Document:

Exhibit 10.1

    

       

      EXHIBIT
        10.1

       

      MICROCHIP
        TECHNOLOGY INCORPORATED

       

      2004
        EQUITY INCENTIVE PLAN

      

      As
        amended and restated by the Board on May 1, 2006 

      Subject
        to Stockholder Approval at our 2006 annual meeting

      

       

      1. Purposes
        of the Plan.
        The
        purposes of this 2004 Equity Incentive Plan are:

       

      · to
        attract and retain the best available personnel,

       

      · to
        provide additional incentive to Service Providers, and

       

      · to
        promote the success of the Company’s business.

       

      Awards
        granted under the Plan may be Nonstatutory Stock Options, Restricted Stock,
        Stock Appreciation Rights, Performance Shares, Performance Units or Deferred
        Stock Units, as determined by the Administrator at the time of
        grant.

       

      2. Definitions.
        As used
        herein, the following definitions shall apply:

       

      (a) “Administrator”
means
        the Board or any of its Committees as shall be administering the Plan, in
        accordance with Section 4 of the Plan.

       

      (b) “Annual
        Revenue”
means
        the Company’s or a business unit’s net sales for the Fiscal Year, determined in
        accordance with generally accepted accounting principles.

       

      (c) “Applicable
        Laws”
means
        the legal requirements relating to the administration of equity compensation
        plans under state and federal corporate and
        securities laws and the Code. 

       

      (d) “Award”
means,
        individually or collectively, a grant under the Plan of Options, Restricted
        Stock, Stock Appreciation Rights, Performance Shares, Performance Units or
        Deferred Stock Units.

       

      (e) “Award
        Agreement”
means
        the written agreement setting forth the terms and provisions applicable to
        each
        Award granted under the Plan. The Award Agreement is subject to the terms
        and
        conditions of the Plan.

       

      (f) “Awarded
        Stock”
means
        the Common Stock subject to an Award.

       

      (g) “Board”
means
        the Board of Directors of the Company. 

       

      (h) “Cash
        Position”
        means
        the Company’s level of cash and cash equivalents.

       

      (i) “Change
        of Control”
means
        the occurrence of any of the following events, in one or a series of related
        transactions: 

       

      (1) any
        “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act,
        other than the Company, a subsidiary of the Company or a Company employee
        benefit plan, including any trustee of such plan acting as trustee, is or
        becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
        Act), directly or indirectly, of securities of the Company representing

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (2) fifty
        percent (50%) or more of the combined voting power of the Company’s then
        outstanding securities entitled to vote generally in the election of directors;
        or

       

      (3) a
        merger
        or consolidation of the Company or any direct or indirect subsidiary of the
        Company with any other corporation, other than a merger or consolidation
        which
        would result in the voting securities of the Company outstanding immediately
        prior thereto continuing to represent (either by remaining outstanding or
        by
        being converted into voting securities of the surviving entity) at least
        fifty
        percent (50%) of the total voting power represented by the voting securities
        of
        the Company or such surviving entity outstanding immediately after such merger
        or consolidation; or 

       

      (4) the
        sale
        or disposition by the Company of all or substantially all of the Company’s
        assets; or

       

      (5) a
        change
        in the composition of the Board, as a result of which fewer than a majority
        of
        the directors are Incumbent Directors. “Incumbent Directors” shall mean
        directors who either (A) are Directors as of the date this Plan is approved
        by
        the Board, or (B) are elected, or nominated for election, to the Board with
        the
        affirmative votes of at least a majority of the Incumbent Directors and whose
        election or nomination was not in connection with any transaction described
        in
        (1) or (2) above or in connection with an actual or threatened proxy contest
        relating to the election of directors of the Company.

       

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

       

      (k) “Committee”
means
        a
        committee appointed by the Board in accordance with Section 4 of the
        Plan.

       

      (l) “Common
        Stock”
means
        the common stock of the Company.

       

      (m) “Company”
means
        Microchip Technology Incorporated.

       

      (n) “Consultant”
means
        any person, including an advisor, engaged by the Company or a Parent or
        Subsidiary to render services and who is compensated for such services. The
        term
        Consultant shall not include Directors who are compensated by the Company
        only
        for their service as Directors.

       

      (o) “Deferred
        Stock Unit”
means
        a
        deferred stock unit Award granted to a Participant pursuant to Section
        13.

       

      (p) “Director”
means
        a
        member of the Board.

       

      (q) “Disability”
means
        total and permanent disability as defined in Section 22(e)(3) of the Code.
        

       

      (r) “Earnings
        Per Share”
        means as
        to any Fiscal Year, the Company’s or a business unit’s Net Income, divided by a
        weighted average number of common shares outstanding and dilutive common
        equivalent shares deemed outstanding, determined in accordance with generally
        accepted accounting principles.

       

      (s) “Employee”
means
        any person, including Officers and Directors, employed by the Company or
        any
        Parent or Subsidiary of the Company. A Service Provider shall not cease to
        be an
        Employee in the case of (i) any leave of absence approved by the Company
        or (ii)
        transfers between locations of the Company or between the Company, its Parent,
        any Subsidiary, or any successor. Neither service as a Director nor payment
        of a
        director’s fee by the Company shall be sufficient to constitute “employment” by
        the Company.

       

      (t) “Exchange
        Act”
means
        the Securities Exchange Act of 1934, as amended.

      
        
          
          

        

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

       

      (1) If
        the
        Common Stock is listed on any established stock exchange or a national market
        system, including without limitation the Nasdaq National Market of the National
        Association of Securities Dealers, Inc. Automated Quotation (“Nasdaq”) System,
        the Fair Market Value of a Share of Common Stock shall be the closing sales
        price for such stock (or the closing bid, if no sales were reported) as quoted
        on such system or exchange (or the exchange with the greatest volume of trading
        in Common Stock) on the day of determination, as reported in The
        Wall Street Journal
        or such
        other source as the Administrator deems reliable;

       

      (2) If
        the
        Common Stock is quoted on the Nasdaq System (but not on the Nasdaq National
        Market thereof) or is regularly quoted by a recognized securities dealer
        but
        selling prices are not reported, the Fair Market Value of a Share of Common
        Stock shall be the mean between the high bid and low asked prices for the
        Common
        Stock on the last market trading day prior to the day of determination, as
        reported in The
        Wall Street Journal
        or such
        other source as the Administrator deems reliable; or

       

      (3) In
        the
        absence of an established market for the Common Stock, the Fair Market Value
        shall be determined in good faith by the Administrator.

       

      (v) “Fiscal
        Year”
means
        a
        fiscal year of the Company.

       

      (w) “Gross
        Margin”
means
        the Company’s net revenue less its cost of goods sold.

       

      (x) “Net
        Income”
        means as
        to any Fiscal Year, the income after taxes of the Company for the Fiscal
        Year
        determined in accordance with generally accepted accounting
        principles.

       

      (y) “Non-Employee
        Director”
means
        a
        member of the Board who is not an Employee.

       

      (z) “Nonstatutory
        Stock Option”
means
        an Option not intended to qualify as an incentive stock option under Section
        422
        of the Code and regulations promulgated thereunder.

       

      (aa) “Notice
        of Grant”
means
        a
        written or electronic notice evidencing certain terms and conditions of an
        individual Award. The Notice of Grant is part of the Option
        Agreement.

       

      (bb) “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.

       

      (cc) “Operating
        Cash Flow”
means
        the Company’s or a business unit’s sum of Net Income plus depreciation and
        amortization less capital expenditures plus changes in working capital comprised
        of accounts receivable, inventories, other current assets, trade accounts
        payable, accrued expenses, product warranty, advance payments from customers
        and
        long-term accrued expenses, determined in accordance with generally acceptable
        accounting principles.

       

      (dd) “Operating
        Income”
means
        the Company’s or a business unit’s income from operations but excluding any
        unusual items, determined in accordance with generally accepted accounting
        principles.

       

      (ee) “Option”
means
        a
        stock option granted pursuant to the Plan.

       

      (ff) “Option
        Agreement”
means
        a
        written or electronic agreement between the Company and a Participant evidencing
        the terms and conditions of an individual Option grant. The Option Agreement
        is
        subject to the terms and conditions of the Plan.

      
        
          
          

        

        
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      (gg) “Parent”
means
        a
“parent corporation,” whether now or hereafter existing, as defined in Section
        424(e) of
        the
        Code.

