company,
or upon any successor to the Company as the result of a Change in Control, and
any such successor or assignee shall be required to perform the Company’s
obligations under the Plan, in the same manner and to the same extent that the
Company would be required to perform if no such succession or assignment or
Change in Control had taken place.  In
such event, the term “Company,” as used in the Plan, shall mean the Company as
hereinafter defined and any successor or assignee as described above which by
reason hereof becomes bound by the terms and provisions of this Plan.

 

SECTION 10. NO IMPLIED EMPLOYMENT CONTRACT.

 

The Plan shall not be
deemed (i) to give any employee or other person any right to be retained
in the employ of the Company or (ii) to interfere with the right of the
Company to discharge any employee or other person at any time and for any
reason, which right is hereby reserved.

 

SECTION 11. LEGAL CONSTRUCTION.

 

This Plan is intended to
be governed by and shall be construed in accordance with the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”)
and, to the extent not preempted by ERISA, the laws of the State of California
with respect to those Eligible Executives domiciled in the United States and
the laws of the applicable jurisdiction with respect to the Non-U.S. Eligible
Executives.  This Plan is intended to be (a) an
employee welfare plan as defined in Section 3(1) of ERISA and (b) a
“top-hat” plan maintained for the benefit of a select group of management or
highly compensated employees of the Company. 
This Plan is intended to meet requirements of Section 162(m) of
the Code to provide for any payments under the Bonus Plan to qualify as
performance based compensation.  Any
feature of this Plan which is found to void the qualification of all payments
under the Bonus Plan as performance based compensation shall be modified to the
extent necessary to comply with the requirements of Section 162(m) of
the Code.

 

SECTION 12. CLAIMS, INQUIRIES AND APPEALS.

 

(a)                                 Applications For Benefits And
Inquiries.  Any application for benefits, inquiries about
the Plan or inquiries about present or future rights under the Plan must be
submitted to the Plan Administrator in writing. 
The Plan Administrator is:

 

The Compensation
Committee

of the Board of Directors
of

Seagate Technology

 

11

 

ATTN: Vice President of
Compensation and Benefits

920 Disc Drive

Scotts Valley, California
95066

 

(b)                                 Denial Of Claims. 
In the event that any application for benefits is denied in whole or in
part, the Plan Administrator must notify the applicant, in writing, of the
denial of the application, and of the applicant’s right to review the
denial.  The written notice of denial
will be set forth in a manner designed to be understood by the employee, and
will include specific reasons for the denial, specific references to the Plan
provision upon which the denial is based, a description of any information or
material that the Plan Administrator needs to complete the review and an
explanation of the Plan’s review procedure.

 

This written notice will
be given to the employee within 90 days after the Plan Administrator receives
the application, unless special circumstances require an extension of time, in
which case, the Plan Administrator has up to an additional 90 days for
processing the application.  If an
extension of time for processing is required, written notice of the extension
will be furnished to the applicant before the end of the initial 90-day period.

 

This notice of extension
will describe the special circumstances necessitating the additional time and
the date by which the Plan Administrator is to render its decision on the
application.  If written notice of denial
of the application for benefits is not furnished within the specified time, the
application shall be deemed to be denied. 
The applicant will then be permitted to appeal the denial in accordance
with the Review Procedure described below.

 

(c)                                 Request For A Review. 
Any person (or that person’s authorized representative) for whom an
application for benefits is denied (or deemed denied), in whole or in part, may
appeal the denial by submitting a request for a review to the Plan
Administrator within 60 days after the application is denied (or deemed
denied).  The Plan Administrator will
give the applicant (or his or her representative) an opportunity to review
pertinent documents in preparing a request for a review.  A request for a review shall be in writing
and shall be addressed to:

 

Seagate Technology

Plan Administrator for
the Executive Severance and CIC Plan

ATTN: Vice President of
Compensation and Benefits

920 Disc Drive

Scotts Valley, California
95066

 

A request for review must
set forth all of the grounds on which it is based, all facts in support of the
request and any other matters that the applicant feels are pertinent.  The Plan Administrator may require the
applicant to submit additional facts, documents or other material as it may
find necessary or appropriate in making its review.

 

(d)                                 Decision On Review. 
The Plan Administrator will act on each request for review within 60
days after receipt of the request, unless special circumstances require an
extension of time (not to exceed an additional 60 days), for processing the
request for a review.  If an extension
for review is required, written notice of the extension will be furnished to
the applicant within the initial 60-day period. 
The Plan Administrator will give prompt, written notice of its decision
to the applicant.  In the event that the
Plan Administrator confirms the denial of the application for benefits in whole
or in part, the notice will outline, in a manner calculated to be understood by
the applicant, the specific Plan provisions upon which the decision is
based.  If written notice of the Plan
Administrator’s decision is not given to the applicant within the time
prescribed in this Subsection (d), the application will be deemed denied
on review.

 

(e)                                 Rules And Procedures. 
The Plan Administrator will establish rules and procedures,
consistent with the Plan and with ERISA, as necessary and appropriate in
carrying out its responsibilities in reviewing benefit claims.  The Plan Administrator may require an
applicant who wishes to submit additional information in connection with an
appeal from the denial (or deemed denial) of benefits to do so at the applicant’s
own expense.

 

(f)                                   Exhaustion Of Remedies. 
No legal action for benefits under the Plan may be brought until the
claimant (i) has submitted a written application for benefits in
accordance with the procedures described by Section 12(a) above, (ii) has
been notified by the Plan Administrator that the application is denied (or the
application is deemed denied due to the Plan Administrator’s failure to act on
it within the established time period), (iii) has filed a written request
for 

 

12

 

a review of the
application in accordance with the appeal procedure described in Section 12(c) above
and (iv) has been notified in writing that the Plan Administrator has
denied the appeal (or the appeal is deemed to be denied due to the Plan
Administrator’s failure to take any action on the claim within the time
prescribed by Section 12(d) above).

 

SECTION 13. BASIS OF PAYMENTS TO AND FROM
PLAN.

 

All benefits under the
Plan shall be paid by the Company.  The
Plan shall be unfunded, and benefits hereunder shall be paid only from the
general assets of the Company.

 

SECTION 14. OTHER PLAN INFORMATION.

 

(a)                                 Employer And Plan Identification
Numbers.  The Employer Identification Number assigned
to the Company (which is the “Plan Sponsor” as that term is used in ERISA) by
the Internal Revenue Service is 77-0545987. 
The Plan Number assigned to the Plan by the Plan Sponsor pursuant to the
instructions of the Internal Revenue Service is 003.

 

(b)                                 Ending Date For Plan’s Fiscal
Year.  The date of the end of the fiscal year for
the purpose of maintaining the Plan’s records is the Friday which falls closest
to, and including, June 30.

 

(c)                                 Agent For The Service Of Legal
Process.  The agent for the service of legal process
with respect to the Plan is the General Counsel, Seagate Technology, 920 Disc
Drive, Scotts Valley, California 95066. 
The service of legal process may also be made on the Plan by serving the
Plan Administrator.

 

(d)                                 Plan Sponsor And Administrator. 
The “Plan Sponsor” of the Plan is Seagate Technology, and the “Plan
Administrator” of the Plan is the Compensation Committee of the Board.  Each of the Plan Sponsor and the Plan
Administrator can be reached by contacting the Vice President of Compensation
and Benefits in writing at 920 Disc Drive, Scotts Valley, California 95066, and
by telephone at (831) 438-6550.  The Plan
Administrator is the named fiduciary charged with the responsibility for
administering the Plan.

 

SECTION 15. STATEMENT OF ERISA RIGHTS.

 

Participants in this Plan
(which is a welfare benefit plan sponsored by Seagate Technology) are entitled
to certain rights and protections under ERISA if the participant is employed in
the United States.  If you are an
Eligible Executive employed in the United States, you are considered a
participant in the Plan and, under ERISA, you are entitled to:

 

(a)                                 Examine, without charge, at the Plan
Administrator’s office and at other specified locations, such as work sites,
all Plan documents and copies of all documents filed by the Plan with the U.S.
Department of Labor, such as detailed annual reports;

 

(b)                                 Obtain copies of all Plan documents and
Plan information upon written request to the Plan Administrator.  The Administrator may make a reasonable
charge for the copies;

 

(c)                                 Receive a summary of the Plan’s annual
financial report, in the case of a plan which is required to file an annual
financial report with the Department of Labor. 
(Generally, all pension plans and welfare plans with 100 or more
participants must file these annual reports.)

 

In addition to creating
rights for Plan participants, ERISA imposes duties upon the people responsible
for the operation of the employee benefit plan. 
The people who operate the Plan, called “fiduciaries” of the Plan, have
a duty to do so prudently and in the interest of you and other Plan
participants and beneficiaries.

 

No one, including your
employer or any other person, may fire you or otherwise discriminate against
you in any way to prevent you from obtaining a Plan benefit or exercising your
rights under ERISA.  If your claim for a
Plan benefit is denied in whole or in part, you must receive a written
explanation of the reason for the denial. 
You have the right to have the Plan Administrator review and reconsider
your claim.

 

13

 

Under ERISA, there are
steps you can take to enforce the above rights. 
For instance, if you request materials from the Plan and do not receive
them within 30 days, you may file suit in a federal court.  In such a case, the court may require the
Plan Administrator to provide the materials and pay you up to $110 a day until
you receive the materials, unless the materials were not sent because of
reasons beyond the control of the Plan Administrator.  If you have a claim for benefits that is
denied or ignored, in whole or in part, you may file suit in a state or federal
court.  If it should happen that the Plan
fiduciaries misuse the Plan’s money, or if you are discriminated against for
asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a federal court. 
The court will decide who should pay court costs and legal fees.  If you are successful, the court may order
the person you have sued to pay these costs and fees.  If you lose, the court may order you to pay
these costs and fees, for example, if it finds your claim is frivolous.

 

If you have any questions
about the Plan, you should contact the Plan Administrator.  If you have any questions, about your rights
under ERISA, you should contact the nearest area office of the Employee
Benefits Security Administration, U.S. Department of Labor, listed in your
telephone directory or the Division of Technical Assistance and Inquires,
Employee Benefits Security Administration, U.S. Department of Labor, 200
Constitution Avenue N.W., Washington, D.C. 20210.  You may also obtain certain publications
about your rights and responsibilities under ERISA by calling the publications
hotline of the Employee Benefits Security Administration.

