Document:

Exhibit 10.15

 

PSA

THE
BOND MARKET

TRADE
ASSOCIATION

 

MASTER

REPURCHASE AGREEMENT

SEPTEMBER 1996 VERSION

 

Dated as of June 22,
2004

 

Between:

 

NOMURA
SECURITIES INTERNATIONAL, INC.

 

and

 

AETHER
SYSTEMS INC. by FBR INVESTMENT MANAGEMENT INC., as AGENT

 

1.                                      Applicability

 

From time to time the
parties hereto may enter into transactions in which one party (“Seller”) agrees
to transfer to the other (“Buyer”) securities or other assets (“Securities”)
against the transfer of funds by Buyer, with a simultaneous agreement by Buyer
to transfer to Seller such Securities at a date certain or on demand, against
the transfer of funds by Seller.  Each
such transaction shall be referred to herein as a “Transaction” and, unless
otherwise agreed in writing, shall be governed by this Agreement, including any
supplemental terms or conditions contained in Annex I hereto and in any other
annexes identified herein or therein as applicable hereunder.

 

2.                                      Definitions

 

(a)                                  “Act
of Insolvency”, with respect to any party; (i) the commencement by such party
as debtor of any case or proceeding under any bankruptcy, insolvency,
reorganization, liquidation, moratorium, dissolution, delinquency or similar
law, or such party seeking the appointment or election of a receiver,
conservator, trustee, custodian or similar official for such party or any
substantial part of its property, or the convening of any meeting of creditors
for purposes of commencing any such case or proceeding or seeking such an
appointment or election, (ii) the commencement of any such case or proceeding
against such party, or another seeking such an appointment or election, or the
filing against a party of an application for a protective decree under the
provisions of the Securities Investor Protection Act of 1970, which (A) is
consented to or not timely contested by such party, (B) results in the entry of
an order for relief, such an appointment or election, the issuance of such a
protective decree or the entry of an order having a similar effect, or (C) is
not dismissed within 15 days, (iii) the making by such party of a general
assignment for the benefit of creditors, or (iv) the admission in writing by
such party of such party’s inability to pay such party’s debts as they become
due;

 

 

(b)                                 “Additional
Purchased Securities”, Securities provided by Seller to Buyer pursuant to
Paragraph 4(a) hereof;

 

(c)                                  “Buyer’s
Margin Amount”, with respect to any Transaction as of any date, the amount
obtained by application of the Buyer’s Margin Percentage to the Repurchase
Price for such Transaction as of such date;

 

(d)                                 “Buyer’s
Margin Percentage”, with respect to any Transaction as of any date, a
percentage (which may be equal to the Seller’s Margin Percentage) agreed to by
Buyer and Seller or, in the absence of any such agreement, the percentage
obtained by dividing the Market Value of the Purchased Securities on the
Purchase Date by the Purchase Price on the Purchase Date for such Transaction;

 

(e)                                  “Confirmation”,
the meaning specified in Paragraph 3(b) hereof;

 

(f)                                    “Income”,
with respect to any Security at any time, any principal thereof and all
interest, dividends or other distributions thereon;

 

(g)                                 “Margin
Deficit”, the meaning specified in Paragraph 4(a) hereof;

 

(h)                                 “Margin
Excess”, the meaning specified in Paragraph 4(b) hereof;

 

(i)                                     “Margin
Notice Deadline” the time agreed to by the parties in the relevant
Confirmation, Annex I hereto or otherwise as the deadline for giving notice
requiring same-day satisfaction of margin maintenance obligations as provided
in Paragraph 4 hereof (or, in the absence of any such agreement, the deadline
for such purposes established in accordance with market practice);

 

(j)                                     “Market
Value”, with respect to any Securities as of any date, the price for such
Securities on such date obtained from a generally recognized source agreed to
by the parties or the most recent closing bid quotation from such a source,
plus accrued Income to the extent not included therein (other than any Income
credited or transferred to, or applied to the obligations of, Seller pursuant
to Paragraph 5 hereof) as of such date (unless contrary to market practice for
such Securities);

 

(k)                                  “Price
Differential”, with respect to any Transaction as of any date, the aggregate
amount obtained by daily application of the Pricing Rate for such Transaction
to the Purchase Price for such Transaction on a 360 day per year basis for the
actual number of days during the period commencing on (and including) the
Purchase Date for such Transaction and ending on (but excluding) the date of
determination (reduced by any amount of such Price Differential previously paid
by Seller to Buyer with respect to such Transaction);

 

(l)                                     “Pricing
Rate”, the per annum percentage rate for determination of the Price
Differential;

 

(m)                               “Prime
Rate”, the prime rate of U.S. commercial banks as published in The Wall Street
Journal (or, if more than one such rate is published, the average of such
rates);

 

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(n)                                 “Purchase
Date” the date on which Purchased Securities are to be transferred by Seller to
Buyer;

 

(o)                                 “Purchase
Price”, (i) on the Purchase Date, the price at which Purchased Securities are
transferred by Seller to Buyer, and (ii) thereafter, except where Buyer and
Seller agree otherwise, such price increased by the amount of any cash
transferred by Buyer to Seller pursuant to Paragraph 4(b) hereof and decreased
by the amount of any cash transferred by Seller to Buyer pursuant to Paragraph
4(a) hereof or applied to reduce Seller’s obligations under clause (ii) of Paragraph
5 hereof;

 

(p)                                 “Purchased
Securities”, the Securities transferred by Seller to Buyer in a Transaction
hereunder, and any Securities substituted therefore in accordance with
Paragraph 9 hereof.  The term “Purchased
Securities” with respect to any Transaction at any time also shall include
Additional Purchased Securities delivered pursuant to Paragraph 4(a) hereof and
shall exclude Securities returned pursuant to Paragraph 4(b) hereof;

 

(q)                                 “Repurchase
Date”, the date on which Seller is to repurchase the Purchased Securities from
Buyer, including any date determined by application of the provisions of
Paragraph 3(c) or 11 hereof;

 

(r)                                    “Repurchase
Price”, the price at which Purchased Securities are to be transferred from
Buyer to Seller upon termination of a Transaction, which will be determined in
each case (including Transactions terminable upon demand) as the sum of the
Purchase Price and the Price Differential as of the date of such determination;

 

(s)                                  “Seller’s
Margin Amount”, with respect to any Transaction as of any date, the amount
obtained by application of the Seller’s Margin Percentage to the Repurchase
Price for such Transaction as of such date;

 

(t)                                    “Seller’s
Margin Percentage”, with respect to any Transaction as of any date, a
percentage (which may be equal to the Buyer’s Margin Percentage) agreed to by
Buyer and Seller or, in the absence of any such agreement, the percentage
obtained by dividing the Market Value of the Purchased Securities on the
Purchase Date by the Purchase Price on the Purchase Date for such Transaction.

 

3.                                      Initiation;
Confirmation; Termination

 

(a)                                  An
agreement to enter into a Transaction may be made orally or in writing at the
initiation of either Buyer or Seller. On the Purchase Date for the Transaction,
the Purchased Securities shall be transferred to Buyer or its agent against the
transfer of the Purchase Price to an account of Seller.

 

(b)                                 Upon
agreeing to enter into a Transaction hereunder, Buyer or Seller (or both), as
shall be agreed, shall promptly deliver to the other party a written
confirmation of each Transaction (a “Confirmation”). The Confirmation shall
describe the Purchased Securities (including CUSIP number, if any), identify
Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase Price,
(iii) the Repurchase Date, unless the Transaction is to be terminable on
demand, (iv) the Pricing Rate

 

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or Repurchase Price applicable to the Transaction, and (v) any
additional terms or conditions of the Transaction not inconsistent with this
Agreement. The Confirmation, together with this Agreement, shall constitute
conclusive evidence of the terms agreed between Buyer and Seller with respect
to the Transaction to which the Confirmation relates, unless with respect to
the Confirmation specific objection is made promptly after receipt
thereof.  In the event of any conflict
between the terms of such Confirmation and this Agreement, this Agreement shall
prevail.

 

(c)                                  In
the case of Transactions terminable upon demand, such demand shall be made by
Buyer or Seller, no later than such time as is customary in accordance with
market practice, by telephone or otherwise on or prior to the business day on
which such termination will be effective. 
On the date specified in such demand, or on the date fixed for
termination in the case of Transactions having a fixed term, termination of the
Transaction will be effected by transfer to Seller or its agent of the
Purchased Securities and any Income in respect thereof received by Buyer (and
not previously credited or transferred to, or applied to the obligations of
Seller pursuant to Paragraph 5 hereof) against the transfer of the Repurchase
Price to an account of Buyer.

 

4.                                      Margin
Maintenance

 

(a)                                  If
at any time the aggregate Market Value of all Purchased Securities subject to
all Transactions in which a particular party hereto is acting as Buyer is less
than the aggregate Buyer’s Margin Amount for all such Transactions (a “Margin
Deficit”), then Buyer may by notice to Seller require Seller in such
Transactions, at Seller’s option, to transfer to Buyer cash or additional
Securities reasonably acceptable to Buyer (“Additional Purchased Securities”),
so that the cash and aggregate Market Value of the Purchased Securities,
including any such Additional Purchased Securities, will thereupon equal or
exceed such aggregate Buyer’s Margin Amount (decreased by the amount of any
Margin Deficit as of such date arising from any Transactions in which such
Buyer is acting as Seller).

 

(b)                                 If
at any time the aggregate Market Value of all Purchased Securities subject to
all Transactions in which a particular party hereto is acting as Seller exceeds
the aggregate Seller’s Margin Amount for all such Transactions at such time (a “Margin
Excess”), then Seller may by notice to Buyer require Buyer in such
Transactions, at Buyer’s option, to transfer cash or Purchased Securities to
Seller, so that the aggregate Market Value of the Purchased Securities, after
deduction of any such cash or any Purchased Securities so transferred, will
thereupon not exceed such aggregate Seller’s Margin Amount (increased by the
amount of any Margin Excess as of such date arising from any Transactions in
which such Seller is acting as Buyer).

 

(c)                                  If
any notice is given by Buyer or Seller under subparagraph (a) or (b) of this
Paragraph at or before the Margin Notice Deadline on any business day, the
party receiving such notice shall transfer cash or Additional Purchased
Securities as provided in such subparagraph no later than the close of business
in the relevant market on such day.  If
any such notice is given after the Margin Notice Deadline,

 

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the party receiving such notice shall transfer such cash or Securities
no later than the close of business in the relevant market on the next business
day following such notice.