       

      (hh) “Participant”
means
        the holder of an outstanding Award granted under the Plan.

       

      (ii) “Performance
        Goals”
        means
        the goal(s) (or combined goal(s)) determined by the Administrator (in its
        discretion) to be applicable to a Participant with respect to an Award. As
        determined by the Administrator, the Performance Goals applicable to an Award
        may provide for a targeted level or levels of achievement using one or more
        of
        the following measures: (a) Annual Revenue, (b) Cash Position, (c) Earnings
        Per
        Share, (d) Net Income, (e) Operating Cash Flow, (f) Operating Income, (g)
        Return
        on Assets, (h) Return on Equity, (i) Return on Sales, (j) Total Stockholder
        Return, and (k) Gross Margin. For Awards not intended to qualify for treatment
        under Section 162(m) of the Code, there may be additional Performance Goals
        set
        by the Board. The Performance Goals may differ from Participant to Participant
        and from Award to Award.

       

      (jj) “Performance
        Share”
means
        a
        performance share Award granted to a Participant pursuant to Section
        11.

       

      (kk) “Performance
        Unit”
means
        a
        performance unit Award granted to a Participant pursuant to
        Section 12.

       

      (ll) “Plan”
means
        this 2004 Equity Incentive Plan. 

       

      (mm) “Restricted
        Stock”
means
        Shares granted pursuant to Section 10 of the Plan.

       

      (nn) “Return
        on Assets”
        means
        the percentage equal to the Company’s or a business unit’s Operating Income
        before incentive compensation, divided by average net Company’s or business
        unit’s, as applicable, assets, determined in accordance with generally accepted
        accounting principles.

       

      (oo) “Return
        on Equity”
        means
        the percentage equal to the Company’s Net Income divided by average
        stockholder’s equity, determined in accordance with generally accepted
        accounting principles.

       

      (pp) “Return
        on Sales”
        means
        the percentage equal to the Company’s or a business unit’s Operating Income
        before incentive compensation, divided by the Company’s or the business unit’s,
        as applicable, revenue, determined in accordance with generally accepted
        accounting principles.

       

      (qq) “Rule
        16b-3”
means
        Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect
        when
        discretion is being exercised with respect to the Plan.

       

      (rr) “Section
        16(b)”
means
        Section 16(b) of the Exchange Act, as amended.

       

      (ss) “Service
        Provider”
means
        an Employee, Consultant or Non-Employee Director.

       

      (tt) “Share”
means
        a
        share of the Common Stock, as adjusted in accordance with Section 19 of the
        Plan. 

       

      (uu) “Stock
        Appreciation Right”
or
        “SAR”
means
        an Award granted pursuant to Section 9 of the Plan.

       

      (vv) “Subsidiary”
means
        a
“subsidiary corporation,” whether now or hereafter existing, as defined
in
        Section 424(f) of the Code. 

       

      (ww) “Total
        Stockholder Return”
        means
        the total return (change in share price plus reinvestment of any dividends)
        of a
        Share.

      
        
          
          

        

        
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      3. Stock
        Subject to the Plan.
        Subject
        to the provisions of Section 19 of the Plan, the maximum aggregate number
        of
        Shares which may be issued under the Plan is 20,400,000 Shares
        comprised of (i) any Shares remaining available for issuance pursuant to
        the
        Company’s 1993 Stock Option Plan as of the date upon which this Plan is
        effective, up to a maximum of 7,500,000 Shares, (ii) any Shares remaining
        available for issuance pursuant to the Company’s 1997 Nonstatutory Stock Option
        Plan as of the date upon which this Plan is effective, up to a maximum of
        7,900,000 Shares, and (iii) any Shares subject to any outstanding options
        under
        the Company’s 1993 or 1997 Nonstatutory Stock Option Plans that subsequently
        expire unexercised, up to a maximum of an additional 5,000,000 Shares.
 In
        no
        event shall more than 30% of the Shares remaining issuable under the Plan
        as of
        the effective date and 30% of the Shares subsequently added to the Plan by
        virtue of outstanding 1993 Stock Option Plan and 1997 Nonstatutory Stock
        Option
        Plan options expiring unexercised be issued pursuant to Restricted Stock,
        Performance Share, Performance Unit or Deferred Stock Unit Awards with a
        purchase price lower than 100% of the Fair Market Value of the underlying
        Shares
        or units on the date of grant; provided, however, that such 30% limitation
        shall
        not apply to Restricted Stock Units issued on or after the date of the Company’s
        2006 annual stockholders’ meeting.

       

      The
        Shares may be authorized, but unissued, or reacquired Common Stock.

       

      If
        an
        Award expires or becomes unexercisable without having been exercised in full,
        or
        with respect to Restricted Stock, Performance Shares, Performance Units or
        Deferred Stock Units, is forfeited to or repurchased by the Company, the
        unpurchased Shares (or for Awards other than Options and SARs, the forfeited
        or
        repurchased Shares) which were subject thereto shall become available for
        future
        grant or sale under the Plan (unless the Plan has terminated). With respect
        to
        SARs, only Shares actually issued pursuant to an SAR shall cease to be available
        under the Plan; all remaining Shares under SARs shall remain available for
        future grant or sale under the Plan (unless the Plan has terminated). However,
        Shares that have actually been issued under the Plan under any Award shall
        not
        be returned to the Plan and shall not become available for future distribution
        under the Plan; provided, however, that if Shares of Restricted Stock,
        Performance Shares, Performance Units or Deferred Stock Units are repurchased
        by
        the Company at their original purchase price or are forfeited to the Company,
        such Shares shall become available for future grant under the Plan. Shares
        used
        to pay the exercise price or purchase price, if applicable, of an Award shall
        become available for future grant or sale under the Plan. To the extent an
        Award
        under the Plan is paid out in cash rather than stock, such cash payment shall
        not result in reducing the number of Shares available for issuance under
        the
        Plan.

       

      4. Administration
        of the Plan.

       

      (a) Procedure.

       

      (1) Multiple
        Administrative Bodies.
        The
        Plan may be administered by different Committees with respect to different
        groups of Service Providers.

       

      (2) Section
        162(m).
        To the
        extent that the Administrator determines it to be desirable to qualify Options
        granted hereunder as “performance-based compensation” within the meaning of
        Section 162(m) of the Code, the Plan shall be administered by a Committee
        of two
        or more “outside directors” within the meaning of Section 162(m) of the
        Code.

       

      (3) Rule
        16b-3.
        To the
        extent desirable to qualify transactions hereunder as exempt under Rule 16b-3,
        the
        transactions contemplated hereunder shall be structured to satisfy the
        requirements for exemption under Rule 16b-3.

       

      (4) Other
        Administration.
        Other
        than as provided above, the Plan shall be administered by (A) the Board or
        (B) a
        Committee, which committee shall be constituted to satisfy Applicable
        Laws.

      
        
          
          

        

        
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      (b) Powers
        of the Administrator.
        Subject
        to the provisions of the Plan, and in the case of a Committee, subject to
        the
        specific duties delegated by the Board to such Committee, the Administrator
        shall have the authority, in its discretion:

       

      (1) to
        determine the Fair Market Value of the Common Stock, in accordance with
        Section 2(u) of the Plan; 

       

      (2) to
        select
        the Service Providers to whom Awards may be granted hereunder (other than
        the
        automatic grants to Non-Employee Directors provided for in Section 17 of
        the
        Plan);

       

      (3) to
        determine whether and to what extent Awards or any combination thereof, are
        granted under the Plan;

       

      (4) to
        determine the number of shares of Common Stock or equivalent units to be
        covered
        by each Award granted under the Plan; 

       

      (5) to
        approve forms of agreement for use under the Plan; 

       

      (6) to
        determine the terms and conditions, not inconsistent with the terms of the
        Plan,
        of any award granted under the Plan. Such terms and conditions include, but
        are
        not limited to, the exercise price, the time or times when Options or SARs
        may
        be exercised or other Awards vest (which may be based on performance criteria),
        any vesting acceleration or waiver of forfeiture restrictions, and any
        restriction or limitation regarding any Award or the shares of Common Stock
        relating thereto, based in each case on such factors as the Administrator,
        in
        its sole discretion, shall determine; 

       

      (7) to
        construe and interpret the terms of the Plan and Awards; 

       

      (8) to
        prescribe, amend and rescind rules and regulations relating to the Plan,
        including rules and regulations relating to sub-plans established for the
        purpose of qualifying for preferred tax treatment under foreign tax
        laws;

       

      (9) to
        modify
        or amend each Award (subject to Section 21(c) of the Plan), including the
        discretionary authority to extend the post-termination exercisability period
        of
        Options and SARs longer than is otherwise provided for in the Plan;

       

      (10) to
        authorize any person to execute on behalf of the Company any instrument required
        to effect the grant of an Award previously granted by the
        Administrator;

       

      (11) to
        allow
        Participants to satisfy withholding tax obligations by electing to have the
        Company withhold from the Shares or cash to be issued upon exercise or vesting
        of an Award (or distribution of a Deferred Stock Unit) that number of Shares
        or
        cash having a Fair Market Value equal to the minimum amount required to be
        withheld (but no more). The Fair Market Value of any Shares to be withheld
        shall
        be determined on the date that the amount of tax to be withheld is to be
        determined. All elections by a Participant to have Shares or cash withheld
        for
        this purpose shall be made in such form and under such conditions as the
        Administrator may deem necessary or advisable; 

       

      (12) to
        determine the terms and restrictions applicable to Awards; and 

       

      (13) to
        make
        all other determinations deemed necessary or advisable for administering
        the
        Plan. 