 

SECTION 16. EFFECT OF SECTION 409A OF
THE CODE

 

This Plan is intended to
comply with all applicable law, including Section 409A of the Code.  If the Eligible Executive is not a Non-U.S.
Eligible Executive, a termination of employment shall not be deemed to have
occurred for purposes of any provision of this Plan providing for the payment
of any amount or benefit that is considered deferred compensation under Section 409A
of the Code upon or following a termination of employment unless such
termination of employment is also a “separation from service” within the
meaning of Section 409A of the Code. 
If an Eligible Executive is deemed on the Termination Date to be a “specified
employee” (as such term is defined under Section 409A of the Code), then
with regard to any payment or the provision of any benefit that is considered
deferred compensation under Section 409A of the Code payable on account of
a “separation from service,” to the extent required to avoid any taxes imposed
under Section 409A(a)(1) of the Code, such payment or benefit shall
be made or provided at the date which is no more than 15 days following the
earlier of (i) the expiration of the six month period measured from the
date of such “separation from service” of such Eligible Executive, and (ii) the
date of such Eligible Executive’s death.

 

14

 

SCHEDULE
A

 

Potential Eligible Executives
employed in the United States

Seagate Technology (US)
Holdings, Inc. [Delaware]

Seagate US LLC [Delaware]

Seagate Technology LLC
[Delaware]

 

Potential Eligible
Executives employed in Malaysia

Seagate International
(Johor) Sdn. Bhd. [Malaysia]

Penang Seagate Industries
(M) Sdn. Bhd. [Malaysia]

 

Potential Eligible
Executives employed in Thailand

Seagate Technology
(Thailand) Limited

 

Potential Eligible
Executives employed in United Kingdom

Seagate Technology
(Marlow) Limited [United Kingdom]

Seagate Technology
(Ireland) [Cayman Islands]

 

Potential Eligible
Executives employed in Singapore

Seagate Singapore
International Headquarters Pte. Ltd.

 

 

BENEFIT
SCHEDULES

FOR THE

SEAGATE TECHNOLOGY

EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

 

The following benefits
schedules set forth the benefits payable to Eligible Executives.  The benefits schedules disclosed in public
filings are for those for Eligible Executives of the Company who currently are,
or are foreseeable to become, “named executive officers,” as defined in Item
402 of Regulation S-K and the other applicable rules and regulations
promulgated by the Securities and Exchange Commission.  The amount of benefits payable is dependent
upon the “Tier” (and corresponding salary grade) in which the Eligible
Executive falls and whether the involuntary Termination Event occurs during a
Change in Control period, as more particularly described in the Plan.

 

The Plan Administrator
shall determine in which “Tier” an Eligible Executive shall be placed for purposes
of receiving severance benefits under this Plan.  The Plan Administrator’s determination shall
be final and shall be binding and conclusive on all persons.  The Plan Administrator retains the right to
reclassify a Potential Eligible Executive prior to the date of the Termination
Event and/or the occurrence of a Change in Control, except as expressly
restricted by this Plan in connection with the occurrence of a Change in
Control.

 

 

BENEFITS
SCHEDULES

FOR THE

SEAGATE TECHNOLOGY

EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

 

	
  Tier:

  	
   

  	
  1

  	
   

  	
  Salary
  Grade:

  	
   

  	
  188

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Location:

  	
   

  	
  U.S.

  	
   

  	
  Level:

  	
   

  	
  Chief
  Executive Officer

  

 

Benefits
Payable in the Event of a Termination Event (involuntary termination):

 

	
  WITHOUT A CHANGE IN CONTROL

  
	
   

  
	
  Base

  	
   

  	
  24 months of Pay

  
	
  Bonus

  	
   

  	
  Prior Year Bonus (if
  applicable), and Pro Rata Bonus

  
	
  Other

  	
   

  	
  Outplacement services
  for two years

  
	
  Payout
  Schedule

  	
   

  	
  50% of Benefit payable
  within 20 business days of the Payment Confirmation Date (subject to
  Section 5 of the Plan and Section 409A of the Code), with the
  remainder to be paid 12 months following the Termination Date.

  

 

	
  DURING
  A CHANGE IN CONTROL PERIOD

   

  Note: No enhanced benefits due to a Termination
  Event occurring within a Change in 

  Control Period shall be paid prior to the effective date of a Change in
  Control.

  
	
   

  
	
  Base

  	
   

  	
  36 months of Pay

  
	
  Bonus

  	
   

  	
  36 months of Target
  Bonus

  
	
  Equity

  	
   

  	
  Upon the later of a
  Termination Event or immediately prior to a Change in Control, there shall be
  full vesting of all unvested equity-based awards (whether or not granted
  prior to or following the adoption of this Plan), notwithstanding the
  applicable provisions of the Eligible Executive’s award agreements or the
  relevant stock compensation plan governing such equity-based awards.

  
	
  Other

  	
   

  	
  Continued Coverage Premiums,
  and Outplacement services for two years

  
	
  Payout
  Schedule

  	
   

  	
  100% of Benefit payable
  within 20 business days of the Payment Confirmation Date (subject to
  Section 5 of the Plan and Section 409A of the Code), with the
  remainder, if any, to be paid 6 months following the Termination Date.

  

 

 

BENEFITS
SCHEDULES

FOR THE

SEAGATE TECHNOLOGY

EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

 

	
  Tier:

  	
   

  	
  2

  	
   

  	
  Salary
  Grade:

  	
   

  	
  184
  through 187

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Location:

  	
   

  	
  U.S.

  	
   

  	
  Level:

  	
   

  	
  Executive
  Vice Presidents

  

 

Benefits
Payable in the Event of a Termination Event (involuntary termination):

 

	
  WITHOUT A CHANGE IN CONTROL

  
	
   

  
	
  Base

  	
   

  	
  20 months of Pay

  
	
  Bonus

  	
   

  	
  Prior Year Bonus (if
  applicable), and Pro Rata Bonus

  
	
  Other

  	
   

  	
  Outplacement services
  for two years

  
	
  Payout
  Schedule

  	
   

  	
  50% of Benefit payable
  within 20 business days following the Payment Confirmation Date (subject to Section 5
  of the Plan and Section 409A of the Code), with the remainder to be paid
  12 months following the Termination Date.

  

 

	
  DURING
  A CHANGE IN CONTROL PERIOD

   

  Note: No enhanced benefits due to a Termination
  Event occurring within a Change in 

  Control Period shall be paid prior to the effective date of a Change in
  Control.

  
	
   

  
	
  Base

  	
   

  	
  24 months of Pay

  
	
  Bonus

  	
   

  	
  24 months of Target
  Bonus

  
	
  Equity

  	
   

  	
  Upon the later of a
  Termination Event or immediately prior to a Change in Control, there shall be
  full vesting of all unvested equity-based awards (whether or not granted
  prior to or following the adoption of this Plan), notwithstanding the
  applicable provisions of the Eligible Executive’s award agreements or the
  relevant stock compensation plan governing such equity-based awards.

  
	
  Other

  	
   

  	
  Continued Coverage
  Premiums, and Outplacement services for two years

  
	
  Payout
  Schedule

  	
   

  	
  100% of Benefit payable
  within 20 business days following the Payment Confirmation Date (subject to Section 5
  of the Plan and Section 409A of the Code), with the remainder, if any,
  to be paid 6 months following the Termination Date.

  

 

 

BENEFITS
SCHEDULES

FOR THE

SEAGATE TECHNOLOGY

EXECUTIVE SEVERANCE AND CHANGE IN CONTROL (CIC) PLAN

 

	
  Tier:

  	
   

  	
  3

  	
   

  	
  Salary
  Grade:

  	
   

  	
  182 and
  183

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Location:

  	
   

  	
  U.S.

  	
   

  	
  Level:

  	
   

  	
  Senior
  Vice Presidents

  

 

Benefits
Payable in the Event of a Termination Event (involuntary termination):

 

	
  WITHOUT A CHANGE IN CONTROL

  
	
   

  
	
  Base

  	
   

  	
  16 months of Pay

  
	
  Bonus

  	
   

  	
  Prior Year Bonus (if
  applicable), and Pro Rata Bonus

  
	
  Other

  	
   

  	
  Outplacement services
  for 18 months

  
	
  Payout
  Schedule

  	
   

  	
  50% of Benefit payable
  within 20 business days following the Payment Confirmation Date (subject to Section 5
  of the Plan and Section 409A of the Code), with the remainder to be paid
  6 months following the Termination Date.

  

 

	
  DURING
  A CHANGE IN CONTROL PERIOD

   

  Note: No enhanced benefits due to a Termination
  Event occurring within a Change in 

  Control Period shall be paid prior to the effective date of a Change in
  Control.

  
	
   

  
	
  Base

  	
   

  	
  18 months of Pay

  
	
  Bonus

  	
   

  	
  18 months of Target
  Bonus

  
	
  Equity

  	
   

  	
  Upon the later of a
  Termination Event or immediately prior to a Change in Control, there shall be
  full vesting of all unvested equity-based awards (whether or not granted
  prior to or following the adoption of this Plan), notwithstanding the
  applicable provisions of the Eligible Executive’s award agreements or the
  relevant stock compensation plan governing such equity-based awards.

  
	
  Other

  	
   

  	
  Continued Coverage
  Premiums, and Outplacement services for 18 months

  
	
  Payout
  Schedule

  	
   

  	
  100% of Benefit payable
  within 20 business days following the Payment Confirmation Date (subject to Section 5
  of the Plan and Section 409A of the Code), with the remainder, if any,
  to be paid 6 months following the Termination Date.Exhibit 10.6

 

SEAGATE
TECHNOLOGY

 

2004
STOCK COMPENSATION PLAN

 

Adopted by Board on August 5,
2004

 

Approved by Stockholders
on October 28, 2004

 

Last Amended and Restated on January 15, 2010

 

Termination Date: October 28,
2014

 

I. PURPOSES.

 

1.1           Eligible Stock Award
Recipients.  The persons eligible to
receive Stock Awards are the Employees, Directors and Consultants of the
Company and its Affiliates.