 

(d)                                 Any
cash transferred pursuant to this Paragraph shall be attributed to such
Transactions as shall be agreed upon by Buyer and Seller.

 

(e)                                  Seller
and Buyer may agree, with respect to any or all Transactions hereunder, that
the respective rights of Buyer or Seller (or both) under subparagraphs (a) and
(b) of this Paragraph may be exercised only where a Margin Deficit or Margin
Excess, as the case may be, exceeds a specified dollar amount or a specified
percentage of the Repurchase Prices for such Transactions (which amount or
percentage shall be agreed to by Buyer and Seller prior to entering into any
such Transactions).

 

(f)                                    Seller
and Buyer may agree, with respect to any or all Transactions hereunder, that
the respective rights of Buyer and Seller under subparagraphs (a) and (b) of
this Paragraph to require the elimination of a Margin Deficit or a Margin
Excess, as the case may be, may be exercised whenever such a Margin Deficit or
Margin Excess exists with respect to any single Transaction hereunder
(calculated without regard to any other Transaction outstanding under this
Agreement).

 

5.                                      Income Payments

 

Seller shall be entitled
to receive an amount equal to all Income paid or distributed on or in respect
of the Securities that is not otherwise received by Seller, to the full extent
it would be so entitled if the Securities had not been sold to Buyer. Buyer
shall, as the parties may agree with respect to any Transaction (or, in the
absence of any such agreement, as Buyer shall reasonably determine in its
discretion), on the date such Income is paid or distributed either (i) transfer
to or credit to the account of Seller such Income with respect to any Purchased
Securities subject to such Transaction or (ii) with respect to Income paid in
cash, apply the Income payment or payments to reduce the amount, if any, to he
transferred to Buyer by Seller upon termination of such Transaction. Buyer
shall not be obligated to take any action pursuant to the preceding sentence
(A) to the extent that such action would result in the creation of a Margin
Deficit, unless prior thereto or simultaneously therewith Seller transfers to
Buyer cash or Additional Purchased Securities sufficient to eliminate such
Margin Deficit, or (B) if an Event of Default with respect to Seller has
occurred and is then continuing at the time such Income is paid or distributed.

 

6.                                      Security Interest

 

Although the parties
intend that all Transactions hereunder be sales and purchases and not loans, in
the event any such Transactions are deemed to be loans, Seller shall be deemed
to have pledged to Buyer as security for the performance by Seller of its
obligations under each such Transaction, and shall be deemed to have granted to
Buyer a security interest in, all of the Purchased Securities with respect to
all Transactions hereunder and all Income thereon and other proceeds thereof.

 

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7.                                      Payment and
Transfer

 

Unless otherwise mutually
agreed, all transfers of funds hereunder shall be in immediately available
funds.  All Securities transferred by one
party hereto to the other party (i) shall be in suitable form for transfer or
shall be accompanied by duly executed instruments of transfer or assignment in
blank and such other documentation as the party receiving possession may
reasonably request, (ii) shall be transferred on the book-entry system of a
Federal Reserve Bank, or (iii) shall be transferred by any other method
mutually acceptable to Seller and Buyer.

 

8.                                      Segregation of
Purchased Securities

 

To the extent required by
applicable law, all Purchased Securities in the possession of Seller shall be
segregated from other securities in its possession and shall be identified as
subject to this Agreement.  Segregation
may be accomplished by appropriate identification on the books and records of
the holder, including a financial or securities intermediary or a clearing corporation.  All of Seller’s interest in the Purchased
Securities shall pass to Buyer on the Purchase Date and, unless otherwise
agreed by Buyer and Seller, nothing in this Agreement shall preclude Buyer from
engaging in repurchase transactions with the Purchased Securities or otherwise
selling, transferring, pledging or hypothecating the Purchased Securities, but
no such transaction shall relieve Buyer of its obligations to transfer
Purchased Securities to Seller pursuant to Paragraph 3, 4 or 11 hereof, or of
Buyer’s obligation to credit or pay Income to, or apply Income to the
obligations of, Seller pursuant to Paragraph 5 hereof

 

Required
Disclosure for Transactions in Which the Seller Retains Custody of the
Purchased Securities

 

Seller is not permitted
to substitute other securities for those subject to this Agreement and
therefore must keep Buyer’s securities segregated at all times, unless in this
Agreement Buyer grants Seller the right to substitute other securities. If
Buyer grants the right to substitute, this means that Buyer’s securities will
likely be commingled with Seller’s own securities during the trading day. Buyer
is advised that, during any trading day that Buyer’s securities are commingled
with Seller’s securities, they [will]* [may)** be subject to liens granted by
Seller to [its clearing bank]* [third parties]** and may be used by Seller for
deliveries on other securities transactions. Whenever the securities are
commingled, Seller’s ability to resegregate substitute securities for Buyer
will be subject to Seller’s ability to satisfy [the clearing]* [any]** lien or
to obtain substitute securities.

 

*Language to be used
under 17 C.F.R. §403.4(e) if Seller is a government securities broker or dealer
other than a financial institution.

 

**Language to be used
under 17 C.F.R. §403.5(d) if Seller is a financial institution.

 

9.                                      Substitution

 

(a)                                  Seller
may, subject to agreement with and acceptance by Buyer, substitute other
Securities for any Purchased Securities. Such substitution shall be made by
transfer to Buyer of such other Securities and transfer to Seller of such
Purchased Securities. After substitution, the substituted Securities shall be
deemed to be Purchased Securities.

 

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(b)                                 In
Transactions in which Seller retains custody of Purchased Securities, the
parties expressly agree that Buyer shall be deemed, for purposes of
subparagraph (a) of this Paragraph, to have agreed to and accepted in this
Agreement substitution by Seller of other Securities for Purchased Securities;
provided, however, that such other Securities shall have a Market Value at
least equal to the Market Value of the Purchased Securities for which they are
substituted.

 

10.                               Representations

 

Each of Buyer and Seller
represents and warrants to the other that (i) it is duly authorized to execute
and deliver this Agreement, to enter into Transactions contemplated hereunder
and to perform its obligations hereunder and has taken all necessary action to
authorize such execution, delivery and performance, (ii) it will engage in such
Transactions as principal (or, if agreed in writing, in the form of an annex
hereto or otherwise, in advance of any Transaction by the other party hereto,
as agent for a disclosed principal), (iii) the person signing this Agreement on
its behalf is duly authorized to do so on its behalf (or on behalf of any such
disclosed principal), (iv) it has obtained all authorizations of any
governmental body required in connection with this Agreement and the
Transactions hereunder and such authorizations are in full force and effect and
(v) the execution, delivery and performance of this Agreement and the
Transactions hereunder will not violate any law, ordinance, charter, bylaw or
rule applicable to it or any agreement by which it is bound or by which any of
its assets are affected.  On the Purchase
Date for any Transaction Buyer and Seller shall each be deemed to repeat all
the foregoing representations made by it.

 

11.                               Events of Default

 

In the event that (i)
Seller fails to transfer or Buyer fails to purchase Purchased Securities upon
the applicable Purchase Date, (ii) Seller fails to repurchase or Buyer fails to
transfer Purchased Securities upon the applicable Repurchase Date, (iii) Seller
or Buyer fails to comply with Paragraph 4 hereof, (iv) Buyer fails, after one
business day’s notice, to comply with Paragraph 5 hereof (v) an Act of
Insolvency occurs with respect to Seller or Buyer, (vi) any representation made
by Seller or Buyer shall have been incorrect or untrue in any material respect
when made or repeated or deemed to have been made or repeated, or (vii) Seller
or Buyer shall admit to the other its inability to, or its intention not to,
perform any of its obligations hereunder (each an “Event of Default”):

 

(a)                                  The
nondefaulting party may, at its option (which option shall be deemed to have
been exercised immediately upon the occurrence of an Act of Insolvency),
declare an Event of Default to have occurred hereunder and, upon the exercise
or deemed exercise of such option, the Repurchase Date for each Transaction
hereunder shall, if it has not already occurred, be deemed immediately to occur
(except that, in the event that the Purchase Date for any Transaction has not
yet occurred as of the date of such exercise or deemed exercise, such
Transaction shall be deemed immediately canceled). The nondefaulting party
shall (except upon the occurrence of an Act of Insolvency) give notice to the
defaulting party of the exercise of such option as promptly as practicable.

 

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(b)                                 In
all Transactions in which the defaulting party is acting as Seller, if the
nondefaulting party exercises or is deemed to have exercised the option
referred to in subparagraph (a) of this Paragraph, (i) the defaulting party’s
obligations in such Transactions to repurchase all Purchased Securities, at the
Repurchase Price therefore on the Repurchase Date determined in accordance with
subparagraph (a) of this Paragraph, shall thereupon become immediately due and
payable, (ii) all Income paid after such exercise or deemed exercise shall be
retained by the nondefaulting party and applied to the aggregate unpaid
Repurchase Prices and any other amounts owing by the defaulting party
hereunder, and (iii) the defaulting party shall immediately deliver to the
nondefaulting party any Purchased Securities subject to such Transactions then
in the defaulting party’s possession or control.

 

(c)                                  In
all Transactions in which the defaulting party is acting as Buyer, upon tender
by the nondefaulting party of payment of the aggregate Repurchase Prices for
all such Transactions, all right, title and interest in and entitlement to all
Purchased Securities subject to such Transactions shall be deemed transferred
to the nondefaulting party, and the defaulting party shall deliver all such
Purchased Securities to the nondefaulting party.

 

(d)                                 If
the nondefaulting party exercises or is deemed to have exercised the option
referred to in subparagraph (a) of this Paragraph, the nondefaulting party,
without prior notice to the defaulting party, may:

 

(i)                                     as
to Transactions in which the defaulting party is acting as Seller, (A)
immediately sell, in a recognized market (or otherwise in a commercially
reasonable manner) at such price or prices as the nondefaulting party may reasonably
deem satisfactory, any or all Purchased Securities subject to such Transactions
and apply the proceeds thereof to the aggregate unpaid Repurchase Prices and
any other amounts owing by the defaulting party hereunder or (B) in its sole
discretion elect, in lieu of selling all or a portion of such Purchased
Securities, to give the defaulting party credit for such Purchased Securities
in an amount equal to the price therefore on such date, obtained from a
generally recognized source or the most recent closing bid quotation from such
a source, against the aggregate unpaid Repurchase Prices and any other amounts
owing by the defaulting party hereunder; and

 

(ii)                                  as
to Transactions in which the defaulting party is acting as Buyer, (A)
immediately purchase, in a recognized market (or otherwise in a commercially
reasonable manner) at such price or prices as the nondefaulting party may
reasonably deem satisfactory, securities (“Replacement Securities”) of the same
class and amount as any Purchased Securities that are not delivered by the
defaulting party to the nondefaulting party as required hereunder or (B) in its
sole discretion elect, in lieu of purchasing Replacement Securities, to be
deemed to have purchased Replacement Securities at the price therefor on such
date, obtained from a generally recognized source or the most recent closing
offer quotation from such a source.