       

      (c) Effect
        of Administrator’s Decision.
        The
        Administrator’s decisions, determinations and interpretations shall be final and
        binding on all Participants and any other holders of Awards.

      
        
          
          

        

        
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      5. Eligibility.
        Restricted Stock, Performance Shares, Performance Units, Stock Appreciation
        Rights, Deferred Stock Units and Nonstatutory Stock Options may be granted
        to
        Service Providers. Non-Employee
        Directors shall only receive Awards pursuant to Section 17 of the
        Plan.

       

      6. Limitations.

       

      (a) Nonstatutory
        Stock Option.
        Each
        Option shall be designated in the Notice of Grant as a Nonstatutory Stock
        Option.

       

      (b) No
        Employment Rights.
        Neither
        the Plan nor any Award shall confer upon a Participant any right with respect
        to
        continuing the Participant’s employment with the Company or its Subsidiaries,
        nor shall they interfere in any way with the Participant’s right or the
        Company’s or Subsidiary’s right, as the case may be, to terminate such
        employment at any time, with or without cause or notice.

       

      (c) 162(m)
        Limitations.
        The
        following limitations shall apply to grants of Options and Stock Appreciation
        Rights to Participants:

       

      (1) No
        Participant shall be granted, in any Fiscal Year, Options and Stock Appreciation
        Rights to purchase more than 1,500,000 Shares;
        provided, however, that such limit shall be 4,000,000 Shares in the
        Participant’s first Fiscal Year of Company service.

       

      (2) The
        foregoing limitations shall be adjusted proportionately in connection with
        any
        change in the Company’s capitalization as described in Section
        19(a).

       

      7. Term
        of Plan.
        The
        Plan is effective as of October 1, 2004 (the “Effective Date”). It shall
        continue in effect until September 30, 2014, unless sooner terminated under
        Section 21 of the Plan.

       

      8. Stock
        Options.

       

      (a) Term.
        The
        term of each Option shall be stated in the Notice of Grant; provided, however,
        that the term shall be ten (10) years from the date of grant or such shorter
        term as may be provided in the Notice of Grant. 

       

      (b) Option
        Exercise Price.
        The
        per
        share exercise price for the Shares to be issued pursuant to exercise of
        an
        Option shall be determined by the Administrator and shall be no less than
        100%
        of the Fair Market Value per share on the date of grant.

       

      (c) No
        Repricing.
        The
        exercise price for an Option may not be reduced. This shall include, without
        limitation, a repricing of the Option as well as an Option exchange program
        whereby the Participant agrees to cancel an existing Option in exchange for
        an
        Option, SAR or other Award.

       

      (d) Waiting
        Period and Exercise Dates.
        At the
        time an Option is granted, the Administrator shall fix the period within
        which
        the Option may be exercised and shall determine any conditions which must
        be
        satisfied before the Option may be exercised. In so doing, the Administrator
        may
        specify that an Option may not be exercised until the completion of a service
        period.

       

      (e) Form
        of Consideration.
        The
        Administrator shall determine the acceptable form of consideration for
        exercising an Option, including the method of payment. Subject to Applicable
        Laws, such consideration may consist entirely of:
        

      
        
          
          

        

        
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      (1) cash;

       

      (2) check;

       

      (3) other
        Shares which (A) in the case of Shares acquired upon exercise of an option
        have
        been owned by the Participant for more than six months on the date of surrender,
        and (B) have a Fair Market Value on the date of surrender equal to the aggregate
        exercise price of the Shares as to which said Option shall be
        exercised;

       

      (4) delivery
        of a properly executed exercise notice together with such other documentation
        as
        the Administrator and the broker, if applicable, shall require to effect
        an
        exercise of the Option and delivery to the Company of the sale proceeds required
        to pay the exercise price;

       

      (5) any
        combination of the foregoing methods of payment; or

       

      (6) such
        other consideration and method of payment for the issuance of Shares to the
        extent permitted by
        Applicable Laws.

       

      (f)
        Exercise
        of Option.

       

      Any
        Option granted hereunder shall be exercisable according to the terms of the
        Plan
        and at such times and under such conditions as determined by the Administrator
        and set forth in the Option Agreement.

       

      An
        Option
        may not be exercised for a fraction of a Share.

       

      An
        Option
        shall be deemed exercised when the Company receives: (i) written or electronic
        notice of exercise (in accordance with the Option Agreement) from the person
        entitled to exercise the Option, and (ii) full payment for the Shares with
        respect to which the Option is exercised. Full payment may consist of any
        consideration and method of payment authorized by the Administrator and
        permitted by the Option Agreement and the Plan. Shares issued upon exercise
        of
        an Option shall be issued in the name of the Participant or, if requested
        by the
        Participant, in the name of the Participant and his or her spouse. Until
        the
        stock certificate evidencing such Shares is issued (as evidenced by the
        appropriate entry on the books of the Company or of a duly authorized transfer
        agent of the Company), no right to vote or receive dividends or any other
        rights
        as a stockholder shall exist with respect to the optioned stock, notwithstanding
        the exercise of the Option. The Company shall issue (or cause to be issued)
        such
        stock certificate promptly after the Option is exercised. No adjustment will
        be
        made for a dividend or other right for which the record date is prior to
        the
        date the stock certificate is issued, except as provided in Section 19 of
        the
        Plan.

       

      Exercising
        an Option in any manner shall decrease the number of Shares thereafter available
        for sale under the Option, by the number of Shares as to which the Option
        is
        exercised. 

       

      (g) Termination
        of Relationship as a Service Provider.
        If a
        Participant ceases to be a Service Provider, other than upon the
        Participant’s
        misconduct, death or Disability, the Participant may exercise his or her
        Option
        within such period of time as is specified in the Option Agreement to the
        extent
        that the Option is vested on the date of termination (but in no event later
        than
        the expiration of the term of such Option as set forth in the Option Agreement).
        In the absence of a specified time in the Option Agreement, the Option shall
        remain exercisable for three (3) months following the Participant’s termination.
        If, on the date of termination, the Participant is not vested as to his or
        her
        entire Option, the Shares covered by the unvested portion of the Option shall
        revert to the Plan. If, after termination, the Participant does not exercise
        his
        or her Option within the time specified by the Administrator, the Option
        shall
        terminate, and the Shares covered by such Option shall revert to the
        Plan.

       

      

      
        
          
          

        

        
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      (h) Disability.
        If a
        Participant ceases to be a Service Provider as a result of the Participant’s
        Disability, the Participant may exercise his or her Option within such period
        of
        time as is specified in the Option Agreement to the extent the Option is
        vested
        on the date of termination (but in no event later than the expiration of
        the
        term of such Option as set forth in the Option Agreement). In the absence
        of a
        specified time in the Option Agreement, the Option shall remain exercisable
        for
        six (6) months following the Participant’s termination. If, on the date of
        termination, the Participant is not vested as to his or her entire Option,
        the
        Shares covered by the unvested portion of the Option shall revert to the
        Plan.
        If, after termination, the Participant does not exercise his or her Option
        within the time specified herein, the Option shall terminate, and the Shares
        covered by such Option shall revert to the Plan.