 

1.2           Available Stock
Awards.  The purpose of the Plan is
to provide a means by which eligible recipients of Stock Awards may be given an
opportunity to benefit from increases in value of the Common Stock through the
granting of Stock Awards including, but not limited to: (i) Incentive
Stock Options, (ii) Nonstatutory Stock Options, (iii) Restricted
Stock Bonuses, (iv) Restricted Stock Purchase Rights, (v) Stock
Appreciation Rights, (vi) Phantom Stock Units, (vii) Restricted Stock
Units, (viii) Performance Share Bonuses, and (ix) Performance Share
Units.

 

1.3           General Purpose.  The Company, by means of this new Plan, which
is intended to replace the Company’s 2001 Stock Option Plan (“Predecessor Plan”),
seeks to provide incentives for the group of persons eligible to receive Stock
Awards to align their long-term interests with those of the Company’s
shareholders and to perform in a manner individually and collectively that
enhances the success of the Company and its Affiliates.  Stock Awards granted under the Predecessor
Plan shall continue to be governed by the terms of the Predecessor Plan in
effect on the date of grant of such award.

 

II. DEFINITIONS.

 

2.1           “Affiliate” means
generally with respect to the Company, any entity directly, or indirectly
through one or more intermediaries, controlling or controlled by (but not under
common control with) the Company.  Solely
with respect to the granting of any Incentive Stock Options, Affiliate means
any parent corporation or subsidiary corporation of the Company, whether now or
hereafter existing, as those terms are defined in Sections 424(e) and (f),
respectively, of the Code.

 

2.2           “Beneficial Owner”
means the definition given in Rule 13d-3 promulgated under the Exchange
Act.

 

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

 

2.4           “Change of Control”
means the occurrence of any of the following events:

 

(i)            The sale, exchange,
lease or other disposition of all or substantially all of the assets of the
Company to a person or group of related persons, as such terms are defined or
described in Sections 3(a)(9) and 13(d)(3) of the Exchange Act (other
than to Silver Lake Partners and its affiliates, Texas Pacific Group and its
affiliates, or any group controlled by one or more of the foregoing), that will
continue the business of the Company in the future;

 

(ii)           A merger or
consolidation involving the Company in which the voting securities of the
Company owned by the shareholders of the Company immediately prior to such
merger or consolidation do not represent, after conversion if applicable, more
than fifty percent (50%) of the total voting power of the surviving controlling
entity outstanding, immediately after such merger or consolidation; provided
that any person who (1) was a

 

 

beneficial owner (within
the meaning of Rules 13d-3 and 13d-5 promulgated under the Exchange Act)
of the voting securities of the Company immediately prior to such merger or
consolidation, and (2) is a beneficial owner of more than 20% of the
securities of the Company immediately after such merger or consolidation, shall
be excluded from the list of “shareholders of the Company immediately prior to
such merger or consolidation” for purposes of the preceding calculation;

 

(iii)          Any person or group of
related persons, as such terms are defined or described in Sections 3(a)(9) and
13(d)(3) of the Exchange Act, is or becomes the Beneficial Owner, directly
or indirectly, of more than 50% of the total voting power of the voting stock
of the Company (including by way of merger, consolidation or otherwise);

 

(iv)          During any period of two
(2) consecutive years, individuals who at the beginning of such period
constituted the Board (together with any new Directors whose election by such
Board or whose nomination for election by the shareholders of the Company was
approved by a vote of a majority of the Directors of the Company then still in
office, who were either Directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board then in office; or

 

(v)           A dissolution or
liquidation of the Company.

 

Notwithstanding the
foregoing, a restructuring of the Company for the purpose of changing the
domicile of the Company (including, but not limited to, any change in the
structure of the Company resulting from the process of moving its domicile from
the Cayman Islands to Ireland or from and to other jurisdictions),
reincorporation of the Company or other similar transaction involving the
Company (a “Restructuring Transaction”) will not constitute a Change in Control
if, immediately after the Restructuring Transaction, the shareholders of the
Company immediately prior to such Restructuring Transaction represent, directly
or indirectly, more than fifty percent (50%) of the total voting power of the
surviving publicly-traded entity.

 

2.5           “Code” means the
Internal Revenue Code of 1986, as amended.

 

2.6           “Committee” means a
committee of one or more members of the Board (or other individuals who are not
members of the Board to the extent allowed by law) appointed by the Board in
accordance with Section 3.3 of the Plan.

 

2.7           “Common Stock” means
the common shares of the Company.

 

2.8           “Company” means Seagate
Technology, a limited company domiciled in the Cayman Islands.

 

2.9           “Consultant” means any
person, including an advisor, (i) engaged by the Company or an Affiliate
to render consulting or advisory services and who is compensated for such
services or (ii) who is a member of the board of directors of an
Affiliate.  However, the term “Consultant”
shall not include either Directors who are not compensated by the Company for
their services as a Director or Directors who are compensated by the Company
solely for their services as a Director.

 

2.10         “Continuous Service”
means that the Participant’s service with the Company or an Affiliate, whether
as an Employee, Director or Consultant, is not interrupted or terminated.  The Participant’s Continuous Service shall
not be deemed to have terminated merely because of a change in the capacity in
which the Participant renders service to the Company or an Affiliate as an
Employee, Consultant or Director or a change in the entity for which the
Participant renders such service, provided that there is no interruption or
termination of the Participant’s Continuous Service.  For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an interruption of Continuous Service.  The Board or the chief executive officer of
the Company, in that party’s sole discretion, may determine whether Continuous
Service shall be considered interrupted in the case of any leave of absence
approved by the Company or an Affiliate, including sick leave, military leave
or any other personal leave.

 

2.11         “Covered Employee” means
the chief executive officer and the four (4) other highest compensated
officers of the Company for whom total compensation is required to be reported
to shareholders under the Exchange Act, as determined for purposes of Section 162(m) of
the Code.

 

2.12         “Director” means a member
of the Board of Directors of the Company.

 

2

 

2.13         “Disability” means the
permanent and total disability of a person within the meaning of Section 22(e)(3) of
the Code for all Incentive Stock Options. 
For all other Stock Awards, “Disability” means physical or mental
incapacitation such that for a period of six (6) consecutive months or for
an aggregate of nine (9) months in any twenty-four (24) consecutive month
period, a person is unable to substantially perform his or her duties.  Any question as to the existence of that
person’s physical or mental incapacitation as to which the person or person’s
representative and the Company cannot agree shall be determined in writing by a
qualified independent physician mutually acceptable to the person and the
Company.  If the person and the Company
or an Affiliate cannot agree as to a qualified independent physician, each
shall appoint such a physician and those two (2) physicians shall select a
third (3rd)who shall
make such determination in writing.  The
determination of Disability made in writing to the Company or an Affiliate and
the person shall be final and conclusive for all purposes of the Stock Awards.

 

2.14         “Eligible Director” means
any Director who: (i) is not employed by the Company and (ii) does
not receive a financial management fee from the Company and is not employed by
any entity that receives such a fee.

 

2.15         “Employee” means any
person employed by the Company or an Affiliate. 
Service as a Director or compensation by the Company or an Affiliate
solely for services as a Director shall not be sufficient to constitute “employment”
by the Company or an Affiliate.

 

2.16         “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 

2.17         “Fair Market Value”
means, as of any date, the value of the Common Stock determined as follows:

 

(i)            If the Common Stock is
listed on any established stock exchange (including the New York Stock
Exchange) or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the Fair Market Value of a share of Common Stock shall be the
arithmetic mean of the high and low selling prices of such stock as reported on
such date on the Composite Tape of the principal national securities exchange
on which such stock is listed or admitted to trading, or if no Composite Tape exists
for such national securities exchange on such date, then on the principal
national securities exchange on which such stock is listed or admitted to
trading, or if the stock is not listed or admitted to trading on a national
securities exchange, the arithmetic mean of the per Share closing bid price and
per Share closing asked price on such date as quoted on the National
Association of Securities Dealers Automated Quotation System (or such market in
which such prices are regularly quoted), or if no sale of stock shall have been
reported on such Composite Tape or such national securities exchange on such
date or quoted on the National Association of Securities Dealers Automated
Quotation System on such date, then the immediately preceding date on which sales
of the stock have been so reported or quoted shall be used.

 

(ii)           In the absence of such
markets for the Common Stock, the Fair Market Value shall be determined in good
faith by the Board.

 

(iii)          For any reference to
Fair Market Value in the Plan used to establish the price at which the Company
shall sell Common Stock to a Participant under the terms and conditions of a
Stock Award (such as a Stock Award of Options, Restricted Stock Purchase Rights
or Stock Appreciation Rights), the date as of which this definition shall be
applied shall be the grant date of such Stock Award.

 

2.18         “Full-Value Stock Award”
shall mean any of a Restricted Stock Bonus, Restricted Stock Units, Phantom
Stock Units, Performance Share Bonus, or Performance Share Units.

 

2.19         “Incentive Stock Option”
means an Option intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code and the regulations promulgated
thereunder.

 

2.20         “Non-Employee Director”
means a Director who either (i) is not a current Employee or Officer of
the Company or its parent or a subsidiary, does not receive compensation
(directly or indirectly) from the Company or its parent or a subsidiary for
services rendered as a consultant or in any capacity other than as a Director (except
for an amount as to which disclosure would not be required under Item 404(a) of
Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)),
does not possess an interest in any other transaction as to which disclosure
would be required under Item 404(a) of Regulation S-K and is not engaged
in a business relationship as to which disclosure would be required under Item
404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee
director” for purposes of Rule 16b-3.

 

2.21         “Nonstatutory Stock
Option” means an Option not intended to qualify as an Incentive Stock Option.

 

3

 

2.22         “Officer” means a person
who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.

 

2.23         “Option” means an
Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the
Plan.

 

2.24         “Option Agreement” means
a written agreement between the Company and an Optionholder evidencing the
terms and conditions of an individual Option grant.  Each Option Agreement shall be subject to the
terms and conditions of the Plan.

 

2.25         “Optionholder” means a
person to whom an Option is granted pursuant to the Plan or, if applicable,
such other person who holds an outstanding Option.