 

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Unless otherwise provided
in Annex I, the parties acknowledge and agree that (1) the Securities subject
to any Transaction hereunder are instruments traded in a recognized market, (2)
in the absence of a generally recognized source for prices or bid or offer
quotations for any Security, the nondefaulting party may establish the source
therefore in its sole discretion and (3) all prices, bids and offers shall be
determined together with accrued Income (except to the extent contrary to
market practice with respect to the relevant Securities).

 

(e)                                  As
to Transactions in which the defaulting party is acting as Buyer, the
defaulting party shall be liable to the nondefaulting party for any excess of
the price paid (or deemed paid) by the nondefaulting party for Replacement
Securities over the Repurchase Price for the Purchased Securities replaced thereby
and for any amounts payable by the defaulting party under Paragraph 5 hereof or
otherwise hereunder.

 

(f)                                    For
purposes of this Paragraph 11, the Repurchase Price for each Transaction
hereunder in respect of which the defaulting party is acting as Buyer shall not
increase above the amount of such Repurchase Price for such Transaction
determined as of the date of the exercise or deemed exercise by the
nondefaulting party of the option referred to in subparagraph (a) of this
Paragraph.

 

(g)                                 The
defaulting party shall be liable to the nondefaulting party for (i) the amount
of all reasonable legal or other expenses incurred by the nondefaulting party
in connection with or as a result of an Event of Default, (ii) damages in an
amount equal to the cost (including all fees, expenses and commissions) of
entering into replacement transactions and entering into or terminating hedge
transactions in connection with or as a result of an Event of Default, and
(iii) any other loss, damage, cost or expense directly arising or resulting
from the occurrence of an Event of Default in respect of a Transaction.

 

(h)                                 To
the extent permitted by applicable law, the defaulting party shall be liable to
the non-defaulting party for interest on any amounts owing by the defaulting party
hereunder, from the date the defaulting party becomes liable for such amounts
hereunder until such amounts are (i) paid in full by the defaulting party or
(ii) satisfied in full by the exercise of the nondefaulting party’s rights
hereunder. Interest on any sum payable by the defaulting party to the
nondefaulting party under this Paragraph 11(h) shall be at a rate equal to the
greater of the Pricing Rate for the relevant Transaction or the Prime Rate.

 

(i)                                     The
nondefaulting party shall have, in addition to its rights hereunder, any rights
otherwise available to it under any other agreement or applicable law.

 

12.                               Single Agreement

 

Buyer and Seller
acknowledge that, and have entered hereinto and will enter into each
Transaction hereunder in consideration of and in reliance upon the fact that,
all Transactions hereunder constitute a single business and contractual
relationship and have been made in consideration of each other. Accordingly,
each of Buyer and Seller agrees (i) to perform all of its obligations in
respect of each Transaction hereunder, and that a

 

9

 

default in the
performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, (ii) that each of them shall be entitled to set
off claims and apply property held by them in respect of any Transaction
against obligations owing to them in respect of any other Transactions
hereunder and (iii) that payments, deliveries and other transfers made by
either of them in respect of any Transaction shall be deemed to have been made
in consideration of payments, deliveries and other transfers in respect of any
other Transactions hereunder, and the obligations to make any such payments,
deliveries and other transfers may be applied against each other and netted.

 

13.                               Notices and Other
Communications

 

Any and all notices,
statements, demands or other communications hereunder may be given by a party
to the other by mail, facsimile, telegraph, messenger or otherwise to the address
specified in Annex II hereto, or so sent to such party at any other place
specified in a notice of change of address hereafter received by the
other.  All notices, demands and requests
hereunder may be made orally, to be confirmed promptly in writing, or by other
communication as specified in the preceding sentence.

 

14.                               Entire Agreement;
Severability

 

This Agreement shall
supersede any existing agreements between the parties containing general terms
and conditions for repurchase transactions. Each provision and agreement herein
shall be treated as separate and independent from any other provision or
agreement herein and shall be enforceable notwithstanding the unenforceability
of any such other provision or agreement.

 

15.                               Non-assignability;
Termination

 

(a)                                  The
rights and obligations of the parties under this Agreement and under any
Transaction shall not be assigned by either party without the prior written
consent of the other party, and any such assignment without the prior written
consent of the other party shall be null and void. Subject to the foregoing,
this Agreement and any Transactions shall be binding upon and shall inure to
the benefit of the parties and their respective successors and assigns. This
Agreement may be terminated by either party upon giving written notice to the
other, except that this Agreement shall, notwithstanding such notice, remain
applicable to any Transactions then outstanding.

 

(b)                                 Subparagraph
(a) of this Paragraph 15 shall not preclude a party from assigning, charging or
otherwise dealing with all or any part of its interest in any sum payable to it
under Paragraph 11 hereof.

 

16.                               Governing Law

 

This Agreement shall be
governed by the laws of the State of New York without giving effect to the
conflict of law principles thereof.

 

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17.                               No Waivers, Etc.

 

No express or implied
waiver of any Event of Default by either party shall constitute a waiver of any
other Event of Default and no exercise of any remedy hereunder by any party
shall constitute a waiver of its right to exercise any other remedy
hereunder.  No modification or waiver of
any provision of this Agreement and no consent by any party to a departure
herefrom shall be effective unless and until such shall be in writing and duly
executed by both of the parties hereto. 
Without limitation on any of the foregoing, the failure to give a notice
pursuant to Paragraph 4(a) or 4(b) hereof will not constitute a waiver of any
right to do so at a later date.

 

18.                               Use of Employee Plan
Assets

 

(a)                                  If
assets of an employee benefit plan subject to any provision of the Employee
Retirement Income Security Act of 1974 (“ERISA”) are intended to be used by
either party hereto (the “Plan Party”) in a Transaction, the Plan Party shall
so notify the other party prior to the Transaction. The Plan Party shall
represent in writing to the other party that the Transaction does not
constitute a prohibited transaction under ERISA or is otherwise exempt
therefrom, and the other party may proceed in reliance thereon but shall not he
required so to proceed.

 

(b)                                 Subject
to the last sentence of subparagraph (a) of this Paragraph, any such
Transaction shall proceed only if Seller furnishes or has furnished to Buyer
its most recent available audited statement of its financial condition and its
most recent subsequent unaudited statement of its financial condition.

 

(c)                                  By
entering into a Transaction pursuant to this Paragraph, Seller shall be deemed
(i) to represent to Buyer that since the date of Seller’s latest such financial
statements, there has been no material adverse change in Seller’s financial
condition which Seller has not disclosed to Buyer, and (ii) to agree to provide
Buyer with future audited and unaudited statements of its financial condition
as they are issued, so long as it is a Seller in any outstanding Transaction
involving a Plan Party.

 

19.                               Intent

 

(a)                                  The
parties recognize that each Transaction is a “repurchase agreement” as that
term is defined in Section 101 of Tide [sic] 11 of the United States Code,
as amended (except insofar as the type of Securities subject to such
Transaction or the term of such Transaction would render such definition
inapplicable), and a “securities contract” as that term is defined in Section 741
of Tide [sic] 11 of the United States Code, as amended (except insofar as the
type of assets subject to such Transaction would render such definition
inapplicable).

 

(b)                                 It
is understood that either party’s right to liquidate Securities delivered to it
in connection with Transactions hereunder or to exercise any other remedies
pursuant to Paragraph 11 hereof is a contractual right to liquidate such
Transaction as described in Sections 555 and 559 of Tide [sic] 11 of the United
States Code, as amended.

 

11

 

(c)                                  The
parties agree and acknowledge that if a party hereto is an “insured depository
institution,” as such term is defined in the Federal Deposit Insurance Act, as
amended (“FDIA”), then each Transaction hereunder is a “qualified financial
contract,” as that term is defined in FDIA and any rules, orders or policy
statements thereunder (except insofar as the type of assets subject to such
Transaction would render such definition inapplicable).

 

(d)                                 It
is understood that this Agreement constitutes a “netting contract” as defined
in and subject to Tide [sic] IV of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment
obligation under any Transaction hereunder shall constitute a “covered
contractual payment entitlement” or “covered contractual payment obligation”,
respectively, as defined in and subject to FDICIA (except insofar as one or
both of the parties is not a “financial institution” as that term is defined in
FDICIA).

 

20.                               Disclosure Relating to
Certain Federal Protections

 

The parties acknowledge
that they have been advised that:

 

(a)                                  in
the case of Transactions in which one of the parties is a broker or dealer
registered with the Securities and Exchange Commission (“SEC’) under Section 15
of the Securities Exchange Act of 1934 (“1934 Act”), the Securities Investor
Protection Corporation has taken the position that the provisions of the
Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other
party with respect to any Transaction hereunder;

 

(b)                                 to
the case of Transactions in which one of the parties is a government securities
broker or a government securities dealer registered with the SEC under Section 1
SC of the 1934 Act, SIPA will not provide protection to the other party with
respect to any Transaction hereunder; and

 

(c)                                  in
the case of Transactions in which one of the parties is a financial
institution, funds held by the financial institution pursuant to a Transaction
hereunder are not a deposit and therefore are not insured by the Federal
Deposit Insurance Corporation or the National Credit Union Share Insurance
Fund, as applicable.

 

12

 

	
  NOMURA
  SECURITIES INTERNATIONAL, INC. 

  	
  AETHER
  SYSTEMS, INC. by FBR

  INVESTMENT MANAGEMENT,INC.,

  as AGENT 

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
  Name:

  	
  David J. Isaacs

  	
   

  	
  Name: 

  	
   

  	
   

  
	
  Title:

  	
  Managing Director

  	
   

  	
  Title: 

  	
   

  	
   

  

 

 

As further specified in
Annex IV hereto, FBR Investment Management, Inc. is acting solely as agent for
Seller and not as principal in any transactions. Subject to Agent’s
representations set forth in the Letter of Trading Authorization issued to
Buyer and dated June 15, 2004, Agent, in such capacity as `Agent’, shall
have no liability to Buyer whatsoever for any of Seller’s obligations hereunder
or otherwise, including without limitations for any Transaction entered into by
the Agent on Seller’s behalf hereunder, or for margin calls, maintenance calls
or settlement of Transactions.