       

      (i) Death
        of Participant.
        If a
        Participant dies while a Service Provider, the Option may be exercised following
        the Participant’s death within such period of time as is specified in the Option
        Agreement (but in no event may the option be exercised later than the expiration
        of the term of such Option as set forth in the Option Agreement), by the
        personal representative of the Participant’s estate, provided such
        representative has been designated prior to Participant’s death in a form
        acceptable to the Administrator. If no such representative has been designated
        by the Participant, then such Option may be exercised by the person(s) to
        whom
        the Option is transferred pursuant to the Participant’s will or in accordance
        with the laws of descent and distribution. In the absence of a specified
        time in
        the Option Agreement, the Option shall remain exercisable for twelve (12)
        months
        following Participant’s death. If the Option is not so exercised within the time
        specified herein, the Option shall terminate, and the Shares covered by such
        Option shall revert to the Plan.

       

      9. Stock
        Appreciation Rights.

       

      (a) Grant
        of SARs.
        Subject
        to the terms and conditions of the Plan, SARs may be granted to Participants
        at
        any time and from time to time as shall be determined by the Administrator,
        in
        its sole discretion. The Administrator shall have complete discretion to
        determine the number of SARs granted to any Participant.

       

      (b) Exercise
        Price and Other Terms.
        Subject
        to Section 4(c) of the Plan, the Administrator, subject to the provisions
        of the
        Plan, shall have complete discretion to determine the terms and conditions
        of
        SARs granted under the Plan; provided, however, that no SAR may have a term
        of
        more than ten (10) years from the date of grant. The per share exercise price
        for the Shares or cash to be issued pursuant to exercise of an SAR shall
        be
        determined by the Administrator and shall be no less than 100% of the Fair
        Market Value per share on the date of grant. The exercise price may not be
        reduced. This shall include, without limitation, a repricing of the SAR as
        well
        as an SAR exchange program whereby the Participant agrees to cancel an existing
        SAR in exchange for an Option, SAR or other Award

       

      (c) Payment
        of SAR Amount.
        Upon
        exercise of an SAR, a Participant shall be entitled to receive payment from
        the
        Company in an amount determined by multiplying:

       

      (1) the
        difference between the Fair Market Value of a Share on the date of exercise
        over
        the exercise price; times

       

      (2) the
        number of Shares with respect to which the SAR is exercised.

       

      (d) Payment
        Upon Exercise of SAR.
        At the
        discretion of the Administrator, payment for an SAR may be in cash, Shares
        or a
        combination thereof.

       

      (e) SAR
        Agreement.
        Each
        SAR grant shall be evidenced by an Award Agreement that shall specify the
        exercise price, the term of the SAR, the conditions of exercise, and such
        other
        terms and conditions as the Administrator, in its sole discretion, shall
        determine.

      
        
          
          

        

        
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      (f) Expiration
        of SARs.
        An SAR
        granted under the Plan shall expire upon the date determined by the
        Administrator, in its sole discretion, and set forth in the Award
        Agreement.

       

      (g) Termination
        of Relationship as a Service Provider.
        If a
        Participant ceases to be a Service Provider, other than upon the Participant’s
        death or Disability termination, the Participant may exercise his or her
        SAR
        within such period of time as is specified in the SAR Agreement to the extent
        that the SAR is vested on the date of termination (but in no event later
        than
        the expiration of the term of such SAR as set forth in the SAR Agreement).
        In
        the absence of a specified time in the SAR Agreement, the SAR shall remain
        exercisable for three (3) months following the Participant’s termination. If, on
        the date of termination, the Participant is not vested as to his or her entire
        SAR, the Shares covered by the unvested portion of the SAR shall revert to
        the
        Plan. If, after termination, the Participant does not exercise his or her
        SAR
        within the time specified by the Administrator, the SAR shall terminate,
        and the
        Shares covered by such SAR shall revert to the Plan.

       

      (h) Disability.
        If a
        Participant ceases to be a Service Provider as a result of the Participant’s
        Disability, the Participant may exercise his or her SAR within such period
        of
        time as is specified in the SAR Agreement to the extent the SAR is vested
        on the
        date of termination (but in no event later than the expiration of the term
        of
        such SAR as set forth in the SAR Agreement). In the absence of a specified
        time
        in the SAR Agreement, the SAR shall remain exercisable for six (6) months
        following the Participant’s termination. If, on the date of termination, the
        Participant is not vested as to his or her entire SAR, the Shares covered
        by the
        unvested portion of the SAR shall revert to the Plan. If, after termination,
        the
        Participant does not exercise his or her SAR within the time specified herein,
        the SAR shall terminate, and the Shares covered by such SAR shall revert
        to the
        Plan.

       

      (i) Death
        of Participant.
        If a
        Participant dies while a Service Provider, the SAR may be exercised following
        the Participant’s death within such period of time as is specified in the SAR
        Agreement (but in no event may the SAR be exercised later than the expiration
        of
        the term of such SAR as set forth in the SAR Agreement), by the personal
        representative of the Participant’s estate, provided such representative has
        been designated prior to Participant’s death in a form acceptable to the
        Administrator. If no such representative has been designated by the Participant,
        then such SAR may be exercised by the person(s) to whom the SAR is transferred
        pursuant to the Participant’s will or in accordance with the laws of descent and
        distribution. In the absence of a specified time in the SAR Agreement, the
        SAR
        shall remain exercisable for twelve (12) months following Participant’s death.
        If the SAR is not so exercised within the time specified herein, the SAR
        shall
        terminate, and the Shares covered by such SAR shall revert to the
        Plan.

       

      10.
        Restricted
        Stock.

       

      (a)
        Grant
        of Restricted Stock.
        Subject
        to the terms and conditions of the Plan, Restricted Stock may be granted
        to
        Participants at any time as shall be determined by the Administrator, in
        its
        sole discretion. The Administrator shall have complete discretion to determine
        (i) the number of Shares subject to a Restricted Stock award granted to any
        Participant (provided that during any Fiscal Year, no Participant shall be
        granted more than 300,000 Shares of Restricted Stock); provided, however,
        that
        such limit shall be 750,000 Shares in the Participant’s first Fiscal Year of
        Company service, and (ii) the conditions that must be satisfied, which typically
        will be based principally or solely on continued provision of services but
        may
        include a performance-based component, upon which is conditioned the grant
        or
        vesting of Restricted Stock. 

       

      (b)
        Restricted
        Stock Units.
        Restricted Stock may be granted in the form of Restricted Stock or units
        to
        acquire Shares. Each such unit shall be the equivalent of one Share for purposes
        of determining the number of Shares subject to an Award. With respect to
        the
        units to acquire Shares, until the Shares are issued, no right to vote or
        receive dividends or any other rights as a stockholder shall exist.

       

      (c) Other
        Terms.
        The
        Administrator, subject to the provisions of the Plan, shall have complete
        discretion to determine the terms and conditions of Restricted Stock granted
        under the Plan. Restricted Stock grants shall be subject to the terms,
        conditions, and restrictions determined by the Administrator at the time
        the
        stock is awarded. The 

      
        
          
          

        

        
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      Administrator
        may require the
        recipient to sign a Restricted Stock Award agreement as a condition of the
        award. Any certificates representing the Shares of stock awarded shall bear
        such
        legends as shall be determined by the Administrator.

       

      (d)
        Restricted
        Stock Award Agreement.
        Each
        Restricted Stock grant shall be evidenced by an agreement that shall specify
        the
        purchase price (if any) and such other terms and conditions as the
        Administrator, in its sole discretion, shall determine; provided, however,
        that
        if the Restricted Stock grant has a purchase price, such purchase price must
        be
        paid no more than ten (10) years following the date of grant. 

       

      (e)
        Section
        162(m) Performance Restrictions.
        For
        purposes of qualifying grants of Restricted Stock as “performance-based
        compensation” under Section 162(m) of the Code, the Administrator, in its
        discretion, may set restrictions based upon the achievement of Performance
        Goals. The Performance Goals shall be set by the Administrator on or before
        the
        latest date permissible to enable the Restricted Stock to qualify as
“performance-based compensation” under Section 162(m) of the Code. In granting
        Restricted Stock which is intended to qualify under Section 162(m) of the
        Code,
        the Administrator shall follow any procedures determined by it from time
        to time
        to be necessary or appropriate to ensure qualification of the Restricted
        Stock
        under Section 162(m) of the Code (e.g., in determining the Performance
        Goals).