 

2.26         “Outside Director” means
a Director who either (i) is not a current employee of the Company or an “affiliated
corporation” (within the meaning of Treasury Regulations promulgated under Section 162(m) of
the Code), is not a former employee of the Company or an “affiliated
corporation” receiving compensation for prior services (other than benefits
under a tax qualified pension plan), was not an officer of the Company or an “affiliated
corporation” at any time and is not currently receiving direct or indirect
remuneration from the Company or an “affiliated corporation” for services in
any capacity other than as a Director; or (ii) is otherwise considered an “outside
director” for purposes of Section 162(m) of the Code.

 

2.27         “Participant” means a
person to whom a Stock Award is granted pursuant to the Plan or, if applicable,
such other person who holds an outstanding Stock Award.

 

2.28         “Performance Share Bonus”
means a grant of shares of the Company’s Common Stock not requiring a
Participant to pay any amount of monetary consideration, and subject to the
provisions of Section 8.6 of the Plan.

 

2.29         “Performance Share Unit”
means the right to receive the value of one (1) share of the Company’s
Common Stock at the time the Performance Share Unit vests, with the further
right to elect to defer receipt of that value otherwise deliverable upon the
vesting of an award of Performance Share Units. 
These Performance Share Units are subject to the provisions of Section 8.7
of the Plan.

 

2.30         “Phantom Stock Unit”
means the right to receive the value of one (1) share of the Company’s
Common Stock, subject to the provisions of Section 8.4 of the Plan.

 

2.31         “Plan” means this 2004
Stock Compensation Plan of Seagate Technology.

 

2.32         “Qualifying Performance
Criteria” means any one or more of the following performance criteria, or
derivations of such performance criteria, either individually, alternatively or
in any combination, applied to either the Company as a whole or to a business
unit or subsidiary, and measured either annually or cumulatively over a period
of years, on an absolute basis or relative to a pre-established target, to
previous years’ results or to a designated comparison group, in each case as
specified by the Committee: (a) pre- and after-tax income; (b) net
income (before or after taxes); (c) operating income; (d) net
earnings; (e) net operating income (before or after taxes); (f) operating
margin; (g) gross margin; (h) cash flow; (i) earnings per share;
(j) return on equity; (k) return on assets, investments or capital
employed; (l) pre-tax profit; (m) revenue; (n) market share; (o) cash
flow (before or after dividends); (p) cost reductions or savings; (q) funds
from operations; (r) total stockholder return; (s) stock price; (t) earnings
before any one or more of the following items: interest, taxes, depreciation or
amortization; (u) market capitalization; (v) economic value added; (w) operating
ratio; (x) product development or release schedules; (y) new product
innovation; (z) cost reductions; (aa) implementation of our critical
processes or projects; (bb) customer service or customer satisfaction; or (cc)
product quality measures.

 

2.33         “Restricted Stock Bonus”
means a grant of shares of the Company’s Common Stock not requiring a
Participant to pay any amount of monetary consideration, and subject to the
provisions of Section 8.1 of the Plan.

 

2.34         “Restricted Stock
Purchase Right” means the right to acquire shares of the Company’s Common Stock
upon the payment of the agreed-upon monetary consideration, subject to the
provisions of Section 8.2 of the Plan.

 

4

 

2.35         “Restricted Stock Unit”
means the right to receive the value of one (1) share of the Company’s
Common Stock at the time the Restricted Stock Unit vests, with the further
right to elect to defer receipt of that value otherwise deliverable upon the
vesting of an award of restricted stock to the extent permitted in the
Participant’s agreement.  These
Restricted Stock Units are subject to the provisions of Section 8.5 of the
Plan.

 

2.36         “Rule 16b-3” means Rule 16b-3
promulgated under the Exchange Act or any successor to Rule 16b-3, as in
effect from time to time.

 

2.37         “Securities Act” means
the Securities Act of 1933, as amended.

 

2.38         “Stock Appreciation Right”
means the right to receive an amount equal to the Fair Market Value of one (1) share
of the Company’s Common Stock on the day the Stock Appreciation Right is
redeemed, reduced by the deemed exercise price or base price of such right,
subject to the provisions of Section 8.3 of the Plan.

 

2.39         “Stock Award” means any
Option award, Restricted Stock Bonus award, Restricted Stock Purchase Right
award, Stock Appreciation Right award, Phantom Stock Unit award, Restricted
Stock Unit award, Performance Share Bonus award, Performance Share Unit award,
or other stock-based award.  These Awards
may include, but are not limited to those listed in Section 1.2.

 

2.40         “Stock Award Agreement”
means a written agreement between the Company and a holder of a Stock Award
setting forth the terms and conditions of an individual Stock Award grant.  Each Stock Award Agreement shall be subject
to the terms and conditions of the Plan.

 

2.41         “Ten Percent Shareholder”
means a person who owns (or is deemed to own pursuant to Section 424(d) of
the Code) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of any of its
Affiliates.

 

III. ADMINISTRATION.

 

3.1           Administration by
Board.  The Board shall administer
the Plan unless and until the Board delegates administration to a Committee, as
provided in Section 3.3.

 

3.2           Powers of Board.  The Board shall have the power, subject to,
and within the limitations of, the express provisions of the Plan:

 

(i)            To determine from time
to time which of the persons eligible under the Plan shall be granted Stock
Awards; when and how each Stock Award shall be granted; what type or
combination of types of Stock Award shall be granted; the provisions of each
Stock Award granted (which need not be identical), including the time or times
when a person shall be permitted to receive Common Stock pursuant to a Stock
Award; and the number of shares of Common Stock with respect to which a Stock
Award shall be granted to each such person.

 

(ii)           To construe and
interpret the Plan and Stock Awards granted under it, and to establish, amend
and revoke rules and regulations for its administration.  The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan or in any Stock Award
Agreement, in a manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective.

 

(iii)          To amend the Plan or a
Stock Award as provided in Section 15 of the Plan.

 

(iv)          Generally, to exercise
such powers and to perform such acts as the Board deems necessary, desirable,
convenient or expedient to promote the best interests of the Company that are
not in conflict with the provisions of the Plan.

 

(v)           To adopt sub-plans
and/or special provisions applicable to Stock Awards regulated by the laws of a
jurisdiction other than and outside of the United States.  Such sub-plans and/or special provisions may
take precedence over other provisions of the Plan, with the exception of Section 4
of the Plan, but unless otherwise superseded by the terms of such sub-plans
and/or special provisions, the provisions of the Plan shall govern.

 

5

 

3.3           Delegation to
Committee.

 

(i)            General.  The Board may delegate administration of the
Plan to a Committee or Committees of one or more individuals, and the term “Committee”
shall apply to any person or persons to whom such authority has been
delegated.  If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to
the Board shall thereafter be to the Committee or subcommittee, as applicable),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board.  The Board may abolish the Committee at any
time and revest in the Board the administration of the Plan.

 

(ii)           Committee
Composition when Common Stock is Publicly Traded.  At such time as the Common Stock is publicly
traded, in the discretion of the Board, a Committee may consist solely of two
or more Outside Directors, in accordance with Section 162(m) of the
Code, and/or solely of two or more Non-Employee Directors, in accordance with Rule 16b-3.  Within the scope of such authority, the Board
or the Committee may (1) delegate to a committee of one or more
individuals who are not Outside Directors the authority to grant Stock Awards
to eligible persons who are either (a) not then Covered Employees and are
not expected to be Covered Employees at the time of recognition of income
resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or (2) delegate
to a committee of one or more individuals who are not Non-Employee Directors the
authority to grant Stock Awards to eligible persons who are either (a) not
then subject to Section 16 of the Exchange Act or (b) receiving a
Stock Award as to which the Board or Committee elects not to comply with Rule 16b-3
by having two or more Non-Employee Directors grant such Stock Award.

 

3.4           Effect of Board’s
Decision.  All determinations,
interpretations and constructions made by the Board in good faith shall not be
subject to review by any person and shall be final, binding and conclusive on
all persons.

 

IV. SHARES SUBJECT TO THE PLAN.

 

4.1           Share Reserve.  Subject to the provisions of Section 14
of the Plan relating to adjustments upon changes in Common Stock, the maximum
aggregate number of shares of Common Stock that may be issued pursuant to Stock
Awards shall not exceed sixty three million five hundred thousand (63,500,000)
shares, provided that each Stock Award granted will reduce the share reserve by
one (1) share upon the issuance of a share at the time of grant, exercise
or redemption, as applicable.  To the
extent that a distribution pursuant to a Stock Award is made in cash, the share
reserve shall remain unaffected.  In
addition, the maximum aggregate number of shares of Common Stock that may be
issued pursuant to Full-Value Stock Awards shall not exceed ten million
(10,000,000) shares of Common Stock (“Full-Value Stock Award Share Reserve”).

 

4.2           Reversion of Shares
to the Share Reserve.  If any Stock
Award shall for any reason (i) expire, be cancelled or otherwise
terminate, in whole or in part, without having been exercised or redeemed in
full, (ii) be reacquired by the Company prior to vesting, or (iii) be
repurchased at cost by the Company prior to vesting, the shares of Common Stock
not acquired under such Stock Award shall revert to and again become available
for issuance under the Plan, and if subject to a Full-Value Stock Award, shall
also reduce the number of shares of Common Stock issued against the Full-Value
Stock Award Share Reserve.  To the extent
that a Stock Award granted under the Plan is redeemed by payment in cash rather
than shares of Common Stock according to its terms, the shares of Common Stock
subject to the redeemed portion of the Stock Award shall revert to and again
become available for issuance under the Plan.

 

4.3           Source of Shares.  The shares of Common Stock subject to the
Plan may be unissued shares or reacquired shares, bought on the market or
otherwise.

 

V. ELIGIBILITY.

 

5.1           Eligibility for
Specific Stock Awards.  Incentive
Stock Options may be granted only to Employees. 
Stock Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants.

 

5.2           Ten Percent
Shareholders.  A Ten Percent
Shareholder shall not be granted an Incentive Stock Option unless the exercise
price of such Option is at least one hundred ten percent (110%) of the Fair
Market Value of the Common Stock at the date of grant and the Option is not
exercisable after the expiration of five (5) years from the date of grant.

 

6

 

5.3           Annual Section 162(m) Limitation.  Subject to the provisions of Section 14
of the Plan relating to adjustments upon changes in the shares of Common Stock,
no Employee shall be eligible to be granted Stock Awards covering more than ten
million (10,000,000) shares of Common Stock during any fiscal year.