 

13

 

ANNEX
I

Supplemental Terms and Conditions

 

This Annex 1 forms a part
of The Master Repurchase Agreement dated as of June 22, 2004 (the “Agreement”)
between NOMURA SECURITIES INTERNATIONAL, INC. and AETHER SYSTEMS INC by FBR
INVESTMENT MANAGEMENT INC., as AGENT. Capitalized terms used but not defined in
this Annex I shall have the meanings ascribed to them in The Agreement.

 

1.                                       Other
Applicable Annexes.  In addition to
this Annex I and Annex II, the following Annexes and any Schedules Thereto, to
the extent applicable, shall form a part of this Agreement and shall be
applicable thereunder, as indicated below. 
If no indication below is made, such Annexes do not form a part of this
Agreement:

 

[Please initial as appropriate]

 

	
  [          ]

  	
   

  	
  Annex III

  	
   

  	
  (International
  Transactions)

  
	
  [          ]

  	
   

  	
  Annex IV

  	
   

  	
  (Party Acting as Agent)

  
	
  [          ]

  	
   

  	
  Annex V

  	
   

  	
  (Margin for Forward
  Transactions)

  
	
  [          ]

  	
   

  	
  Annex VI

  	
   

  	
  (Buy/Sell Back
  Transactions)

  
	
  [          ]

  	
   

  	
  Annex VII

  	
   

  	
  (Transactions Involving
  Registered Investment Companies)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [          ]

  	
   

  	
  INITIAL
  HERE IF NONE OF THE ABOVE

  

 

2.                                       Repurchase/Substitution.
The following two paragraphs shall be added to Paragraph 9 of The Agreement:

 

(c)                                  In
the case of any Transaction for which the Repurchase Date is other than the
Business Day immediately following The Purchase Date and with respect to which
Seller does not have any existing right to substitute substantially the same
Securities for The Purchased Securities, Seller shall have the right, subject
to The proviso to this sentence, upon notice to Buyer, which notice shall be
given at or prior to 10:00 a.m. (New York time) on such Business Day, to
substitute substantially The same Securities for any Purchased Securities; provided, however, that Buyer may elect,
by The close of business on the Business Day notice is received, or by the
close of the next Business Day if notice is given after 10:00 am (New York
time) on such day, not to accept such substitution. In the event such
substitution is accepted by Buyer, such substitution shall be made by Seller’s
transfer to Buyer of such other Securities and Buyer’s transfer to Seller of
such Purchased Securities, and after substitution, the substituted Securities
shall be deemed to be Purchased Securities. In The event Buyer elects not to
accept such substitution, Buyer shall offer Seller the right to terminate The
Transaction.

 

(d)                                 In
the event Seller exercises its right to substitute or terminate under
sub-paragraph (c), Seller shall be obligated to pay to Buyer, by the close of
The Business Day of such substitution or termination, as the case may be, an
amount equal to (A) Buyer’s actual cost (including all fees, expenses and
commissions) of (i) entering into replacement transactions; (ii) entering into
or terminating hedge transactions; and/or (iii) terminating transactions or
substituting securities in like

 

 

 

transactions with third parties in connection with or
as a result of such substitution or termination, and (B) to The extent Buyer
determines not to enter into replacement transactions, The loss incurred by
Buyer directly arising or resulting from such substitution or termination. The
foregoing amounts shall be solely determined and calculated by Buyer in good
faith.

 

3.                                       Jurisdiction.  Each of the parties (a) consents to submit
itself to The personal jurisdiction of the US Federal Court for The Southern
District of New York or any other New York state court in The Borough of
Manhattan, in the event any dispute arises out of this Agreement (b) agrees That
it shall not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, and (c) agrees that it shall not
being any action relating to this Agreement or the transactions contemplated
herein in any court other than The US Federal Court for The Southern District
of New York or any other New York state court in The Borough of Manhattan. This
provision does not preclude either party from bringing proceedings in any other
jurisdiction on order to enforce any judgment obtained in any proceedings
referred to in the preceding sentence.

 

	
  NOMURA
  SECURITIES INTERNATIONAL, INC.

  	
  AETHER
  SYSTEMS, INC. by FBR

  INVESTMENT MANAGEMENT, INC.,

  as AGENT

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name: 

  	
  David J. Isaacs

  	
  Name: 

  	
   

  	
   

  
	
  Title: 

  	
  Managing Director

  	
  Title: 

  	
   

  	
   

  
						

 

	
  4.

  	
  Other Terms and
  Conditions.

  
	
   

  	
  (Insert new page if needed)

  

 

15

 

Annex
II

Names and Addresses for Communications Between Parties

 

Documentation
Issues

 

Nomura
Securities International, Inc.

Two World Financial
Center

Building B, 18th Floor,
Legal

New York, NY 10281-1198

Jay Gracin, Director,
Assistant General Counsel

Phone: (212) 667-9480

Fax: (212) 667-1024

Leslie Faison – Legal
Department

Tel: (212) 667-9796

Fax: (212) 667-1024

 

Operational
Issues and Trading

 

Nomura
Securities International, Inc.

Two World Financial
Center

Building B, 21st Floor

New York, NY 10281

Attention:  David J. Isaacs, Managing Director

Tel: (212) 667-2130

Fax: (212) 667-1044

 

Aether
Systems Inc.

11500 Cronridge Drive

Owings Mills, MD 21117

Attn: Steven Bass

Tel: (443) 394-5250

Fax: (443) 356-8699

 

FBR
Investment Management, Inc.

1001 Nineteenth Street
North

Arlington, VA 22209

Attn: Brian Bowers

Tel: (703) 469-1148

Fax: (703) 312-9721

 

 

Annex
III

International Transactions

 

This Annex III (including
any Schedules hereto) forms a part of the Master Repurchase Agreement dated as
of                     
(the “Agreement”) between                     
and                     .  Capitalized terms used but not defined in
this Annex III shall have the meanings ascribed to then in the Agreement.

 

1.                                       Definitions.  For purposes of the Agreement and this Annex
III:

 

(a)                                  The
following terms shall have the following meanings:

 

“Base Currency”, United
States dollars or such other currency as Buyer and Seller may agree in the
Confirmation with respect to any International Transaction or otherwise in
writing;

 

“Business Day” or “business
day”:

 

(i)                                     in
relation to any International Transaction which (A) involves an International Security
and (B) is to be settled through CEDEL or Euroclear, a day on which CEDEL or,
as the case may be, Euroclear is open to settle business in the currency in
which the Purchase Price and the Repurchase Price are denominated;

 

(ii)                                  in
relation to any International Transaction which (A) involves an International
Security and (B) is to be settled through a settlement system other than CEDEL
or Euroclear, a day on which that settlement system is open to settle such
International Transaction;

 

(iii)                               in
relation to any International Transaction which involves a delivery of
Securities not falling within (i) or (ii) above, a day on which banks are open
for business in the place where delivery of the relevant Securities is to be
effected; and

 

(iv)                              in
relation to any International Transaction which involves an obligation to make
a payment not falling within (I) or (ii) above, a day other than a Saturday or
Sunday on which banks are open for business in the principal financial center
of the country of which the currency in which the payment is denominated is the
official currency and, if different, in the place where any account designated
by the parties for the making or receipt of the payment is situated (or, in the
case of ECU, a day on which ECU clearing operates);

 

“CEDEL”, CEDEL Bank, société anonyme;

 

“Contractual Currency”, the currency in which the
International Securities subject to any International Transaction are
denominated or such other currency as may be specified in the Confirmation with
respect to any International Transaction;

 

 

“Euroclear”, Morgan Guaranty Trust Company of New
York, Brussels Branch, as operator of the Euroclear System;

 

“International Security’, any Security that (i) is
denominated in a currency other than United States dollars or (ii) is capable
of being cleared through a clearing facility outside the United States or (iii)
is issued by an issuer organized under the laws of a jurisdiction other than
the United States (or any political subdivision thereof);

 

“International Transaction”, any Transaction involving
(i) an International Security or (ii) a party organized under the laws of a
jurisdiction other than the United States (or any political subdivision
thereof) or having its principal place of business outside the United States or
(iii) a branch or office outside the United States designated in Annex I by a
party organized under the laws of the United States (or any political
subdivision thereof) as an office through which that party may act;

 

“LIBOR”, in relation to any sum in any currency, the
offered rate for deposits for such sum in such currency for a period of three
months which appears on the Reuters Screen LIBO page as of 11:00A.M., London
time, on the date on which it is to be determined (or, if more than one such
rate appears, the arithmetic mean of such rates);

 

“Spot Rate”, where an amount in one currency is to be
converted into a second currency on any date, the spot rate of exchange of a
comparable amount quoted by a major money-center bank in the New York interbank
market, as agreed by Buyer and Seller, for the sale by such bank of such second
currency against a purchase by it of such first currency.

 

(b)                                 Notwithstanding
Paragraph 2 of the Agreement, the term “Prime Rate” shall mean, with respect to
any International Transaction, LIBOR plus a spread, as may be specified in the
Confirmation with respect to any International Transaction or otherwise in
writing.

 

2.                                       Manner
of Transfer.  All transfers of
International Securities (i) shall be in suitable form for transfer and
accompanied by duly executed instruments of transfer or assignment in blank
(where required for transfer) and such other documentation as the transferee
may reasonably request, or (ii) shall be transferred through the book-entry
system of Euroclear or CEDEL, or (iii) shall be transferred through any other
agreed securities clearing system or (iv) shall be transferred by any other
method mutually acceptable to Seller and Buyer.

 

3.                                       Contractual
Currency.

 

(a)                                  Unless
otherwise mutually agreed, all funds transferred in respect of the Purchase
Price or the Repurchase Price in any International Transaction shall be in the
Contractual Currency.

 

(b)                                 Notwithstanding
subparagraph (a) of this Paragraph 3, the payee of any payment may, at its
option, accept tender thereof in any other currency; provided, however,

 

18

 

that, to the extent permitted by applicable law, the
obligation of the payor to make such payment will be discharged only to the
extent of the amount of the Contractual Currency that such payee may,
consistent with normal banking procedures, purchase with such other currency
(after deduction of any premium and costs of exchange) for delivery within the
customary delivery period for spot transactions in respect of the relevant
currency

 

(c)                                  If
for any reason the amount in the Contractual Currency so received, including
amounts received after conversion of any recovery under any judgment or order
expressed in a currency other than the Contractual Currency, falls short of the
amount in the Contractual Currency due in respect of the Agreement, the party
required to make the payment shall (unless an Event of Default has occurred and
such party is the nondefaulting party) as a separate and independent obligation
(which shall not merge with any judgment or any payment or any partial payment
or enforcement of payment) and to the extent permitted by applicable law,
immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall.