       

      11.
        Performance
        Shares.

       

      (a) Grant
        of Performance Shares.
        Subject
        to the terms and conditions of the Plan, Performance Shares may be granted
        to
        Participants at any time as shall be determined by the Administrator, in
        its
        sole discretion. The Administrator shall have complete discretion to determine
        (i) the number of Shares subject to a Performance Share award granted to
        any
        Participant (provided that during any Fiscal Year, no Participant shall be
        granted more than 300,000 units of Performance Shares); provided, however,
        that
        such limit shall be 750,000 Shares in the Participant’s first Fiscal Year of
        Company service, and (ii) the conditions that must be satisfied, which typically
        will be based principally or solely on achievement of performance milestones
        but
        may include a service-based component, upon which is conditioned the grant
        or
        vesting of Performance Shares. Performance Shares shall be granted in the
        form
        of units to acquire Shares. Each such unit shall be the equivalent of one
        Share
        for purposes of determining the number of Shares subject to an Award. Until
        the
        Shares are issued, no right to vote or receive dividends or any other rights
        as
        a stockholder shall exist with respect to the units to acquire Shares.

       

      (b) Other
        Terms.
        The
        Administrator, subject to the provisions of the Plan, shall have complete
        discretion to determine the terms and conditions of Performance Shares granted
        under the Plan. Performance Share grants shall be subject to the terms,
        conditions, and restrictions determined by the Administrator at the time
        the
        stock is awarded, which may include such performance-based milestones as
        are
        determined appropriate by the Administrator. The Administrator may require
        the
        recipient to sign a Performance Shares agreement as a condition of the award.
        Any certificates representing the Shares of stock awarded shall bear such
        legends as shall be determined by the Administrator.

       

      (c) Performance
        Share Award Agreement.
        Each
        Performance Share grant shall be evidenced by an agreement that shall specify
        such other terms and conditions as the Administrator, in its sole discretion,
        shall determine. 

       

      (d) Section
        162(m) Performance Restrictions.
        For
        purposes of qualifying grants of Performance Shares as “performance-based
        compensation” under Section 162(m) of the Code, the Administrator, in its
        discretion, may set restrictions based upon the achievement of Performance
        Goals. The Performance Goals shall be set by the Administrator on or before
        the
        latest date permissible to enable the Performance Shares to qualify as
“performance-based compensation” under Section 162(m) of the Code. In granting
        Performance Shares which are intended to qualify under Section 162(m) of
        the
        Code, the Administrator shall follow any procedures determined by it from
        time
        to time to be necessary or appropriate to ensure qualification of the
        Performance Shares under Section 162(m) of the Code (e.g., in determining
        the
        Performance Goals).

      
        
          
          

        

        
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      12. Performance
        Units.

       

      (a)
        Grant
        of Performance Units.
        Performance Units are similar to Performance Shares, except that they shall
        be
        settled in a cash equivalent to the Fair Market Value of the underlying Shares,
        determined as of the vesting date. Subject to the terms and conditions of
        the
        Plan, Performance Units may be granted to Participants at any time and from
        time
        to time as shall be determined by the Administrator, in its sole discretion.
        The
        Administrator shall have complete discretion to determine the conditions
        that
        must be satisfied, which typically will be based principally or solely on
        achievement of performance milestones but may include a service-based component,
        upon which is conditioned the grant or vesting of Performance Units. Performance
        Units shall be granted in the form of units to acquire Shares. Each such
        unit
        shall be the cash equivalent of one Share of Common Stock. No right to vote
        or
        receive dividends or any other rights as a stockholder shall exist with respect
        to Performance Units or the cash payable thereunder.

       

      (b)
        Number
        of Performance Units.
        The
        Administrator will have complete discretion in determining the number of
        Performance Units granted to any Participant, provided that during any Fiscal
        Year, no Participant shall receive Performance Units having an initial value
        greater than $1,500,000, provided, however, that such limit shall be $4,000,000
        in the Participant’s first Fiscal Year of Company service.

       

      (c)
        Other
        Terms.
        The
        Administrator, subject to the provisions of the Plan, shall have complete
        discretion to determine the terms and conditions of Performance Units granted
        under the Plan. Performance Unit grants shall be subject to the terms,
        conditions, and restrictions determined by the Administrator at the time
        the
        stock is awarded, which may include such performance-based milestones as
        are
        determined appropriate by the Administrator. The Administrator may require
        the
        recipient to sign a Performance Unit agreement as a condition of the award.
        Any
        certificates representing the Shares awarded shall bear such legends as shall
        be
        determined by the Administrator.

       

      (d)
        Performance
        Unit Award Agreement.
        Each
        Performance Unit grant shall be evidenced by an agreement that shall specify
        such terms and conditions as the Administrator, in its sole discretion, shall
        determine.

       

      (e)
        Section
        162(m) Performance Restrictions.
        For
        purposes of qualifying grants of Performance Units as “performance-based
        compensation” under Section 162(m) of the Code, the Administrator, in its
        discretion, may set restrictions based upon the achievement of Performance
        Goals. The Performance Goals shall be set by the Administrator on or before
        the
        latest date permissible to enable the Performance Units to qualify as
“performance-based compensation” under Section 162(m) of the Code. In granting
        Performance Units which are intended to qualify under Section 162(m) of the
        Code, the Administrator shall follow any procedures determined by it from
        time
        to time to be necessary or appropriate to ensure qualification of the
        Performance Units under Section 162(m) of the Code (e.g., in determining
        the
        Performance Goals).

       

      13.
        Deferred
        Stock Units.

       

      (a)
        Description.
        Deferred Stock Units shall consist of a Restricted Stock, Performance Share
        or
        Performance Unit Award that the Administrator, in its sole discretion permits
        to
        be paid out in installments or on a deferred basis, in accordance with rules
        and
        procedures established by the Administrator. Deferred Stock Units shall remain
        subject to the claims of the Company’s general creditors until distributed to
        the Participant.

       

      (b)
        162(m)
        Limits.
        Deferred Stock Units shall be subject to the annual 162(m) limits applicable
        to
        the underlying Restricted Stock, Performance Share or Performance Unit
        Award. 

       

      14.
        Death
        of Participant.
        In the
        event that a Participant dies while a Service Provider, then 100% of his
        or her
        Awards shall immediately vest.

      
        
          
          

        

        
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      15.
        Leaves
        of Absence.
        Unless
        the Administrator provides otherwise or as otherwise required by Applicable
        Laws, vesting of Awards granted hereunder shall cease commencing on the first
        day of any unpaid leave of absence and shall only recommence upon return
        to
        active service.

       

      16.
        Misconduct.
        Should
        (i) the Participant’s service be terminated for misconduct (including, but not
        limited to, any act of dishonesty, willful misconduct, fraud or embezzlement),
        or (ii) the Participant makes any unauthorized use or disclosure of confidential
        information or trade secrets of the Company or any Parent or Subsidiary,
        then in
        any such event all outstanding Awards held by the Participant under the Plan
        shall terminate immediately and cease to be outstanding, including as to
        both
        vested and unvested Awards.

       

      17.
        Non-Employee
        Director Options.

       

      (a)
        Initial
        Grants.
        Each
        Non-Employee Director who first becomes a Non-Employee Director on or after
        the
        date upon which the Plan is approved by the Company’s stockholders (excluding
        any Non-Employee Director who previously served on the Board), shall be entitled
        to receive an automatic Option grant of 12,000 shares of Common Stock, as
        of the
        date that the individual first is appointed or elected as a Non-Employee
        Director.

       

      (b)
        Annual
        Grants.
        On the
        date of the Company’s annual stockholders meeting, each Non-Employee Director
        who has served as a Non-Employee Director for at least three months on that
        date
        shall be automatically granted an Option grant of 6,000 shares of Common
        Stock,
        provided that such Non-Employee Director has been elected by the stockholders
        to
        serve as a member of the Board at that annual meeting.

       

      18.
        Non-Transferability
        of Awards.
        Unless
        determined otherwise by the Administrator, an Award may not be sold, pledged,
        assigned, hypothecated, transferred, or disposed of in any manner other than
        by
        will or by the laws of descent or distribution and may be exercised, during
        the
        lifetime of the recipient, only by the recipient. If the Administrator makes
        an
        Award transferable, such Award shall contain such additional terms and
        conditions as the Administrator deems appropriate. 