 

5.4           Individual
Full-Value Stock Award Limitation over Life of Plan.  Subject to the provisions of Section 14
of the Plan relating to adjustments upon changes in the shares of Common Stock,
no individual shall be eligible to be issued more than ten million (10,000,000)
shares of Common Stock under all Full-Value Stock Awards (i.e., Restricted
Stock Bonuses, Restricted Stock Units, Phantom Stock Units, Performance Share
Bonuses, and Performance Share Units, but not Incentive Stock Options,
Nonstatutory Stock Options, or Stock Appreciation Rights for which an annual
limit is provided under Section 5.3) granted to such individual under the
Plan.

 

5.5           Consultants.

 

(i)            A Consultant shall not
be eligible for the grant of a Stock Award if, at the time of grant, a Form S-8
Registration Statement under the Securities Act (“Form S-8”) is not
available to register either the offer or the sale of the Company’s securities
to such Consultant because of the nature of the services that the Consultant is
providing to the Company, or because the Consultant is not a natural person, or
as otherwise provided by the rules governing the use of Form S-8,
unless the Company determines both (1) that such grant (A) shall be
registered in another manner under the Securities Act (e.g., on a Form S-3
Registration Statement) or (B) does not require registration under the
Securities Act in order to comply with the requirements of the Securities Act,
if applicable, and (2) that such grant complies with the securities laws
of all other relevant jurisdictions.

 

(ii)           Form S-8 generally
is available to consultants and advisors only if (A) they are natural
persons; (B) they provide bona fide services to the issuer, its parents,
its majority owned subsidiaries: and (C) the services are not in
connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer’s securities.

 

VI. OPTION PROVISIONS.

 

Each Option shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate.  All Options shall be
separately designated Incentive Stock Options or Nonstatutory Stock Options at
the time of grant, and, if certificates are issued, a separate certificate or
certificates will be issued for shares of Common Stock purchased on exercise of
each type of Option.  The provisions of
separate Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

 

6.1           Term.  Subject to the provisions of Section 5.2
of the Plan regarding grants of Incentive Stock Options to Ten Percent
Shareholders, no Option shall be exercisable after the expiration of seven (7) years
from the date it was granted.

 

6.2           Exercise Price of an
Incentive Stock Option.  Subject to
the provisions of Section 5.2 of the Plan regarding Ten Percent
Shareholders, the exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the Common
Stock subject to the Option on the date the Option is granted.  Notwithstanding the foregoing, an Incentive
Stock Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section 424(a) of
the Code.

 

6.3           Exercise Price of a
Nonstatutory Stock Option.  The
exercise price of each Nonstatutory Stock Option shall be not less than
eighty-five percent (85%) of the Fair Market Value of the Common Stock subject
to the Option on the date the Option is granted.  Notwithstanding the foregoing, a Nonstatutory
Stock Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section 424(a) of
the Code.

 

6.4           Consideration.  The purchase price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) in cash or by check at the time the
Option is exercised or (ii) at the discretion of the Board at the time of
the grant of the Option (or subsequently in the case of a Nonstatutory Stock
Option): (1) by delivery to the Company of other Common Stock, (2) according
to a deferred payment or other similar arrangement with the Optionholder,
including use of a promissory note, (3) pursuant to a “same day sale”
program, or (4) by some combination of the foregoing.  Unless otherwise specifically provided in the
Option, 

 

7

 

the purchase price of
Common Stock acquired pursuant to an Option that is paid by delivery to the
Company of other Common Stock acquired, directly or indirectly from the
Company, shall be paid only by shares of the Common Stock of the Company that
have been held for more than six (6) months (or such longer or shorter
period of time required to avoid a charge to earnings for financial accounting
purposes).  At any time that the Company
is incorporated in Delaware, payment of the Common Stock’s “par value,” as defined
in the Delaware General Corporation Law, shall not be made by deferred payment.

 

In the case of any
deferred payment arrangement, interest shall be compounded at least annually
and shall be charged at the market rate of interest and contain such other
terms and conditions necessary to avoid a charge to earnings for financial
accounting purposes as a result of the use of such deferred payment
arrangement.

 

6.5           Transferability of
an Incentive Stock Option.  An
Incentive Stock Option shall not be transferable except by will or by the laws
of descent and distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. 
Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.

 

6.6           Transferability of a
Nonstatutory Stock Option.  A
Nonstatutory Stock Option shall be transferable to the extent provided in the
Option Agreement.  If the Nonstatutory
Stock Option does not provide for transferability, then the Nonstatutory Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. 
Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.

 

6.7           Vesting Generally.  Options granted under the Plan shall be
exercisable at such time and upon such terms and conditions as may be
determined by the Board.  The vesting
provisions of individual Options may vary. 
The provisions of this Section 6.7 are subject to any Option
provisions governing the minimum number of shares of Common Stock as to which
an Option may be exercised.

 

6.8           Termination of
Continuous Service.  In the event an
Optionholder’s Continuous Service terminates (other than upon the Optionholder’s
death or Disability), the Optionholder may exercise his or her Option (to the
extent that the Optionholder was entitled to exercise such Option as of the
date of termination) but only within such period of time ending on the earlier
of (i) the date three (3) months following the termination of the
Optionholder’s Continuous Service (or such longer or shorter period specified
in the Option Agreement), or (ii) the expiration of the term of the Option
as set forth in the Option Agreement. 
If, after termination, the Optionholder does not exercise his or her
Option within the time specified in the Option Agreement, the Option shall
terminate.

 

6.9           Extension of
Termination Date.  An Optionholder’s
Option Agreement may also provide that if the exercise of the Option following
the termination of the Optionholder’s Continuous Service (other than upon the
Optionholder’s death or Disability) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act or other applicable securities law, then
the Option shall terminate on the earlier of (i) the expiration of the
term of the Option set forth in the Option Agreement or (ii) the
expiration of a period of three (3) months after the termination of the
Optionholder’s Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements or other applicable
securities law.

 

6.10         Disability of
Optionholder.  In the event that an
Optionholder’s Continuous Service terminates as a result of the Optionholder’s
Disability, the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination), but only within such period of time ending on the earlier of (i) the
date twelve (12) months following such termination (or such longer or shorter
period specified in the Option Agreement) or (ii) the expiration of the
term of the Option as set forth in the Option Agreement.  If after termination, the Optionholder does
not exercise his or her Option within the time specified herein, the Option
shall terminate.

 

6.11         Death of Optionholder.  In the event (i) an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder’s Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person 

 

8

 

designated to exercise
the Option upon the Optionholder’s death pursuant to Section 6.5 or 6.6 of
the Plan, but only within the period ending on the earlier of (1) the date
twelve (12) months following the date of death (or such longer or shorter
period specified in the Option Agreement) or (2) the expiration of the
term of such Option as set forth in the Option Agreement.  If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.

 

6.12         Early Exercise.  The Option may, but need not, include a
provision whereby the Optionholder may elect at any time before the
Optionholder’s Continuous Service terminates to exercise the Option as to any
part or all of the shares of Common Stock subject to the Option prior to the
full vesting of the Option.  Any unvested
shares of Common Stock so purchased may be subject to a repurchase option in
favor of the Company or to any other restriction the Board determines to be
appropriate.

 

VII. NON-DISCRETIONARY STOCK AWARDS FOR ELIGIBLE
DIRECTORS.

 

In addition to any other
Stock Awards that Eligible Directors may be granted on a discretionary basis
under the Plan, each Eligible Director of the Company shall be automatically
granted without the necessity of action by the Board, the following Stock Award
grants:

 

7.1           Initial Stock Award
Grant.

 

(i)            Form of
Initial Stock Award.  On the date
that a Director commences service on the Board and satisfies the definition of
an Eligible Director, an initial grant of Nonstatutory Stock Options and/or
Full-Value Stock Awards shall automatically be made to that Eligible Director
(collectively, the “Initial Grant”).  The
existing independent members of the Board shall determine which portion of each
Initial Grant will be granted in the form of a Nonstatutory Stock Option, if
any, and which portion of each Initial Grant will be granted in the form of a
Full-Value Stock Award, if any.

 

(ii)           Number of Shares
Subject to Initial Stock Award Grant. 
Subject to the provisions of Section 14 of the Plan, the number of
shares of Common Stock covered by the Initial Grant shall be determined by the
existing independent members of the Board, and shall in no event exceed one
hundred thousand (100,000) shares (“Initial Grant Limit”); provided that (a) the
number of shares of Common Stock subject to that portion, if any, of the
Initial Grant awarded in the form of a Nonstatutory Stock Option shall be
counted against the Initial Grant Limit on a one-for-one basis and (b) the
number of shares of Common Stock subject to that portion, if any, of the
Initial Grant awarded in the form of a Full-Value Stock Award shall be counted
against the Initial Grant Limit as three shares for every one share subject to
such Full-Value Stock Award.

 

(iii)          Other Terms.  The exercise price of any Nonstatutory Stock
Options granted as part of an Initial Grant shall be one hundred percent (100%)
of the Fair Market Value of the Company’s Common Stock subject to the option on
the date the option is granted.  The
maximum term of any Nonstatutory Stock Options granted as part of an Initial
Grant shall be seven (7) years. 
Nonstatutory Stock Options and/or Full-Value Stock Awards granted as
part of an Initial Grant shall generally vest and become exercisable over a
period of four (4) years in equal annual installments provided that the
Director remains in Continuous Service during that period.  In all other respects, Stock Awards granted
pursuant to an Initial Grant shall contain in substance the same terms and
conditions either as set forth in Section 6 with respect to Options, or as
set forth in Section 8 with respect to Full-Value Stock Awards, as
applicable.  If at the time a Director
commences service on the Board, the Director does not satisfy the definition of
an Eligible Director, such Director shall not be entitled to an Initial Grant
at any time, even if such Director subsequently becomes an Eligible Director.

 

7.2           Annual Stock Award
Grant.

 

(i)            Form of Annual
Stock Award.  An annual grant of
Nonstatutory Stock Options and/or Full-Value Stock Awards (collectively, the “Annual
Grant”) shall automatically be made to each Director who (1) is re-elected
to the Board, (2) is an Eligible Director on the relevant grant date, and (3) has
served as a Director for a period of at least six (6) months.  The existing independent members of the Board
shall determine which portion of each Annual Grant will be granted in the form
of a Nonstatutory Stock Option, if any, and which portion of each Annual Grant
will be granted in the form of a Full-Value Stock Award, if any.