 

(d)                                 If
for any reason the amount of the Contractual Currency received by one party
hereto exceeds the amount in the Contractual Currency due such party in respect
of the Agreement, then (unless an Event of Default has occurred and such party
is the nondefaulting party) the party receiving the payment shall refund
promptly the amount of such excess.

 

4.                                       Notices. Any and all notices, statements,
demands or other communications with respect to International Transactions
shall be given in accordance with Paragraph 13 of the Agreement and shall be in
the English language.

 

5.                                       Taxes.

 

(a)                                  Transfer
taxes, stamp taxes and all similar costs with respect to the transfer of
Securities shall be paid by Seller.

 

(b)                                 (i)                                     Unless
otherwise agreed, all money payable by one party (the “Payor”) to the other
(the “Payee”) in respect of any International Transaction shall be paid free
and clear of, and without withholding or deduction for, any taxes or duties of
whatsoever nature imposed, levied, collected, withheld or assessed by any
authority having power to tax (a “Tax”), unless the withholding or deduction of
such Tax is required by law. In that event, unless otherwise agreed, Payor
shall pay such additional amounts as will result in the net amounts receivable
by Payee (after taking account of such withholding or deduction) being equal to
such amounts as would have been received by Payee had no such Tax been required
to be withheld or deducted; provided that for purposes of Paragraphs 5 and 6
the term “Tax” shall not include any Tax that would not have been imposed but
for the existence of any present or former connection between Payee and the
jurisdiction imposing such Tax other than the mere receipt of payment from
Payor or the performance of Payee’s obligations under an International
Transaction. The parties acknowledge and agree, for the

 

19

 

avoidance of doubt, that
the amount of Income required to be transferred, credited or applied by Buyer
for the benefit of Seller under Paragraph 5 of the Agreement shall be
determined without taking into account any Tax required to be withheld or
deducted from such Income, unless otherwise agreed.

 

(ii)                                  In
the case of any Tax required to be withheld or deducted from any money payable
to a party hereto acting as Payee by the other party hereto acting as Payor,
Payee agrees to deliver to Payor (or, if applicable, to the authority imposing
the Tax) any certificate or document reasonably requested by Payor that would
entitle Payee to an exemption from, or reduction in the rate of, withholding or
deduction of Tax from money payable by Payor to Payee.

 

(iii)                               Each
party hereto agrees to notify the other party of any circumstance known or
reasonably known to it (other than a Change of Tax Law, as defined in Paragraph
6 hereof) that causes a certificate or document provided by it pursuant to
subparagraph (b) (ii) of this Paragraph to fail to be true.

 

(iv)                              Notwithstanding
subparagraph (b) (i) of this Paragraph, no additional amounts shall be payable
by Payor to Payee in respect of an International Transaction to the extent that
such additional amounts are payable as a result of a failure by Payee to comply
with its obligations under subparagraph (b) (ii) or (b) (iii) of this Paragraph
with respect to such International Transaction.

 

6.                                       Tax Event.

 

(a)                                  This
Paragraph 6 shall apply if either party notifies the other, with respect to a
Tax required to be collected by withholding or deduction, that:

 

(i)                                     any
action taken by a taxing authority or brought in a court of competent
jurisdiction after the date an International Transaction is entered into,
regardless of whether such action is taken or brought with respect to a party
to the Agreement; or

 

(ii)                                  a
change in the fiscal or regulatory regime after the date an International
Transaction is entered into,

 

(each, a “Change of Tax
Law”) has or will, in the notifying party’s reasonable opinion, have a material
adverse effect on such party in the context of an International Transaction.

 

(b)                                 If
so requested by the other party, the notifying party will furnish the other
party with an opinion of a suitably qualified adviser that an event referred to
in subparagraph (a) (i) or (a) (ii) of this Paragraph 6 has occurred and
affects the notifying party.

 

20

 

(c)                                  Where
this Paragraph 6 applies, the party giving the notice referred to in
subparagraph (a) above may, subject to subparagraph (d) below, terminate the
International Transaction effective from a date specified in the notice, not
being earlier (unless so agreed by the other party) than 30 days after the date
of such notice, by nominating such date as the Repurchase Date.

 

(d)                                 If
the party receiving the notice referred to in subparagraph (a) of this
Paragraph 6 so elects, it may override such notice by giving a counter-notice
to the other party. If a counter-notice is given, the party which gives such
counter-notice will be deemed to have agreed to indemnify the other party
against the adverse effect referred to in subparagraph (a) of this Paragraph 6
so far as it relates to the relevant International Transaction and the original
Repurchase Date will continue to apply.

 

(e)                                  Where
an International Transaction is terminated as described in this Paragraph 6,
the party which has given the notice to terminate shall indemnify the other
party against any reasonable legal and other professional expenses incurred by
the other party by reason of the termination, but the other party may not claim
any sum constituting consequential loss or damage in respect of a termination
in accordance with this Paragraph 6.

 

(f)                                    This
Paragraph 6 is without prejudice to Paragraph 5 of this Annex III; but an
obligation to pay additional amounts pursuant to Paragraph 5 of this Annex III
may, where appropriate, be a circumstance which causes this Paragraph 6 to
apply.

 

7.                                       Margin. In the calculation of “Margin
Deficit” and “Margin Excess” pursuant to Paragraph 4 of the Agreement, all sums
not denominated in the Base Currency shall be deemed to be converted into the
Base Currency at the Spot Rate on the date of such calculation.

 

8.                                       Events of Default.

 

(a)                                  In
addition to the Events of Default set forth in Paragraph 11 of the Agreement,
it shall be an additional “Event of Default” if either party fails, after one
business day’s notice, to perform any covenant or obligation required to be
performed by it under this Annex III, including, without limitation, the
payment of taxes or additional amounts as required by Paragraph 5 of this Annex
III.

 

(b)                                 In
addition to the other rights of a nondefaulting party under Paragraph 11 of the
Agreement, following an Event of Default, the nondefaulting party may, at any
time at its option, effect the conversion of any currency into a different
currency of its choice at the Spot Rate on the date of the exercise of such
option and offset obligations of the defaulting party denominated in different
currencies against each other.

 

21

 

Schedule III.A

International Transactions Relating to (Relevant Country]

 

This Schedule III.A
forms a part of Annex III to the Master Repurchase Agreement dated as of                     ,
           (the “Agreement”)
between                     
and                     .
Capitalized terms used but not defined in this Schedule III.A shall have
the meanings ascribed to them in Annex III.

 

 

[Insert provisions
applicable to relevant country.]

 

 

Annex
IV

Party Acting as Agent

 

This Annex IV forms a
part of the Master Repurchase Agreement dated as of                     
(the “Agreement”) between                     
and                       This Annex TV sets forth the terms and
conditions governing all transactions in which a party selling securities or
buying securities, as the case may be (“Agent”), in a Transaction is acting as
agent for one or more third parties (each, a “Principal”). Capitalized terms
used but not defined in this Annex IV shall have the meanings ascribed to them
in the Agreement.

 

1.                                       Additional Representations. In addition to
the representations set forth in Paragraph 10 of the Agreement, Agent hereby
makes the following representations, which shall continue during the term of
any Transaction: Principal has duly authorized Agent to execute and deliver the
Agreement on its behalf, has the power to so authorize Agent and to enter into
the Transactions contemplated by the Agreement and to perform the obligations
of Seller or Buyer, as the case may be, under such Transactions, and has taken
all necessary action to authorize such execution and delivery by Agent and such
performance by it.

 

2.                                       Identification of Principals. Agent agrees
(a) to provide the other party, prior to the date on which the parties agree to
enter into any Transaction under the Agreement, with a written list of
Principals for which it intends to act as Agent (which list may be amended in
writing from time to time with the consent of the other party), and (b) to
provide the other party, before the close of business on the next business day
after orally agreeing to enter into a Transaction, with notice of the specific
Principal or Principals for whom it is acting in connection with such
Transaction. If (i) Agent fails to identify such Principal or Principals prior
to the close of business on such next business day or (ii) the other party
shall determine in its sole discretion that any Principal or Principals
identified by Agent are not acceptable to it, the other party may reject and
rescind any Transaction with such Principal or Principals, return to Agent any
Purchased Securities or portion of the Purchase Price, as the case may be,
previously transferred to the other party and refuse any further performance
under such Transaction, and Agent shall immediately return to the other party
any portion of the Purchase Price or Purchased Securities, as the case may be,
previously transferred to Agent in connection with such Transaction; provided,
however, that (A) the other party shall promptly (and in any event within one
business day) notify Agent of its determination to reject and rescind such
Transaction and (B) to the extent that any performance was rendered by any
party under any Transaction rejected by the other party, such party shall
remain entitled to any Price Differential or other amounts that would have been
payable to it with respect to such performance if such Transaction had not been
rejected. The other party acknowledges that Agent shall not have any obligation
to provide it with confidential information regarding the financial status of
its Principals; Agent agrees, however, that it will assist the other party in
obtaining from Agent’s Principals such information regarding the financial
status of such Principals as the other party may reasonably request.

 

3.                                       Limitation of Agent’s Liability. The parties
expressly acknowledge that if the representations of Agent under the Agreement,
including this Annex TV, are true and correct in all material respects during
the term of any Transaction and Agent otherwise complies with the provisions of
this Annex IV, then (a) Agent’s obligations under the

 

 

Agreement shall not include a guarantee of performance
by its Principal or Principals and (b) the other party’s remedies shall not
include a right of setoff in respect of rights or obligations, if any, of Agent
arising in other transactions in which Agent is acting as principal.

 

4.                                       Multiple Principals.

 

(a)                                  In
the event that Agent proposes to act for more than one Principal hereunder,
Agent and the other party shall elect whether (1) to treat Transactions under
the Agreement as transactions entered into on behalf of separate Principals or
(ii) to aggregate such Transactions as if they were transactions by a single
Principal.  Failure to make such an
election in writing shall be deemed an election to treat Transactions under the
Agreement as transactions on behalf of separate Principals.