       

      19.
        Adjustments
        Upon Changes in Capitalization, Dissolution or Liquidation or Change of
        Control.

       

      (a)
        Changes
        in Capitalization.
        Subject
        to any required action by the stockholders of the Company, the number of
        shares
        of Common Stock covered by each outstanding Award, the number of shares of
        Common Stock which have been authorized for issuance under the Plan but as
        to
        which no Awards have yet been granted or which have been returned to the
        Plan
        upon cancellation or expiration of an Award, as well as the price per share
        of
        Common Stock covered by each such outstanding Award and the 162(m) fiscal
        year
        share issuance limits under Sections 6(c), 10(a) and 11(a) shall be
        proportionately adjusted for any increase or decrease in the number of issued
        shares of Common Stock resulting from a stock split, reverse stock split,
        stock
        dividend, combination or reclassification of the Common Stock, or any other
        increase or decrease in the number of issued shares of Common Stock effected
        without receipt of consideration by the Company; provided, however, that
        any
        such change in capitalization shall not affect the number of shares awarded
        under the automatic grants to Non-Employee Directors described in Sections
        17(a)
        and (b), and provided that conversion of any convertible securities of the
        Company shall not be deemed to have been “effected without receipt of
        consideration.” Such adjustment shall be made by the Committee, whose
        determination in that respect shall be final, binding and conclusive. Except
        as
        expressly provided herein, no issuance by the Company of shares of stock
        of any
        class, or securities convertible into shares of stock of any class, shall
        affect, and no adjustment by reason thereof shall be made with respect to,
        the
        number or price of shares of Common Stock subject to an Award. 

       

      (b)
        Dissolution
        or Liquidation.
        In the
        event of the proposed dissolution or liquidation of the Company, the
        Administrator shall notify each Participant as soon as practicable prior
        to the
        effective date of such proposed transaction. The Administrator in its discretion
        may provide for a Participant to have the right to exercise his or her Option
        or
        SAR until ten (10) days prior to such transaction as to all of the Awarded
        Stock
        covered thereby, 

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      including
        Shares as to which the Award would not otherwise be exercisable. In addition,
        the Administrator may provide that any Company repurchase option or forfeiture
        rights applicable to any Award shall lapse 100%, and that any Award vesting
        shall accelerate 100%, provided the proposed dissolution or liquidation takes
        place at the time and in the manner contemplated. To the extent it has not
        been
        previously exercised (with respect to Options and SARs) or vested (with respect
        to other Awards), an Award will terminate immediately prior to the consummation
        of such proposed action.

       

      (c)
        Change
        of Control.

       

      (1) Stock
        Options and SARs.
        In the
        event of a Change of Control, each outstanding Option and SAR shall be assumed
        or an equivalent option or SAR substituted by the successor corporation or
        a
        Parent or Subsidiary of the successor corporation. In the event that the
        successor corporation refuses to assume or substitute for the Option or SAR,
        the
        Participant shall fully vest in and have the right to exercise the Option
        or SAR
        as to all of the Awarded Stock, including Shares as to which it would not
        otherwise be vested or exercisable. If an Option or SAR becomes fully vested
        and
        exercisable in lieu of assumption or substitution in the event of a Change
        of
        Control, the Administrator shall notify the Participant in writing or
        electronically that the Option or SAR shall be fully vested and exercisable
        for
        a period of thirty (30) days from the date of such notice, and the Option
        or SAR
        shall terminate upon the expiration of such period. For the purposes of this
        paragraph, the Option or SAR shall be considered assumed if, following the
        Change of Control, the option or stock appreciation right confers the right
        to
        purchase or receive, for each Share of Awarded Stock subject to the Option
        or
        SAR immediately prior to the Change of Control, the consideration (whether
        stock, cash, or other securities or property) received in the Change of Control
        by holders of Common Stock for each Share held on the effective date of the
        transaction (and if holders were offered a choice of consideration, the type
        of
        consideration chosen by the holders of a majority of the outstanding Shares);
        provided, however, that if such consideration received in the Change of Control
        is not solely common stock of the successor corporation or its Parent, the
        Administrator may, with the consent of the successor corporation, provide
        for
        the consideration to be received upon the exercise of the Option or SAR,
        for
        each Share of Awarded Stock subject to the Option or SAR, to be solely common
        stock of the successor corporation or its Parent equal in fair market value
        to
        the per share consideration received by holders of Common Stock in the Change
        of
        Control.

       

      (2) Restricted
        Stock, Performance Shares, Performance Units and Deferred Stock
        Units.
        In the
        event of a Change of Control, each outstanding Restricted Stock, Performance
        Share, Performance Unit and Deferred Stock Unit award shall be assumed or
        an
        equivalent Restricted Stock, Performance Share, Performance Unit and Deferred
        Stock Unit award substituted by the successor corporation or a Parent or
        Subsidiary of the successor corporation. In the event that the successor
        corporation refuses to assume or substitute for the Restricted Stock,
        Performance Share, Performance Unit or Deferred Stock Unit award, the
        Participant shall fully vest in the Restricted Stock, Performance Share,
        Performance Unit or Deferred Stock Unit including as to Shares (or with respect
        to Performance Units, the cash equivalent thereof) which would not otherwise
        be
        vested. For the purposes of this paragraph, a Restricted Stock, Performance
        Share, Performance Unit and Deferred Stock Unit award shall be considered
        assumed if, following the Change of Control, the award confers the right
        to
        purchase or receive, for each Share (or with respect to Performance Units,
        the
        cash equivalent thereof) subject to the Award immediately prior to the Change
        of
        Control, the consideration (whether stock, cash, or other securities or
        property) received in the Change of Control by holders of Common Stock for
        each
        Share held on the effective date of the transaction (and if holders were
        offered
        a choice of consideration, the type of consideration chosen by the holders
        of a
        majority of the outstanding Shares); provided, however, that if such
        consideration received in the Change of Control is not solely common stock
        of
        the successor corporation or its Parent, the Administrator may, with the
        consent
        of the successor corporation, provide for the consideration to be received,
        for
        each Share and each unit/right to acquire a Share subject to the Award, to
        be
        solely common stock of the successor corporation or its Parent equal in fair
        market value to the per share consideration received by holders of Common
        Stock
        in the Change of Control.

       

      20.
        Date
        of Grant.
        The
        date of grant of an Award shall be, for all purposes, the date on which the
        Administrator makes the determination granting such Award, or such other
        later
        date as is determined by the 

       

      
        
          
          

        

        
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      Administrator.
        Notice of the determination shall be provided to each Participant within
        a
        reasonable time after the date of such grant. 

       

      21.
        Amendment
        and Termination of the Plan.

       

      (a)
        Amendment
        and Termination.
        The
        Board may at any time amend, alter, suspend or terminate the Plan. 

       

      (b)
        Stockholder
        Approval.
        The
        Company shall obtain stockholder approval of any Plan amendment to the extent
        necessary and desirable to comply with Section 422 of the Code (or any successor
        rule or statute or other applicable law, rule or regulation, including the
        requirements of any exchange or quotation system on which the Common Stock
        is
        listed or quoted). Such stockholder approval, if required, shall be obtained
        in
        such a manner and to such a degree as is required by the applicable law,
        rule or
        regulation.

       

      (c)
        Effect
        of Amendment or Termination.
        No
        amendment, alteration, suspension or termination of the Plan shall impair
        the
        rights of any Participant, unless mutually agreed otherwise between the
        Participant and the Administrator, which agreement must be in writing and
        signed
        by the Participant and the Company.

       

      22.
        Conditions
        Upon Issuance of Shares.

       

      (a)
        Legal
        Compliance.
        Shares
        shall not be issued pursuant to the exercise of an Award unless the exercise
        of
        the Award or the issuance and delivery of such Shares (or with respect to
        Performance Units, the cash equivalent thereof) shall comply with Applicable
        Laws and shall be further subject to the approval of counsel for the Company
        with respect to such compliance. 

       

      (b)
        Investment
        Representations.
        As a
        condition to the exercise or receipt of an Award, the Company may require
        the
        person exercising or receiving such Award to represent and warrant at the
        time
        of any such exercise or receipt that the Shares are being purchased only
        for
        investment and without any present intention to sell or distribute such Shares
        if, in the opinion of counsel for the Company, such a representation is
        required.

       

      23.
        Liability
        of Company.

       

      (a)
        Inability
        to Obtain Authority.
        The
        inability of the Company to obtain authority from any regulatory body having
        jurisdiction, which authority is deemed by the Company’s counsel to be necessary
        to the lawful issuance and sale of any Shares hereunder, shall relieve the
        Company of any liability in respect of the failure to issue or sell such
        Shares
        as to which such requisite authority shall not have been obtained.