 

(ii)           Number of Shares
Subject to Annual Stock Award Grant. 
Subject to the provisions of Section 14 of the Plan, the number of
shares of Common Stock covered by the Annual Grant shall be determined by the

 

9

 

 

existing independent
members of the Board, and shall in no event exceed twenty five thousand
(25,000) shares (“Annual Grant Limit”); provided that (a) the number of
shares of Common Stock subject to that portion, if any, of the Annual Grant
awarded in the form of a Nonstatutory Stock Option shall be counted against the
Annual Grant Limit on a one-for-one basis and (b) the number of shares of
Common Stock subject to that portion, if any, of the Annual Grant awarded in
the form of a Full-Value Stock Award shall be counted against the Annual Grant
Limit as three shares for every one share subject to such Full-Value Stock
Award.

 

(iii)          Other Terms.  The exercise price of any Nonstatutory Stock
Options granted as part of an Annual Grant shall be one hundred percent (100%)
of the Fair Market Value of the Company’s Common Stock subject to the option on
the date the option is granted.  The
maximum term of any Nonstatutory Stock Options granted as part of an Annual
Grant shall be seven (7) years. 
Nonstatutory Stock Options and/or Full-Value Stock Awards granted as
part of an Annual Grant shall generally vest and become exercisable over a
period of four (4) years in equal annual installments provided that the
Director remains in Continuous Service during that period.  In all other respects, Stock Awards granted
pursuant to an Annual Grant shall contain in substance the same terms and
conditions either as set forth in Section 6 with respect to Options, or as
set forth in Section 8 with respect to Full-Value Stock Awards, as
applicable.  If at the time a Director
commences service on the Board, the Director does not satisfy the definition of
an Eligible Director, such Director shall not be entitled to an Annual Grant at
any time, even if such Director subsequently becomes an Eligible Director.

 

VIII. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

 

8.1           Restricted Stock
Bonus Awards.  Each Restricted Stock
Bonus agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. 
Restricted Stock Bonuses shall be paid by the Company in shares of the
Common Stock of the Company.  The terms
and conditions of Restricted Stock Bonus agreements may change from time to
time, and the terms and conditions of separate Restricted Stock Bonus
agreements need not be identical, but each Restricted Stock Bonus agreement
shall include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:

 

(i)            Consideration.  A Restricted Stock Bonus may be awarded in
consideration for past services actually rendered to the Company or an
Affiliate for its benefit.

 

(ii)           Vesting.  Vesting shall generally be based on the
Participant’s Continuous Service.  Shares
of Common Stock awarded under the Restricted Stock Bonus agreement shall be
subject to a share reacquisition right in favor of the Company in accordance
with a vesting schedule to be determined by the Board.

 

(iii)          Termination of
Participant’s Continuous Service.  In
the event a Participant’s Continuous Service terminates, the Company shall
reacquire any or all of the shares of Common Stock held by the Participant that
have not vested as of the date of termination under the terms of the Restricted
Stock Bonus agreement.

 

(iv)          Transferability.  Rights to acquire shares of Common Stock
under the Restricted Stock Bonus agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the
Restricted Stock Bonus agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the Restricted Stock Bonus
agreement remains subject to the terms of the Restricted Stock Bonus agreement.

 

8.2           Restricted Stock
Purchase Awards.  Each Restricted
Stock Purchase agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. 
The terms and conditions of the Restricted Stock Purchase agreements may
change from time to time, and the terms and conditions of separate Restricted
Stock Purchase agreements need not be identical, but each Restricted Stock
Purchase agreement shall include (through incorporation of provisions hereof by
reference in the agreement or otherwise) the substance of each of the following
provisions:

 

(i)            Purchase Price.  The purchase price under each Restricted
Stock Purchase agreement shall be such amount as the Board shall determine and
designate in such Restricted Stock Purchase agreement.  The purchase price shall not be less than
eighty-five percent (85%) of the Common Stock’s Fair Market Value on the date
such award is made or at the time the purchase is consummated.

 

(ii)           Consideration.  The purchase price of Common Stock acquired
pursuant to the Restricted Stock Purchase agreement shall be paid either: (A) in
cash or by check at the time of purchase; (B) at the discretion of the
Board, according to a deferred payment or other similar arrangement with the
Participant, including use of a 

 

10

 

promissory note; or (C) in
any other form of legal consideration that may be acceptable to the Board in
its discretion; provided, however, that at any time that the Company is
incorporated in Delaware, then payment of the Common Stock’s “par value,” as
defined in the Delaware General Corporation Law, shall not be made by deferred
payment.

 

(iii)          Vesting.  The Board shall determine the criteria under
which shares of Common Stock under the Restricted Stock Purchase agreement may
vest; the criteria may or may not include performance criteria or Continuous
Service.  Shares of Common Stock acquired
under the Restricted Stock Purchase agreement may, but need not, be subject to
a share repurchase option in favor of the Company in accordance with a vesting
schedule to be determined by the Board.

 

(iv)          Termination of
Participant’s Continuous Service.  In
the event a Participant’s Continuous Service terminates, the Company may
repurchase any or all of the shares of Common Stock held by the Participant
that have not vested as of the date of termination under the terms of the
Restricted Stock Purchase agreement.

 

(v)           Transferability.  Rights to acquire shares of Common Stock
under the Restricted Stock Purchase agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the
Restricted Stock Purchase agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the Restricted Stock Purchase
agreement remains subject to the terms of the Restricted Stock Purchase
agreement.

 

8.3           Stock Appreciation
Rights.  Two types of Stock
Appreciation Rights (“SARs”) shall be authorized for issuance under the Plan: (1) stand-alone
SARs and (2) stapled SARs.

 

(i)            Stand-Alone SARs.  The following terms and conditions shall govern
the grant and redeemability of stand-alone SARs:

 

(A)        The stand-alone SAR shall
cover a specified number of underlying shares of Common Stock and shall be
redeemable upon such terms and conditions as the Board may establish.  Upon redemption of the stand-alone SAR, the
holder shall be entitled to receive a distribution from the Company in an
amount equal to the excess of (i) the aggregate Fair Market Value (on the
redemption date) of the shares of Common Stock underlying the redeemed right
over (ii) the aggregate base price in effect for those shares.

 

(B)         The number of shares of
Common Stock underlying each stand-alone SAR and the base price in effect for
those shares shall be determined by the Board in its sole discretion at the
time the stand-alone SAR is granted.  In
no event, however, may the base price per share be less than eighty-five
percent (85%) of the Fair Market Value per underlying share of Common Stock on
the grant date.

 

(C)         The distribution with
respect to any redeemed stand-alone SAR may be made in shares of Common Stock
valued at Fair Market Value on the redemption date, in cash, or partly in
shares and partly in cash, as the Board shall in its sole discretion deem
appropriate.

 

(ii)           Stapled SARs.  The following terms and conditions shall
govern the grant and redemption of stapled SARs:

 

(A)        Stapled SARs may only be
granted concurrently with an Option to acquire the same number of shares of
Common Stock as the number of such shares underlying the stapled SARs.

 

(B)         Stapled SARs shall be redeemable
upon such terms and conditions as the Board may establish and shall grant a
holder the right to elect among (i) the exercise of the concurrently
granted Option for shares of Common Stock, whereupon the number of shares of
Common Stock subject to the stapled SARs shall be reduced by an equivalent
number, (ii) the redemption of such stapled SARs in exchange for a
distribution from the Company in an amount equal to the excess of the Fair
Market Value (on the redemption date) of the number of vested shares which the
holder redeems over the aggregate base price for such vested shares, whereupon
the number of shares of Common Stock subject to the concurrently granted Option
shall be reduced by any equivalent number, or (iii) a combination of (i) and
(ii).

 

(C)         The distribution to which
the holder of stapled SARs shall become entitled under this Section 8 upon
the redemption of stapled SARs as described in Section 8.3(ii)(B) above
may be made in shares of 

 

11

 

Common Stock valued at
Fair Market Value on the redemption date, in cash, or partly in shares and
partly in cash, as the Board shall in its sole discretion deem appropriate.

 

8.4           Phantom Stock Units.  The following terms and conditions shall
govern the grant and redeemability of Phantom Stock Units:

 

(i)            Phantom Stock Unit
awards shall be redeemable by the Participant to the Company upon such terms
and conditions as the Board may establish. 
The value of a single Phantom Stock Unit shall be equal to the Fair
Market Value of a share of Common Stock, unless the Board otherwise provides in
the terms of the Stock Award Agreement.

 

(ii)           The distribution with
respect to any exercised Phantom Stock Unit award may be made in shares of
Common Stock valued at Fair Market Value on the redemption date, in cash, or
partly in shares and partly in cash, as the Board shall in its sole discretion
deem appropriate.

 

8.5           Restricted Stock
Units.  The following terms and
conditions shall govern the grant and redeemability of Restricted Stock Units:

 

A Restricted Stock Unit
is the right to receive the value of one (1) share of the Company’s Common
Stock at the time the Restricted Stock Unit vests.  To the extent permitted by the Committee in
the terms of his or her agreement, a Participant may elect to defer receipt of
the value of the shares of Common Stock otherwise deliverable upon the vesting
of an award of Restricted Stock Units, so long as such deferral election
complies with applicable law, including to the extent applicable, the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”).  An election to defer such delivery shall be
irrevocable and shall be made in writing on a form acceptable to the
Company.  The election form shall be
filed prior to the vesting date of such Restricted Stock Units in a manner
determined by the Board.  When the
Participant vests in such Restricted Stock Units, the Participant will be
credited with a number of Restricted Stock Units equal to the number of shares
of Common Stock for which delivery is deferred. 
Restricted Stock Units may be paid by the Company by delivery of shares
of Common Stock, in cash, or a combination thereof, as the Board shall in its
sole discretion deem appropriate, in accordance with the timing and manner of
payment elected by the Participant on his or her election form, or if no
deferral election is made, as soon as administratively practicable following
the vesting of the Restricted Stock Unit.