 

(b)                                 In
the event that Agent and the other party elect (or are deemed to elect) to
treat Transactions under the Agreement as transactions on behalf of separate
Principals, the parties agree that (i) Agent will provide the other party,
together with the notice described in Paragraph 2(b) of this Annex IV, notice
specifying the portion of each Transaction allocable to the account of each of
the Principals for which it is acting (to the extent that any such Transaction
is allocable to the account of more than one Principal); (ii) the portion of
any individual Transaction allocable to each Principal shall be deemed a
separate Transaction under the Agreement; (iii) the margin maintenance
obligations of Buyer and Seller under Paragraph 4 of the Agreement shall be
determined on a Transaction-by-Transaction basis (unless the parties agree to
determine such obligations on a Principal-by-Principal basis); and (iv) Buyer’s
and Seller’s remedies under the Agreement upon the occurrence of an Event of
Default shall be determined as if Agent had entered into a separate Agreement
with the other party on behalf of each of its Principals.

 

(c)                                  In
the event that Agent and the other party elect to treat Transactions under the
Agreement as if they were transactions by a single Principal, the parties agree
that (1) Agent’s notice under Paragraph 2(b) of this Annex IV need only
identify the names of its Principals but not the portion of each Transaction
allocable to each Principal’s account; (ii) the margin maintenance obligations
of Buyer and Seller under Paragraph 4 of the Agreement shall, subject to any
greater requirement imposed by applicable law, be determined on an aggregate
basis for all Transactions entered into by Agent on behalf of any Principal;
and (iii) Buyer’s and Seller’s remedies upon the occurrence of an Event of
Default shall be determined as if all Principals were a single Seller or Buyer,
as the case maybe.

 

(d)                                 Notwithstanding
any other provision of the Agreement (including, without limitation, this Annex
IV), the parties agree that any Transactions by Agent on behalf of an employee
benefit plan under ERISA shall be treated as Transactions on behalf of separate
Principals in accordance with Paragraph 4(b) of this Annex IV (and all margin
maintenance obligations of the parties shall be determined on a
Transaction-by-Transaction basis).

 

24

 

5.                                       Interpretation of Terms.  All references to “Seller” or “Buyer” as the
case may be, in the Agreement shall, subject to the provisions of this Annex IV
(including, among other provisions, the limitations on Agent’s liability in
Paragraph 3 of this Annex IV), be construed to reflect that (i) each Principal
shall have, in connection with any Transaction or Transactions entered into by
Agent on its behalf, the rights, responsibilities, privileges and obligations
of a “Seller” or “Buyer” as the case may be, directly entering into such
Transaction or Transactions with the other party under the Agreement, and (ii)
Agent’s Principal or Principals have designated Agent as their sole agent for
performance of Seller’s obligations to Buyer or Buyer’s obligations to Seller,
as the case may be, and for receipt of performance by Buyer of its obligations
to Seller or Seller of its obligations to Buyer, as the case may be, in
connection with any Transaction or Transactions under the Agreement (including,
among other things, as Agent for each Principal in connection with transfers of
Securities, cash or other property and as agent for giving and receiving all
notices under the Agreement). Both Agent and its Principal or Principals shall
be deemed “parties” to the Agreement and all references to a party or “either
party” in the Agreement shall be deemed revised accordingly (and any Act of
Insolvency with respect to Agent or any other Event of Default by Agent under
Paragraph 11 of the Agreement shall be deemed an Event of Default by Seller or
Buyer, as the case may be).

 

25

 

Annex
V

Margin for Forward Transactions

 

This Annex V forms a part
of the Master Repurchase Agreement dated as of                     ,
         (the “Agreement”) between                     and
Capitalized terms used but not defined in this Annex V shall have the meanings
ascribed to them in the Agreement.

 

1.                                       Definitions. For purposes of the Agreement
and this Annex V, the following terms shall have the following meanings:

 

“Forward Exposure”, the
amount of loss a party would incur upon canceling a Forward Transaction and
entering into a replacement transaction, determined in accordance with market
practice or as otherwise agreed by the parties;

 

“Forward Transaction”,
any Transaction agreed to by the parties as to which the Purchase Date has not
yet occurred;

 

“Net Forward Exposure”,
the aggregate amount of a party’s Forward Exposure to the other party under all
Forward Transactions hereunder reduced by the aggregate amount of any Forward
Exposure of the other party to such party under all Forward Transactions
hereunder;

 

“Net Unsecured Forward
Exposure”, a party’s Net Forward Exposure reduced by the Market Value of any
Forward Collateral transferred to such party (and not returned) pursuant to
Paragraph 2 of this Annex V

 

2.                                       Margin Maintenance.

 

(a)                                  If
at any time a party (the “In-the-Money Party”) shall have a Net Unsecured
Forward Exposure to the other party (the “Out-of-the-Money Party”) under one or
more Forward Transactions, the In-the-Money Party may by notice to the
Out-of-the-Money Party require the Out-of-the-Money Party to transfer to the
In-the-Money Party Securities or cash reasonably acceptable to the
In-the-Money-Party (together with any Income thereon and proceeds thereof, “Forward
Collateral”) having a Market Value sufficient to eliminate such Net Unsecured
Forward Exposure. The Out-of-the-Money Party may by notice to the In-the-Money
Party require the In-the-Money Party to transfer to the Out-of-the-Money Party
Forward Collateral having a Market Value that exceeds the In-the-Money Party’s
Net Forward Exposure (“Excess Forward Collateral Amount”). The rights of the
parties under this subparagraph shall be in addition to their rights under
subparagraphs (a) and (b) of Paragraph 4 and any other provisions of the
Agreement.

 

(b)                                 The
parties may agree, with respect to any or all Forward Transactions hereunder,
that the respective rights of the parties under subparagraph (a) of this
Paragraph may be exercised only where a Net Unsecured Forward Exposure or
Excess Forward Collateral Amount, as the case may be, exceeds a specified
dollar amount or other specified threshold for such Forward Transactions (which
amount or threshold shall be agreed to by the parties prior to entering into
any such Forward Transactions).

 

 

(c)                                  The
parties may agree, with respect to any or all Forward Transactions hereunder,
that the respective rights of the parties under subparagraph (a) of this
Paragraph to require the elimination of a Net Unsecured Forward Exposure or Excess
Forward Collateral Amount, as the case may be, may be exercised whenever such a
Net Unsecured Forward Exposure or Excess Forward Collateral Amount exists with
respect to any single Forward Transaction hereunder (calculated without regard
to any other Forward Transaction outstanding hereunder).

 

(d)                                 The
parties may agree, with respect to any or all Forward Transactions hereunder,
that (i) one party shall transfer to the other party Forward Collateral having
a Market Value equal to a specified dollar amount or other specified threshold
no later than the Margin Notice Deadline on the day such Forward Transaction is
entered into by the parties or (ii) one party shall not be required to make any
transfer otherwise required to be made under this Paragraph if, after giving
effect to such transfer, the Market Value of the Forward Collateral held by
such party would be less than a specified dollar amount or other specified
threshold (which amount or threshold shall be agreed to by the parties prior to
entering into any such Forward Transactions).

 

(e)                                  If
any notice is given by a party to the other under subparagraph (a) of this
Paragraph at or before the Margin Notice Deadline on any business day, the
party receiving such notice shall transfer Forward Collateral as provided in
such subparagraph no later than the close of business in the relevant market on
such business day. If any such notice is given after the Margin Notice
Deadline, the party receiving such notice shall transfer such Forward
Collateral no later than the close of business in the relevant market on the
next business day.

 

(f)                                    Upon
the occurrence of the Purchase Date for any Forward Transaction and the
performance by the parties of their respective obligations to transfer cash and
Securities on such date, any Forward Collateral in respect of such Forward
Transaction, together with any Income thereon and proceeds thereof, shall be
transferred by the party holding such Forward Collateral to the other party;
provided, however, that neither party shall be required to transfer such
Forward Collateral to the other if such transfer would result in the creation
of a Net Unsecured Forward Exposure of the transferor.

 

(g)                                 The
Pledgor (as defined below) of Forward Collateral may, subject to agreement with
and acceptance by the Pledgee (as defined below) thereof, substitute other
Securities reasonably acceptable to the Pledgee for any Securities Forward
Collateral. Such substitution shall be made by transfer to the Pledgee of such
other Securities and transfer to the Pledgor of such Securities Forward
Collateral. After substitution, the substituted Securities shall constitute
Forward Collateral.

 

3.                                       Security Interest.

 

(a)                                  In
addition to the rights granted to the parties under Paragraph 6 of the
Agreement, each party (“Pledgor”) hereby pledges to the other party (“Pledgee”)
as security for the performance of its obligations hereunder, and grants
Pledgee a security interest in and right of setoff against, any Forward
Collateral and any

 

27

 

other cash, Securities or property, and all proceeds
of any of the foregoing, transferred by or on behalf of Pledgor to Pledgee or
due from Pledgee to Pledgor in connection with the Agreement and the Forward
Transactions hereunder.

 

(b)                                 Unless
otherwise agreed by the parties, a party to whom Forward Collateral has been
transferred shall have the right to engage in repurchase transactions with
Forward Collateral or otherwise sell, transfer, pledge or hypothecate Forward
Collateral, including in respect of loans or other extensions of credit to such
party that may be in amounts greater than the Forward Collateral such party is
entitled to as security for obligations hereunder, and that may extend for
periods of time longer than the periods during which such party is entitled to
Forward Collateral as security for obligations hereunder; provided, however,
that no such transaction shall relieve such party of its obligations to
transfer Forward Collateral pursuant to Paragraph 2 or 4 of this Annex V or
Paragraph 11 of the Agreement.

 

4.                                       Events of Default.

 

(a)                                  In
addition to the Events of Default set forth in Paragraph 11 of the Agreement,
it shall be an additional “Event of Default” if either party fails, after one
business day’s notice, to perform any covenant or obligation required to be
performed by it under Paragraph 2 or any other provision of this Annex.