       

      (b)
        Grants
        Exceeding Allotted Shares.
        If the
        Awarded Stock covered by an Award exceeds, as of the date of grant, the number
        of Shares which may be issued under the Plan without additional stockholder
        approval, such Award shall be void with respect to such excess Awarded Stock,
        unless stockholder approval of an amendment sufficiently increasing the number
        of Shares subject to the Plan is timely obtained in accordance with Section
        21(b) of the Plan.

       

      24. Reservation
        of Shares.
        The
        Company, during the term of this Plan, will at all times reserve and keep
        available such number of Shares as shall be sufficient to satisfy
        the
        requirements of the Plan.

      

      

      

      
        
          
          

        

        
          15Exhibit 10.2

    

      EXHIBIT
        10.2

      

      MICROCHIP
        TECHNOLOGY INCORPORATED

      

      EXECUTIVE
        MANAGEMENT INCENTIVE COMPENSATION PLAN

      

       

      1. Purposes
        of the Plan.
        The
        Plan is intended to increase shareholder value and the success of the Company
        by
        motivating key executives to: (1)  perform to the best of their abilities,
        and (2) achieve the Company’s objectives. The Plan’s goals are to be
        achieved by providing such executives with incentive awards based on the
        achievement of goals relating to the performance of the Company or upon the
        achievement of objectively determinable individual performance goals. The
        Plan
        is intended to permit the payment of bonuses that may qualify as
        performance-based compensation under Code Section 162(m).

       

      2. Definitions.

       

      (a) “Award”
means,
        with respect to each Participant, the award determined pursuant to
        Section 8(a) below for a Performance Period. Each Award is determined by a
        Payout Formula for a Performance Period, subject to the Committee’s authority
        under Section 8(a) to eliminate or reduce the Award otherwise payable.

       

      (b) “Base
        Salary”
        means as
        to any Performance Period, the Participant’s annualized salary rate on the last
        day of the Performance Period. Such Base Salary shall be before both
        (a) deductions for taxes or benefits, and (b) deferrals of
        compensation pursuant to Company-sponsored plans.

       

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

       

      (d) “Cash
        Position”
means
        the Company’s level of cash and cash equivalents.

       

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

       

      (f) “Committee”
means
        the Compensation Committee of the Board, or a sub-committee of the Compensation
        Committee, which shall, with respect to payments hereunder intended to qualify
        as performance-based compensation under Code Section 162(m), consist solely
        of
        two or more members of the Board who are not employees of the Company and
        who
        otherwise qualify as “outside directors” within the meaning of Section
        162(m).

       

      (g) “Company”
means
        Microchip Technology Incorporated or any of its subsidiaries (as such term
        is
        defined in Code Section 424(f)). 

       

      (h) “Determination
        Date”
means
        the latest possible date that will not jeopardize a Target Award or Award’s
        qualification as Performance-Based Compensation.

       

      (i) “Earnings
        Per Share”
means
        as to any Fiscal Quarter or Fiscal Year, the Company’s or a business unit’s Net
        Income, divided by a weighted average number of common shares outstanding
        and
        dilutive common equivalent shares deemed outstanding, determined in accordance
        with generally accepted accounting principles. 

       

      (j) “Fiscal
        Quarter”
means
        a
        fiscal quarter of the Company.

       

      (k) “Fiscal
        Year”
means
        a
        fiscal year of the Company.

       

      (l) “Gross
        Margin”
means
        the Company’s or a business unit’s net sales for the Fiscal Quarter or Fiscal
        Year less the Company’s or a business unit’s, as applicable, cost of goods sold
        for the Fiscal Quarter or Fiscal Year, determined in accordance with generally
        accepted accounting principles.

       

      (m)“Maximum
        Award”
        means as
        to any Participant for any Performance Period,
        $2.5 million.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (n)“Net
        Income”
means
        as to any Fiscal Quarter or Fiscal Year, the income after taxes of the Company
        for the Fiscal Quarter or Fiscal Year determined in accordance with generally
        accepted accounting principles.

       

      (o)“Operating
        Cash Flow”
means
        the Company’s or a business unit’s sum of Net Income plus depreciation and
        amortization less capital expenditures plus changes in working capital comprised
        of accounts receivable, inventories, other current assets, trade accounts
        payable, accrued expenses, product warranty, advance payments from customers
        and
        long-term accrued expenses, determined in accordance with generally acceptable
        accounting principles. 

       

      (p)“Operating
        Expenses”
means
        the sum of the Company’s or a business unit’s research and development expenses
        and selling and general and administrative expenses during a Fiscal Quarter
        or
        Fiscal Year.

       

      (q)“Operating
        Profit”
means
        the Company’s or a business unit’s income from operations determined in
        accordance with generally accepted accounting principles. 

       

      (r)“Participant”
means
        an executive officer of the Company participating in the Plan for a Performance
        Period.

       

      (s)“Payout
        Formula”
means
        as to any Performance Period, the formula or payout matrix established by
        the
        Committee pursuant to Section 7 in order to determine the Awards (if any)
        to be paid to Participants. The formula or matrix may differ from Participant
        to
        Participant. 

       

      (t)“Performance-Based
        Compensation”
means
        compensation that is intended to qualify as “performance-based compensation”
within the meaning of Section 162(m).

       

      (u)“Performance
        Goals”
means
        the goal(s) (or combined goal(s)) determined by the Committee (in its
        discretion) to be applicable to a Participant with respect to an Award. As
        determined by the Committee, the Performance Goals applicable to an Award
        may
        provide for a targeted level or levels of achievement using one or more of
        the
        following measures: (a) Cash Position, (b) Earnings Per Share, (c)
        Gross Margin, (d) Net Income, (e) Operating Cash Flow,
        (f) Operating Expenses, (g) Operating Profit, (h) Return on Assets,
        (i) Return on Equity, (j) Return on Sales, (k) Revenue Growth, and
        (l) Total Stockholder Return. The Performance Goals may differ from
        Participant to Participant and from Award to Award. The Committee shall
        appropriately adjust any evaluation of performance under a Performance Goal
        to
        exclude (i) any extraordinary non-recurring items as described in Accounting
        Principles Board Opinion No. 30 and/or in management’s discussion and analysis
        of financial conditions and results of operations appearing in the Company’s
        quarterly and annual reporting with the Securities and Exchange Commission
        for
        the applicable year, or (ii) the effect of any changes in accounting principles
        affecting the Company’s or a business unit’s reported results.

       

      (v)“Performance
        Period”
means
        any Fiscal Quarter or Fiscal Year, or such other longer period but not in
        excess
        of five Fiscal Years, as determined by the Committee in its sole
        discretion.

       

      (w)“Plan”
means
        this Performance Bonus Plan.

       

      (x)“Plan
        Year”
means
        the Company’s fiscal year.

       

      (y)“Return
        on Assets”
means
        the percentage equal to the Company’s or a business unit’s Operating Income
        before incentive compensation, divided by average net Company or business
        unit,
        as applicable, assets, determined in accordance with generally accepted
        accounting principles. 

       

      (z)“Return
        on Equity”
means
        the percentage equal to the Company’s Net Income divided by average
        shareholder’s equity, determined in accordance with generally accepted
        accounting principles.

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      (aa)“Return
        on Sales”
means
        the percentage equal to the Company’s or a business unit’s Operating Income
        before incentive compensation, divided by the Company’s or the business unit’s,
        as applicable, revenue, determined in accordance with generally accepted
        accounting principles.

      

      (bb)“Revenue
        Growth”
means
        the Company’s or a business unit’s net sales for the Fiscal Quarter or Fiscal
        Year, determined in accordance with generally accepted accounting principles,
        compared to the net sales of the immediately preceding quarter.

       

      (cc)“Section
        162(m)”
means
        Section 162(m) of the Code, or any successor to Section 162(m), as that Section
        may be interpreted from time to time by the Internal Revenue Service, whether
        by
        regulation, notice or otherwise. 

       

      (dd)“Target
        Award”
        means
        the target award payable under the Plan to a Participant for the Performance
        Period, expressed as a percentage of his or her Base Salary or a specific
        dollar
        amount, as determined by the Committee in accordance with
        Section 6.

       

      (ee)“Total
        Stockholder Return”
means
        the total return (change in share price plus reinvestment of any dividends)
        of a
        share of the Company’s common stock.