 

Each Restricted Stock
Unit agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. 
The terms and conditions of Restricted Stock Unit agreements may change
from time to time, and the terms and conditions of separate Restricted Stock
Unit agreements need not be identical, but each Restricted Stock Unit agreement
shall include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:

 

(i)            Consideration.  A Restricted Stock Unit may be awarded in
consideration for past services actually rendered to the Company or an
Affiliate for its benefit.

 

(ii)           Vesting.  Vesting shall generally be based on the
Participant’s Continuous Service.  Shares
of Common Stock awarded under the Restricted Stock Unit agreement shall be
subject to a share reacquisition right in favor of the Company in accordance
with a vesting schedule to be determined by the Board.

 

(iii)          Termination of
Participant’s Continuous Service.  In
the event a Participant’s Continuous Service terminates, the Company shall
reacquire any or all of the shares of Common Stock held by the Participant that
have not vested as of the date of termination under the terms of the Restricted
Stock Unit agreement.

 

(iv)          Transferability.  Rights to acquire the value of shares of
Common Stock under the Restricted Stock Unit agreement shall be transferable by
the Participant only upon such terms and conditions as are set forth in the
Restricted Stock Unit agreement, as the Board shall determine in its discretion,
so long as any Common Stock awarded under the Restricted Stock Unit agreement
remains subject to the terms of the Restricted Stock Unit agreement.

 

8.6           Performance Share
Bonus Awards.  Each Performance Share
Bonus agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. 
Performance Share Bonuses shall be paid by the Company in shares of the
Common Stock of the Company.  The terms
and conditions of Performance Share Bonus agreements may change from time to
time, and the terms and conditions of separate Performance Share Bonus 

 

12

 

agreements need not be
identical, but each Performance Share Bonus agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:

 

(i)            Consideration.  A Performance Share Bonus may be awarded in
consideration for past services actually rendered to the Company or an Affiliate
for its benefit.

 

(ii)           Vesting.  Vesting shall be based on the achievement of
certain performance criteria, whether financial, transactional or otherwise, as
determined by the Board.  Vesting shall
be subject to the Performance Share Bonus agreement.  Upon failure to meet performance criteria,
shares of Common Stock awarded under the Performance Share Bonus agreement
shall be subject to a share reacquisition right in favor of the Company in
accordance with a vesting schedule to be determined by the Board.

 

(iii)          Termination of
Participant’s Continuous Service.  In
the event a Participant’s Continuous Service terminates, the Company shall
reacquire any or all of the shares of Common Stock held by the Participant that
have not vested as of the date of termination under the terms of the
Performance Share Bonus agreement.

 

(iv)          Transferability.  Rights to acquire shares of Common Stock
under the Performance Share Bonus agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the
Performance Share Bonus agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the Performance Share Bonus
agreement remains subject to the terms of the Performance Share Bonus
agreement.

 

(v)           Discretionary
Adjustments and Limits.  Subject to
the limits imposed under Section 162(m) of the Code for Stock Awards
that are intended to qualify as “performance-based compensation,”
notwithstanding the satisfaction of any performance goals, the number of shares
of Common Stock granted, issued, retainable and/or vested under a Performance
Share Bonus may, to the extent specified in the Stock Award Agreement, be
reduced, but not increased, by the Committee on the basis of such further
considerations as the Committee shall determine

 

8.7           Performance Share
Units.  The following terms and
conditions shall govern the grant and redeemability of Performance Share Units:

 

A Performance Share Unit
is the right to receive the value of one (1) share of the Company’s Common
Stock at the time the Performance Share Unit vests.  Participants may elect to defer receipt of
the value of shares of Common Stock otherwise deliverable upon the vesting of
an award of performance shares.  An
election to defer such delivery shall be irrevocable and shall be made in
writing on a form acceptable to the Company. 
The election form shall be filed prior to the vesting date of such
performance shares in a manner determined by the Board.  When the Participant vests in such
performance shares, the Participant will be credited with a number of
Performance Share Units equal to the number of shares of Common Stock for which
delivery is deferred.  Performance Share
Units may be paid by the Company by delivery of shares of Common Stock, in
cash, or a combination thereof, as the Board shall in its sole discretion deem
appropriate, in accordance with the timing and manner of payment elected by the
Participant on his or her election form, or if no deferral election is made, as
soon as administratively practicable following the vesting of the Performance
Share Unit.

 

Each Performance Share
Unit agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. 
The terms and conditions of Performance Share Unit agreements may change
from time to time, and the terms and conditions of separate Performance Share
Unit agreements need not be identical, but each Performance Share Unit
agreement shall include (through incorporation of provisions hereof by reference
in the agreement or otherwise) the substance of each of the following
provisions:

 

(i)            Consideration.  A Performance Share Unit may be awarded in
consideration for past services actually rendered to the Company or an
Affiliate for its benefit.  The Board shall
have the discretion to provide that the Participant pay for such Performance
Share Units with cash or other consideration permissible by law.

 

(ii)           Vesting.  Vesting shall be based on the achievement of
certain performance criteria, whether financial, transactional or otherwise, as
determined by the Board.  Vesting shall
be subject to the Performance Share Unit agreement.  Upon failure to meet performance criteria,
shares of Common Stock awarded under the Performance Share Unit agreement shall
be subject to a share reacquisition right in favor of the Company in accordance
with a vesting schedule to be determined by the Board.

 

13

 

(iii)          Termination of
Participant’s Continuous Service.  In
the event a Participant’s Continuous Service terminates, the Company shall
reacquire any or all of the shares of Common Stock held by the Participant that
have not vested as of the date of termination under the terms of the
Performance Share Unit agreement.

 

(iv)          Transferability.  Rights to acquire the value of shares of
Common Stock under the Performance Share Unit agreement shall be transferable
by the Participant only upon such terms and conditions as are set forth in the
Performance Share Unit agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the Performance Share Unit
agreement remains subject to the terms of the Performance Share Unit agreement.

 

(v)           Discretionary
Adjustments and Limits.  Subject to
the limits imposed under Section 162(m) of the Code for Stock Awards
that are intended to qualify as “performance-based compensation,”
notwithstanding the satisfaction of any performance goals, the number of shares
of Common Stock granted, issued, retainable and/or vested under a Performance
Share Unit may, to the extent specified in the Stock Award Agreement, be
reduced, but not increased, by the Committee on the basis of such further
considerations as the Committee shall determine.

 

IX. COVENANTS OF THE COMPANY.

 

9.1           Availability of
Shares.  During the terms of the
Stock Awards, the Company shall keep available at all times the number of
shares of Common Stock required to satisfy such Stock Awards.

 

9.2           Securities Law
Compliance.  The Company shall seek
to obtain from each regulatory commission or agency having jurisdiction over
the Plan such authority as may be required to grant Stock Awards and to issue
and sell shares of Common Stock upon exercise, redemption or satisfaction of
the Stock Awards; provided, however, that this undertaking shall not require
the Company to register under the Securities Act the Plan, any Stock Award or
any Common Stock issued or issuable pursuant to any such Stock Award.  If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of Common Stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell Common Stock related to such Stock
Awards unless and until such authority is obtained.

 

X. QUALIFYING PERFORMANCE-BASED COMPENSATION

 

10.1         General.  The Committee may establish performance
criteria and the level of achievement versus such criteria that shall determine
the number of shares of Common Stock to be granted, retained, vested, issued or
issuable under or in settlement of or the amount payable pursuant to a Stock
Award (including a, Restricted Stock Bonus, Restricted Stock Purchase Right,
Restricted Stock Unit, Performance Share Bonus or Performance Share Unit
award), which criteria may be based on Qualifying Performance Criteria or other
standards of financial performance and/or personal performance
evaluations.  In addition, the Committee
may specify that a Stock Award or a portion of a Stock Award is intended to
satisfy the requirements for “performance-based compensation” under Section 162(m) of
the Code, provided that the performance criteria for such Award or portion of a
Stock Award that is intended by the Committee to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code shall be a measure
based on one or more Qualifying Performance Criteria selected by the Committee
and specified at the time the Award is granted, or within the time prescribed
by Section 162(m) and shall otherwise be in compliance with Section 162(m).  The Committee shall certify the extent to
which any Qualifying Performance Criteria has been satisfied, and the amount
payable as a result thereof, prior to payment, settlement or vesting of any
Award that is intended to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code.  Notwithstanding satisfaction of any
performance goals, the number of shares of Common Stock issued under or the
amount paid under an award may, to the extent specified in the Stock Award
Agreement, be reduced, but not increased, by the Committee on the basis of such
further considerations as the Committee in its sole discretion shall determine.

 

10.2         Adjustments.  To the extent consistent with Section 162(m) of
the Code, the Committee (a) shall appropriately adjust any evaluation of
performance under a Qualifying Performance Criteria to eliminate the effects of
charges for restructurings, discontinued operations, extraordinary items and
all items of gain, loss or expense determined to be extraordinary or unusual in
nature or related to the disposal of a segment of a business or related to a
change in accounting principle all as determined in accordance with standards
established by opinion No. 30 of the Accounting Principles Board (APA
Opinion No. 30) or other applicable or successor accounting provisions, as
well as the cumulative effect of accounting changes, in each case as determined
in accordance with generally accepted accounting principles or identified in
the Company’s financial statements or notes to the financial statements, and (b) may
appropriately adjust any evaluation of performance under a Qualifying
Performance Criteria to exclude any of the 

 

14

 

following events that
occurs during a performance period: (i) asset write-downs, (ii) litigation,
claims, judgments or settlements, (iii) the effect of changes in tax law
or other such laws or provisions affecting reported results, (iv) accruals
for reorganization and restructuring programs and (v) accruals of any
amounts for payment under this Plan or any other compensation arrangement
maintained by the Company.

 

XI. USE OF PROCEEDS FROM STOCK.

 

Proceeds from the sale of
Common Stock pursuant to Stock Awards shall constitute general funds of the
Company.