 

(b)                                 In
addition to the other rights of a nondefaulting party under Paragraphs 11 and
12 of the Agreement, if the nondefaulting party exercised or is deemed to have
exercised the option referred to in Paragraph 11(a) of the Agreement:

 

(i)                                     The
nondefaulting party, without prior notice to the defaulting party, may (A)
immediately sell, in a recognized market (or otherwise in a commercially
reasonable manner) at such price or prices as the nondefaulting party may
reasonably deem satisfactory, any or all Forward Collateral subject to any or
all Forward Transactions hereunder and apply the proceeds thereof to any
amounts owing by the defaulting party hereunder or (B) in its sole discretion
elect, in lieu of selling all or a portion of such Forward Collateral, to give
the defaulting party credit for such Forward Collateral in an amount equal to
the price therefor on such date, obtained from a generally recognized source or
the most recent closing bid quotation from such a source, against any amounts
owing by the defaulting party hereunder

 

(ii)                                  Any
Forward Collateral held by the defaulting party, together with any Income
thereon and proceeds thereof, shall be immediately transferred by the
defaulting party to the nondefaulting party. The nondefaulting party may, at
its option (which option shall be deemed to have been exercised immediately
upon the occurrence of an Act of Insolvency), and without prior notice to the
defaulting party, (i) immediately purchase, in a recognized market (or
otherwise in a commercially reasonable manner) at such price or prices as the
nondefaulting party may reasonably deem satisfactory, securities (“Replacement
Securities”) of the same class and amount as any Securities Forward Collateral
that is not delivered by the

 

28

 

defaulting party to the nondefaulting party as
required hereunder or (ii) in its sole discretion elect, in lieu of purchasing
Replacement Securities, to be deemed to have purchased Replacement Securities
at the price therefore on such date, obtained from a generally recognized
source or the most recent closing offer quotation from such a source, whereupon
the defaulting party shall be liable for the price of such Replacement
Securities together with the amount of any cash Forward Collateral not
delivered by the defaulting party to the nondefaulting party as required
hereunder

 

Unless otherwise provided in Annex I, the parties
acknowledge and agree that (1) the Forward Collateral subject to any Forward
Transaction hereunder are instruments traded in a recognized market, (2) in the
absence of a generally recognized source for prices or bid quotations for any Forward
Collateral, the nondefaulting party may establish the source therefor in its
sole discretion and (3) all prices and bids shall be determined together with
accrued Income (except to the extent contrary to market practice with respect
to the relevant Forward Collateral).

 

5.                                       No Waivers, Etc.  Without limitation of the provisions of
Paragraph 17 of the Agreement, the failure to give a notice pursuant to
subparagraph (a), (b), (c) or (d) of Paragraph 2 of this Annex V will not
constitute a waiver of any right to do so at a later date.

 

29

 

Annex
VI

Buy/Sell Back Transactions

 

This Annex VI forms a
part of the Master Repurchase Agreement dated as of                     
(the “Agreement”) between                     and
                    .  Capitalized terms used but not defined in
this Annex VI shall have the meanings ascribed to them in the Agreement.

 

1.                                       In
the event of any conflict between the terms of this Annex VI and any other term
of the Agreement, the terms of this Annex VI shall prevail.

 

2.                                       Each
Transaction shall be identified at the time it is entered into and in the
relevant Confirmation as either a Repurchase Transaction or a Buy/Sell Back
Transaction.

 

3.                                       In
the case of a Buy/Sell Back Transaction, the Confirmation delivered in
accordance with Paragraph 3 of the Agreement may consist of a single document
in respect of both of the transfers of funds against Securities which together
form the Buy/Sell Back Transaction or separate Confirmations may be delivered
in respect of each such transfer.

 

4.                                       Definitions.
The following definitions shall apply to Buy/Sell Back Transactions:

 

(a)                                  “Accrued
Interest”, with respect to any Purchased Securities subject to a Buy/Sell Back
Transaction, unpaid Income that has accrued during the period from (and
including) the issue date or the last Income payment date (whichever is later)
in respect of such Purchased Securities to (but excluding) the date of
calculation.  For these purposes unpaid
Income shall be deemed to accrue on a daily basis from (and including) the
issue date or the last Income payment date (as the case may be) to (but
excluding) the next Income payment date or the maturity date (whichever is
earlier);

 

(b)                                 “Sell
Back Differential”, with respect to any Buy/Sell Back Transaction as of any
date, the aggregate amount obtained by daily application of the Pricing Rate
for such Buy/Sell Back Transaction to the Purchase Price for such Buy/Sell Back
Transaction on a 360 day per year basis (unless otherwise agreed by the parties
for the Transaction) for the actual number of days during the period commencing
on (and including) the Purchase Date for such Buy/Sell Back Transaction and
ending on (but excluding) the date of determination;

 

(c)                                  “Sell
Back Price’s with respect to any Buy/Sell Back Transaction:

 

(i)                                     in
relation to the date originally specified by the parties as the Repurchase Date
pursuant to Paragraph 2(q) of the Agreement, the price agreed by the Parties in
relation to such Buy/Sell Back Transaction, and

 

(ii)                                  in
any other case (including for the purposes of the application of Paragraph 4 or
Paragraph 11 of the Agreement), the product of the formula (P + D) - (IR + C),
where:

 

	
  P

  	
   

  	
  =

  	
   

  	
  the Purchase Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  D

  	
   

  	
  =

  	
   

  	
  The Sell Back
  Differential

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IR

  	
   

  	
  =

  	
   

  	
  the amount of any
  Income in respect of the Purchased Securities paid by the issuer on any date
  falling between the Purchase Date and the Repurchase Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C

  	
   

  	
  =

  	
   

  	
  the aggregate amount
  obtained by daily application of the Pricing Rate for such Buy/Sell Back
  Transaction to any such Income from (and including) the date of payment by
  the issuer to (but excluding) the date of calculation.

  

 

5.                                       When
entering into a Buy/Sell Back Transaction the parties shall also agree on the
Sell Back Price and the Pricing Rate to apply in relation to such Buy/Sell Back
Transaction on the scheduled Repurchase Date. The parties shall record the
Pricing Rate in at least one Confirmation applicable to such Buy/Sell Back
Transaction.

 

6.                                       Termination
of a Buy/Sell Back Transaction shall be effected on the Repurchase Date by
transfer to Seller or its agent of Purchased Securities against the payment by
Seller of (i) in a case where the Repurchase Date is the date originally agreed
to by the parties pursuant to Paragraph 2(q) of the Agreement, the Sell Back
Price referred to in Paragraph 4(c) (i) of this Annex; and (ii) in any other
case, the Sell Back Price referred to in Paragraph 4(c) (ii) of this Annex.

 

7.                                       For
the avoidance of doubt, the parties acknowledge and agree that the Purchase
Price and the Sell Back Price in Buy/Sell Back Transactions shall include
Accrued Interest (except to the extent contrary to market practice with respect
to the Securities subject to such Buy/Sell Back Transaction, in which event (i)
an amount equal to the Purchase Price plus Accrued Interest to the Purchase
Date shall be paid to Seller on the Purchase Date and shall be used, in lieu of
the Purchase Price, for calculating the Sell Back Differential, (ii) an amount
equal to the Sell Back Price plus the amount of Accrued Interest to the
Repurchase Date shall be paid to Buyer on the Repurchase Date, and (iii) the
formula in Paragraph 4(c) (ii) of this Annex VI shall be replaced by the
formula “(P + AI + D) - (IR + C) “, where “AI” equals Accrued Interest to the
Purchase Date).

 

8.                                       Unless
the parties agree in Annex Ito the Agreement that a Buy/Sell Back Transaction
is not to be repriced, they shall at the time of repricing agree on the
Purchase Price, the Sell Back Price and the Pricing Rate applicable to such
Transaction.

 

9.                                       Paragraph
5 of the Agreement shall not apply to Buy/Sell Back Transactions. Seller
agrees, on the date such Income is received, to pay to Buyer any Income
received by Seller in respect of Purchased Securities that is paid by the
issuer on any date falling between the Purchase Date and the Repurchase Date.

 

10.                                 References
to “Repurchase Price” throughout the Agreement shall be construed as references
to “Repurchase Price or the Sell Back Price, as the case may be.”

 

11.                                 In
11 of the Agreement, references to the “Repurchase Prices” shall be construed
as references to “Repurchase Prices and Sell Back Prices.”

 

31

 

Annex
VII

Transactions Involving Registered Investment Companies

 

This Annex VII (including
any Schedules hereto) forms a part of the Master Repurchase Agreement dated as
of                     ,
         (the “Agreement’) between (“Counterparty”)
and each investment company identified on Schedule VII.A hereto (as such schedule may
be amended from time to time) acting on behalf of its respective series or
portfolios identified on such Schedule VII.A, or in the case of those
investment companies for which no separate series or portfolios are identified
on such Schedule VII.A, acting for and on behalf of itself (each such
series, portfolio or investment company, as the case may be, hereinafter
referred to as a “Fund”). In the event of any conflict between the terms of
this Annex VII and any other term of the Agreement, the terms of this Annex VII
shall prevail. Capitalized terms used but not defined in this Annex VII shall
have the meanings ascribed to them in the Agreement.

 

1.                                       Multiple Funds.  For any Transaction in which a Fund is acting
as Buyer (or Seller, as the case may be) each reference in the Agreement and
this Annex VII to Buyer (or Seller, as the case may be) shall be deemed a
reference solely to the particular Fund to which such Transaction relates, as
identified to Seller (or Buyer, as the case may be) by the Fund and as may be
specified in the Confirmation therefore. 
In no circumstances shall the rights, obligations or remedies of either
party with respect to a particular Fund constitute a right, obligation or
remedy applicable to any other Fund. Specifically, and without otherwise
limiting the scope of this Paragraph: (a) the margin maintenance obligations of
Buyer and Seller specified in Paragraph 4 or any other provisions of the
Agreement and the single agreement provisions of Paragraph 12 of the Agreement
shall be applied based solely upon Transactions entered into by a particular
Fund, (b) Buyer’s and Seller’s remedies under the Agreement upon the occurrence
of an Event of Default shall be determined as if each Fund had entered into a
separate Agreement with Counterparty, and (c) Seller and Buyer shall have no
right to set off claims related to Transactions entered into by a particular
Fund against claims related to Transactions entered into by any other Fund.

 

2.                                       Margin Percentage.  For any Transaction in which a Fund is acting
as Buyer, the Buyer’s Margin Percentage shall always be equal to at least         %,
or such other percentage as the parties hereto may from time to time mutually
determine; provided, that in no event shall such percentage be less than 100%.
For any Transaction in which a Fund is acting as Seller, the Buyer’s Margin
Percentage shall be such percentage as the parties hereto may from time to time
mutually determine: provided, that in no event shall such percentage be less
than 100%.

 

3.                                       Confirmations.  Unless otherwise agreed, Counterparty shall
promptly issue a Confirmation to the Fund pursuant to Paragraph 3 of the
Agreement. Upon the transfer of substituted or Additional Purchased Securities
by either party, Counterparty shall promptly provide notice to the Fund
confirming such transfer.

 

4.                                       Financial Condition.  Each party represents that it has delivered
the following financial information to the other party to the Agreement: in the
case of a party that is a registered broker-dealer, its most recent statements
required to be furnished to customers by Rule 17a-5(c) under the 1934 Act; in
the case of a party that is a Fund, its most recent audited or unaudited
financial statements required to be furnished to its shareholders by Rule

 

 

30d-1 under the Investment Company Ant of 1940; in the
case of any other party, its most recent audited or unaudited statements of
financial condition or other comparable information concerning its financial
condition.