       

      3. Plan
        Administration.

       

      (a) The
        Committee shall be responsible for the general administration and
        interpre-tation of the Plan and for carrying out its provisions. Subject
        to the
        requirements for qualifying compensation as Performance-Based Compensation,
        the
        Committee may delegate specific administrative tasks to Company employees
        or
        others as appropriate for proper administration of the Plan. Subject to the
        limitations on Committee discretion imposed under Section 162(m), the Committee
        shall have such powers as may be necessary to discharge its duties hereunder,
        including, but not by way of limitation, the following powers and duties,
        but
        subject to the terms of the Plan:

       

      i) discretionary
        authority to construe and interpret the terms of the Plan, and to determine
        eligibility, Awards and the amount, manner and time of payment of any Awards
        hereunder;

       

      ii) to
        prescribe forms and procedures for purposes of Plan participation and
        distribution of Awards; and

       

      iii) to
        adopt
        rules, regulations and bylaws and to take such actions as it deems necessary
        or
        desirable for the proper administration of the Plan.

       

      (b) Any
        rule
        or decision by the Committee that is not inconsistent with the provisions
        of the
        Plan shall be conclusive and binding on all persons, and shall be given the
        maximum deference permitted by law.

       

      4. Eligibility.
        The
        employees eligible to participate in the Plan for a given Performance Period
        shall be executive officers of the Company who are designated by the Committee
        in its sole discretion. No person shall be automatically entitled to participate
        in the Plan.

       

      5. Performance
        Goal Determination.
        The
        Committee, in its sole discretion, shall establish the Performance Goals
        for
        each Participant for the Performance Period. Such Performance Goals shall
        be set
        forth in writing prior to the Determination Date. 

       

      6. Target
        Award Determination.
        The
        Committee, in its sole discretion, shall establish a Target Award for each
        Participant. Each Participant’s Target Award shall be determined by the
        Committee in its sole discretion, and each Target Award shall be set forth
        in
        writing prior to the Determination Date.

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      7. Determination
        of Payout Formula or Formulae.
        On or
        prior to the Determination Date, the Committee, in its sole discretion, shall
        establish a Payout Formula or Formulae for purposes of determining the Award
        (if
        any) payable to each Participant. Each Payout Formula shall (a) be set
        forth in writing prior to the Determination Date, (b) be based on a
        comparison of actual performance to the Performance Goals, (c) provide for
        the payment of a Participant’s Target Award if the Performance Goals for the
        Performance Period are achieved, and (d) provide for an Award greater than
        or less
        than
        the Participant’s Target Award, depending upon the extent to which actual
        performance exceeds or falls below the Performance Goals. Notwithstanding
        the
        preceding, in no event shall a Participant’s Award for any Performance Period
        exceed the Maximum Award.

      

      8. Determination
        of Awards; Award Payment.

       

      (a) Determination
        and Certification.
        After
        the end of each Performance Period, the Committee shall certify in writing
        (which may be by approval of the minutes in which the certification was made)
        the extent to which the Performance Goals applicable to each Participant
        for the
        Performance Period were achieved or exceeded. The Award for each Participant
        shall be determined by applying the Payout Formula to the level of actual
        performance that has been certified by the Committee. Notwithstanding any
        contrary provision of the Plan, the Committee, in its sole discretion, may
        eliminate or reduce the Award payable to any Participant below that which
        otherwise would be payable under the Payout Formula but shall not have the
        right
        to increase the Award above that which would otherwise be payable under the
        Payout Formula.

       

      (b) Right
        to Receive Payment.
        Each
        Award under the Plan shall be paid solely from the general assets of the
        Company. Nothing in this Plan shall be construed to create a trust or to
        establish or evidence any Participant’s claim of any right to payment of an
        Award other than as an unsecured general creditor with respect to any payment
        to
        which he or she may be entitled. A Participant needs to be employed by the
        Company through the payment date in order to be eligible to receive an Award
        payout hereunder.

       

      (c) Form
        of Distributions.
        The
        Company shall distribute all Awards to the Participant in cash.

       

      (d) Timing
        of Distributions.
        Subject
        to Section 8(e) below, the Company shall distribute amounts payable to
        Participants as soon as is practicable following the determination and written
        certification of the Award for a Performance Period.

       

      (e) Deferral.
        The
        Committee may defer payment of Awards, or any portion thereof, to Covered
        Employees as the Committee, in its discretion, determines to be necessary
        or
        desirable to preserve the deductibility of such amounts under
        Section 162(m). In addition, the Committee, in its sole discretion, may
        permit a Participant to defer receipt of the payment of cash that would
        otherwise be delivered to a Participant under the Plan. Any such deferral
        elections shall be subject to such rules and procedures as shall be determined
        by the Committee in its sole discretion.

       

      9. Term
        of Plan.
        Subject
        to its approval at the 2006 annual meeting of the Company’s stockholders, the
        Plan shall first apply to the Company’s Plan Year commencing in the Company’s
        first full Fiscal Quarter following approval by the shareholders at the August,
        2006 annual meeting. Once approved by the Company’s shareholders, the Plan shall
        continue until terminated under Section 10 of the Plan.

       

      10. Amendment
        and Termination of the Plan.
        The
        Committee may amend, modify, suspend or terminate the Plan, in whole or in
        part,
        at any time, including the adoption of amendments deemed necessary or desirable
        to correct any defect or to supply omitted data or to reconcile any
        inconsistency in the Plan or in any Award granted hereunder; provided, however,
        that no amendment, alteration, suspension or discontinuation shall be made
        which
        would (i) impair any payments to Participants made prior to such amendment,
        modification, suspension or termination, unless the Committee has made a
        determination that such amendment or modification is in the best interests
        of
        all persons to whom Awards have theretofore been granted; provided further,
        however, that in no event may such an amendment or modification result in
        an
        increase in the amount of compensation payable pursuant to such Award or
        (ii) cause 

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      compensation
        that is, or may become, payable hereunder to fail to qualify as
        Performance-Based Compensation. To the extent necessary or advisable under
        applicable law, including Section 162(m), Plan amendments shall be subject
        to
        shareholder approval. At no time before the actual distribution of funds
        to
        Participants under the Plan shall any Participant accrue any vested interest
        or
        right whatsoever under the Plan except as otherwise stated in this
        Plan.

       

      11. Withholding.
        Distributions pursuant to this Plan shall be subject to all applicable federal
        and state tax and withholding requirements.

       

      12. At-Will
        Employment.
        No
        statement in this Plan should be construed to grant any employee an employment
        contract of fixed duration or any other contractual rights, nor should this
        Plan
        be interpreted as creating an implied or an expressed contract of employment
        or
        any other contractual rights between the Company and its employees. The
        employment relationship between the Company and its employees is terminable
        at-will. This means that an employee of the Company may terminate the employment
        relationship at any time and for any reason or no reason.

       

      13. Successors.
        All
        obligations of the Company under the Plan, with respect to awards granted
        hereunder, shall be binding on any successor to the Company, whether the
        existence of such successor is the result of a direct or indirect purchase,
        merger, consolidation, or otherwise, of all or substantially all of the business
        or assets of the Company.

       

      14. Indemnification. 
        Each person who is or shall have been a member of the Committee, or of the
        Board, shall be indemnified and held harmless by the Company against and
        from
        (a) any loss, cost, liability, or expense that may be imposed upon or
        reasonably incurred by him or her in connection with or resulting from any
        claim, action, suit, or proceeding to which he or she may be a party or in
        which
        he or she may be involved by reason of any action taken or failure to act
        under
        the Plan or any award, and (b) from any and all amounts paid by him or her
        in settlement thereof, with the Company’s approval, or paid by him or her in
        satisfaction of any judgment in any such claim, action, suit, or proceeding
        against him or her, provided he or she shall give the Company an opportunity,
        at
        its own expense, to handle and defend the same before he or she undertakes
        to
        handle and defend it on his or her own behalf. The foregoing right of
        indemnification shall not be exclusive of any other rights of indemnification
        to
        which such persons may be entitled under the Company’s Certificate of
        Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or
        under
        any power that the Company may have to indemnify them or hold them
        harmless.

       

      15. Nonassignment.
        The
        rights of a Participant under this Plan shall not be assignable or transferable
        by the Participant except by will or the laws of intestacy.

       

      16. Governing
        Law.
        The
        Plan shall be governed by the laws of the State of Arizona, without regard
        to
        conflicts of law provisions thereunder.

       

      
        
          
          

        

        
          5

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