 

XII. CANCELLATION AND RE-GRANT OF OPTIONS.

 

12.1         The Board shall have the
authority to effect, at any time and from time to time, (i) the repricing
of any outstanding Options under the Plan and/or (ii) with the consent of
the affected Optionholders, the cancellation of any outstanding Options under
the Plan and the grant in substitution therefor of new Options under the Plan
covering the same or different number of shares of Common Stock, but having an
exercise price per share not less than eighty-five percent (85%) of the Fair
Market Value (one hundred percent (100%) of Fair Market Value in the case of an
Incentive Stock Option or, in the case of a Ten Percent Shareholder (as
described in Section 5.2 of the Plan), not less than one hundred ten
percent (110%) of the Fair Market Value) per share of Common Stock on the new
grant date.  Notwithstanding the
foregoing, the Board may grant an Option with an exercise price lower than that
set forth above if such Option is granted as part of a transaction to which
section 424(a) of the Code applies. 
Prior to the implementation of any such repricing or cancellation of one
or more outstanding Options, the Board shall obtain the approval of the
shareholders of the Company to the extent required by any New York Stock
Exchange, Nasdaq or other securities exchange listing requirements, or
applicable law.

 

12.2         Shares subject to an
Option canceled under this Section 12 shall continue to be counted against
the maximum award of Options permitted to be granted pursuant to Section 5.3
of the Plan.  The repricing of an Option
under this Section 12, resulting in a reduction of the exercise price,
shall be deemed to be a cancellation of the original Option and the grant of a
substitute Option; in the event of such repricing, both the original and the
substituted Options shall be counted against the maximum awards of Options
permitted to be granted pursuant to Section 5.3 of the Plan.  The provisions of this Section 12.2
shall be applicable only to the extent required by Section 162(m) of
the Code.

 

XIII. MISCELLANEOUS.

 

13.1         Acceleration of
Exercisability and Vesting.  The
Board (or Committee, if so authorized by the Board) shall have the power to
accelerate exercisability and/or vesting when it deems fit, such as upon a
Change of Control.  The Board or
Committee shall have the power to accelerate the time at which a Stock Award
may first be exercised or the time during which a Stock Award or any part
thereof will vest in accordance with the Plan, notwithstanding the provisions
in the Stock Award stating the time at which it may first be exercised or the
time during which it will vest.

 

13.2         Shareholder Rights.  No Participant shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
of Common Stock subject to a Stock Award except to the extent that the Company
has issued the shares of Common Stock relating to such Stock Award.

 

13.3         No Employment or other
Service Rights.  Nothing in the Plan
or any instrument executed or Stock Award granted pursuant thereto shall confer
upon any Participant any right to continue to serve the Company or an Affiliate
in the capacity in effect at the time the Stock Award was granted or shall
affect the right of the Company or an Affiliate to terminate (i) the
employment of an Employee with or without notice and with or without cause, (ii) the
service of a Consultant pursuant to the terms of such Consultant’s agreement
with the Company or an Affiliate or (iii) the service of a Director
pursuant to the Bylaws of the Company, and any applicable provisions of the
corporate law of the state or other jurisdiction in which the Company is
domiciled, as the case may be.

 

13.4         Incentive Stock Option
$100,000 Limitation.  To the extent
that the aggregate Fair Market Value (determined at the time of grant) of
Common Stock with respect to which Incentive Stock Options are exercisable for
the first time by any Optionholder during any calendar year (under all plans of
the Company and its Affiliates) exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.

 

15

 

13.5         Investment Assurances.  The Company may require a Participant, as a
condition of exercising or redeeming a Stock Award or acquiring Common Stock
under any Stock Award, (i) to give written assurances satisfactory to the
Company as to the Participant’s knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in financial
and business matters and that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of acquiring
the Common Stock; (ii) to give written assurances satisfactory to the
Company stating that the Participant is acquiring Common Stock subject to the
Stock Award for the Participant’s own account and not with any present
intention of selling or otherwise distributing the Common Stock; and (iii) to
give such other written assurances as the Company may determine are reasonable
in order to comply with applicable law. 
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock under the Stock Award has been registered under a then currently
effective registration statement under the Securities Act or (2) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws, and in either case otherwise complies with applicable
law.  The Company may, upon advice of
counsel to the Company, place legends on stock certificates issued under the
Plan as such counsel deems necessary or appropriate in order to comply with
applicable laws, including, but not limited to, legends restricting the
transfer of the Common Stock.

 

13.6         Withholding
Obligations.  To the extent provided
by the terms of a Stock Award Agreement, the Participant may satisfy any federal,
state, local, or foreign tax withholding obligation relating to the exercise or
redemption of a Stock Award or the acquisition, vesting, distribution or
transfer of Common Stock under a Stock Award by any of the following means (in
addition to the Company’s right to withhold from any compensation paid to the
Participant by the Company) or by a combination of such means: (i) tendering
a cash payment; (ii) authorizing the Company to withhold shares of Common
Stock from the shares of Common Stock otherwise issuable to the Participant,
provided, however, that no shares of Common Stock are withheld with a value
exceeding the minimum amount of tax required to be withheld by law; or (iii) delivering
to the Company owned and unencumbered shares of Common Stock.

 

XIV. ADJUSTMENTS UPON CHANGES IN STOCK.

 

14.1         Capitalization
Adjustments.  If any change is made
in the Common Stock subject to the Plan, or subject to any Stock Award, without
the receipt of consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, spinoff,
dividend in property other than cash, stock split, liquidating dividend,
extraordinary dividends or distributions, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan may be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
or to grants of Full-Value Stock Awards pursuant to Section 4.1 above, the
maximum number of securities subject to award to any person pursuant to
Sections 5.3 or 5.4 above, and the number of securities subject to the option
grants to Eligible Directors under Section 7 of the Plan, and the
outstanding Stock Awards may be appropriately adjusted in the class(es) and
number of securities and price per share of the securities subject to such
outstanding Stock Awards.  The Board may
make such adjustments in its sole discretion, and its determination shall be
final, binding and conclusive.  (The
conversion of any convertible securities of the Company shall not be treated as
a transaction “without receipt of consideration” by the Company.)

 

14.2         Adjustments Upon a
Change of Control.

 

(i)            In the event of a
Change of Control as defined in 2.4(i) through 2.4(iv), such as an asset
sale, merger, or change in ownership of voting power, then any surviving entity
or acquiring entity shall assume or continue any Stock Awards outstanding under
the Plan or shall substitute similar stock awards (including an award to
acquire substantially the same consideration paid to the shareholders in the
transaction by which the Change of Control occurs) for those outstanding under
the Plan.  In the event any surviving
entity or acquiring entity refuses to assume or continue such Stock Awards or
to substitute similar stock awards for those outstanding under the Plan, then
with respect to Stock Awards held by Participants whose Continuous Service has
not terminated, the Board in its sole discretion and without liability to any
person may (1) provide for the payment of a cash amount in exchange for
the cancellation of a Stock Award equal to the product of (x) the excess,
if any, of the Fair Market Value per share of Common Stock at such time over
the exercise or redemption price, if any, times (y) the total number of
shares then subject to such Stock Award, (2) continue the Stock Awards, or
(3) notify Participants holding an Option, Stock Appreciation Right, or
Phantom Stock Unit that they must exercise or redeem any portion of such Stock
Award (including, at the discretion of the Board, any unvested portion of such
Stock Award) at or prior to the closing, of the transaction by which the Change
of Control occurs and that the Stock Awards shall terminate if not so exercised
or redeemed at or prior to the closing of the transaction by which the Change
of Control occurs.  With respect to any
other Stock Awards outstanding under the Plan, 

 

16

 

such Stock Awards shall
terminate if not exercised or redeemed prior to the closing of the transaction
by which the Change of Control occurs. 
The Board shall not be obligated to treat all Stock Awards, even those
that are of the same type, in the same manner.

 

(ii)           In the event of a
Change of Control as defined in 2.4(v), such as a dissolution of the Company,
all outstanding Stock Awards shall terminate immediately prior to such event.

 

XV. AMENDMENT OF THE PLAN AND STOCK AWARDS.

 

15.1         Amendment of Plan.  The Board at any time, and from time to time,
may amend the Plan.  However, except as
provided in Section 14 of the Plan relating to adjustments upon changes in
Common Stock, no amendment shall be effective unless approved by the
shareholders of the Company to the extent shareholder approval is necessary to
satisfy the requirements of Section 422 of the Code, any New York Stock
Exchange, Nasdaq or other securities exchange listing requirements, or other
applicable law or regulation.

 

15.2         Shareholder Approval.  The Board may, in its sole discretion, submit
any other amendment to the Plan for shareholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of
the Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.

 

15.3         Contemplated
Amendments.  It is expressly
contemplated that the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide eligible Employees with the maximum benefits
provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to bring the
Plan and/or Incentive Stock Options granted under it into compliance therewith.

 

15.4         No Material Impairment
of Rights.  Rights under any Stock
Award granted before amendment of the Plan shall not be materially impaired by
any amendment of the Plan unless (i) the Company requests the consent of
the Participant and (ii) the Participant consents in writing.

 

15.5         Amendment of Stock
Awards.  The Board at any time, and
from time to time, may amend the terms of any one or more Stock Awards;
provided, however, that the rights under any Stock Award shall not be
materially impaired by any such amendment unless (i) the Company requests
the consent of the Participant and (ii) the Participant consents in
writing.

 

XVI. TERMINATION OR SUSPENSION OF THE PLAN.

 

16.1         Plan Term.  The Board may suspend or terminate the Plan at
any time. Unless sooner terminated, the Plan shall terminate on the day before
the tenth (10th)
anniversary of the date the Plan is approved by the shareholders of the
Company.  No Stock Awards may be granted
under the Plan while the Plan is suspended or after it is terminated.

 

16.2         No Material Impairment
of Rights.  Suspension or termination
of the Plan shall not materially impair rights and obligations under any Stock
Award granted while the Plan is in effect except with the written consent of
the Participant.

 

XVII. EFFECTIVE DATE OF PLAN.

 

The Plan shall become
effective on the date that it is approved by the shareholders of the Company,
which approval shall be within twelve (12) months before or after the date the
Plan is adopted by the Board.  No Stock
Awards may be granted under the Plan prior to the time that the shareholders
have approved the Plan.  The approval or
disapproval of the Plan by the shareholders of the Company shall have no effect
on any other equity compensation plan, program or arrangement sponsored by the
Company or any of its Affiliates.

 

XVIII. CHOICE OF LAW.

 

The law of the State of
California shall govern all questions concerning the construction, validity and
interpretation of this Plan, without regard to such state’s conflict of laws
rules.

 

17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}]]