 

Each party represents
that the financial statements or information so delivered fairly reflect its
financial condition and, if applicable, its net capital ratio, on the date as
of which such financial statements or information were prepared. Each party
agrees that it will make available and deliver to the other party, promptly
upon request, all such financial statements that subsequently are required to
be delivered to its customers or shareholders pursuant to Rule 17a-5 (c) or
Rule 30d-1, as the case may be, or, in the case of a party that is neither a
registered broker-dealer nor a Fund, all such financial information that
subsequently becomes available to the public.

 

Each Fund acknowledges
and agrees that it has made an independent evaluation of the creditworthiness
of the other party that is required pursuant to the Investment Company Act of
1940 or the regulations thereunder. Each Fund agrees that its agreement to
enter into each Transaction hereunder shall constitute an acknowledgment and
agreement that it has made such an evaluation.

 

5.                                       Segregation of Purchased Securities.  Unless otherwise agreed by the parties, any
transfer of Purchased Securities to a Fund shall be effected by delivery or
other transfer (in the manner agreed upon pursuant to Paragraph 7 of the
Agreement) to the custodian or subcustodian designated for such Fund in Schedule VII.A
hereto (“Custodian”) for credit to the Fund’s custodial account with such
Custodian. If the party effecting such transfer is the Fund’s Custodian, such
party shall, unless otherwise directed by the Fund, (a) transfer and maintain
such Purchased Securities to and in the Fund’s custodial account with such
party and (b) so indicate in a notice to the Fund.

 

33

 

Section VII.A

Supplemental Terms and Conditions of Transactions

Involving Registered Investment Companies

 

This Schedule VII.A
forms a part of Annex VII to the Master Repurchase Agreement dated as of                     ,
         (the “Agreement”) between                     
and                     .  Capitalized terms used but not defined in
this Schedule VII.A shall have the meanings ascribed to them in Annex VII.

 

1.                                       This
Agreement is entered into by or on behalf of the following Funds, and unless
otherwise indicated by the appropriate Fund in connection with a Transaction,
the following Custodians are designated to receive transfers of Purchased
Securities on behalf of such Funds for credit to the appropriate Fund’s
custodial account:

 

	
  Name of Fund

  	
   

  	
  Custodian

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

o  Limitation
of Liability.  If the Fund
is organized as a business trust (or a series thereof), the. parties agree as
follows:  [insert appropriate language
limiting liability of trustees, officers and others].EXHIBIT 10.60

 

MICRON TECHNOLOGY, INC.

2004 EQUITY INCENTIVE PLAN

 

ARTICLE 1

PURPOSE

 

1.1.                              GENERAL.  The purpose of the Micron Technology, Inc.
2004 Equity Incentive Plan (the “Plan”) is to promote the success, and enhance
the value, of Micron Technology, Inc. (the “Company”), by linking the personal
interests of employees, officers, directors and consultants of the Company or
any Affiliate (as defined below) to those of Company stockholders and by
providing such persons with an incentive for outstanding performance.  The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract, and retain the
services of employees, officers, directors and consultants upon whose judgment,
interest, and special effort the successful conduct of the Company’s operation
is largely dependent.  Accordingly, the
Plan permits the grant of incentive awards from time to time to selected
employees, officers, directors and consultants of the Company and its
Affiliates.

 

ARTICLE 2

DEFINITIONS

 

2.1.                              DEFINITIONS.  When a word or phrase appears in this Plan
with the initial letter capitalized, and the word or phrase does not commence a
sentence, the word or phrase shall generally be given the meaning ascribed to
it in this Section or in Section 1.1 unless a clearly different
meaning is required by the context.  The
following words and phrases shall have the following meanings:

 

(a)                                  “Affiliate”
means (i) any Subsidiary or Parent, or (ii) an entity that directly or through
one or more intermediaries controls, is controlled by or is under common
control with, the Company, as determined by the Committee.

 

(b)                                 “Award”
means any Option, Stock Appreciation Right, Restricted Stock Award, Restricted
Stock Unit Award, Deferred Stock Unit Award, Performance Share, Dividend
Equivalent Award, or Other Stock-Based Award granted to a Participant under the
Plan.

 

(c)                                  “Award
Certificate” means a written document, in such form as the Committee prescribes
from time to time, setting forth the terms and conditions of an Award.  Award Certificates may be in the form of
individual award agreements or certificates or a program document describing
the terms and provisions of an Awards or series of Awards under the Plan.

 

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

 

(e)                                  “Change
in Control” means and includes the occurrence of any one of the following
events:

 

(i)                                     individuals
who, on the Effective Date, constitute the Board of Directors of the Company
(the “Incumbent Directors”) cease for any reason to constitute at least a
majority of such Board, provided that any person becoming a director after the
Effective Date and whose election or nomination for election was approved by a
vote of at least a majority of the Incumbent Directors then on the Board shall
be an Incumbent Director; provided, however, that no individual
initially elected or nominated as a director of the Company as a result of an
actual or threatened election contest with respect to the election or removal
of directors (“Election Contest”) or other actual or threatened solicitation of
proxies or consents by or on behalf of any Person other than the Board (“Proxy
Contest”), including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest, shall be deemed an Incumbent Director; or

 

(ii)                                  any
person is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the
1934 Act), directly or indirectly, of either (A) 35% or more of the
then-outstanding shares of common stock of the Company (“Company Common Stock”)
or (B) securities of the Company

 

1

 

representing 35% or more of the combined voting power
of the Company’s then outstanding securities eligible to vote for the election
of directors (the “Company Voting Securities”); provided, however,
that for purposes of this subsection (ii), the following acquisitions
shall not constitute a Change in Control: (w) an acquisition directly from the
Company, (x) an acquisition by the Company or a Subsidiary of the Company, (y)
an acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary of the Company, or (z) an
acquisition pursuant to a Non-Qualifying Transaction (as defined in subsection (iii)
below); or

 

(iii)                               the consummation of a
reorganization, merger, consolidation, statutory share exchange or similar form
of corporate transaction involving the Company or a Subsidiary (a “Reorganization”),
or the sale or other disposition of all or substantially all of the Company’s
assets (a “Sale”) or the acquisition of assets or stock of another corporation
(an “Acquisition”), unless immediately following such Reorganization, Sale or
Acquisition: (A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the outstanding Company Common
Stock and outstanding Company Voting Securities immediately prior to such
Reorganization, Sale or Acquisition beneficially own, directly or indirectly,
more than 50% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Reorganization, Sale or Acquisition (including,
without limitation, a corporation which as a result of such transaction owns
the Company or all or substantially all of the Company’s assets or stock either
directly or through one or more subsidiaries, the “Surviving Corporation”) in
substantially the same proportions as their ownership, immediately prior to
such Reorganization, Sale or Acquisition, of the outstanding Company Common
Stock and the outstanding Company Voting Securities, as the case may be, and
(B) no person (other than (x) the Company or any Subsidiary of the Company, (y)
the Surviving Corporation or its ultimate parent corporation, or (z) any
employee benefit plan or related trust) sponsored or maintained by any of the
foregoing is the beneficial owner, directly or indirectly, of 35% or more of
the total common stock or 35% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the Surviving
Corporation, and (C) at least a majority of the members of the board of
directors of the Surviving Corporation were Incumbent Directors at the time of
the Board’s approval of the execution of the initial agreement providing for
such Reorganization, Sale or Acquisition (any Reorganization, Sale or
Acquisition which satisfies all of the criteria specified in (A), (B) and (C)
above shall be deemed to be a “Non-Qualifying Transaction”); or

 

(iv)                              approval
by the stockholders of the Company of a complete liquidation or dissolution of
the Company.

 

(f)                                    “Code”
means the Internal Revenue Code of 1986, as amended from time to time, and
includes a reference to the underlying final regulations.

 

(g)                                 “Committee”
means the committee of the Board described in Article 4.

 

(h)                                 “Company”
means Micron Technology, Inc., a Delaware corporation, or any successor
corporation.

 

(i)                                     “Continuous
Status as a Participant” means the absence of any interruption or termination
of service as an employee, officer, consultant or director of the Company or
any Affiliate, as applicable; provided, however, that for purposes of an
Incentive Stock Option, or a Stock Appreciation Right issued in tandem with an
Incentive Stock Option, “Continuous Status as a Participant” means the absence
of any interruption or termination of service as an employee of the Company or
any Parent or Subsidiary, as applicable, pursuant to applicable tax
regulations.  Continuous Status as a
Participant shall continue to the extent provided in a written severance or
employment agreement during any period for which severance compensation payments
are made to an employee, officer, consultant or director and shall not be
considered interrupted in the case of any leave of absence authorized in
writing by the Company prior to its commencement; provided, however, that for
purposes of Incentive Stock Options, no such leave may

 

2

 

exceed 90 days, unless reemployment upon expiration of
such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of
absence approved by the Company is not so guaranteed, on the 91st day of such
leave any Incentive Stock Option held by the Participant shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option.

 

(j)                                     “Covered
Employee” means a covered employee as defined in Code Section 162(m)(3).

 

(k)                                  “Disability”
or “Disabled” has the same meaning as provided in the long-term disability plan
or policy maintained by the Company or if applicable, most recently maintained,
by the Company or if applicable, an Affiliate, for the Participant, whether or
not such Participant actually receives disability benefits under such plan or
policy.  If no long-term disability plan
or policy was ever maintained on behalf of Participant or if the determination
of Disability relates to an Incentive Stock Option, or a Stock Appreciation
Right issued in tandem with an Incentive Stock Option, Disability means
Permanent and Total Disability as defined in Section 22(e)(3) of the
Code.  In the event of a dispute, the
determination whether a Participant is Disabled will be made by the Committee
and may be supported by the advice of a physician competent in the area to
which such Disability relates.

 

(l)                                     “Deferred
Stock Unit” means a right granted to a Participant under Article 11.

 

(m)                               “Dividend
Equivalent” means a right granted to a Participant under Article 12.

 

(n)                                 “Effective
Date” has the meaning assigned such term in Section 3.1.

 

(o)                                 “Eligible
Participant” means an employee, officer, consultant or director of the Company
or any Affiliate.

 

(p)                                 “Exchange”
means the New York Stock Exchange or any other national securities exchange or
national market system on which the Stock may from time to time be listed or
traded.

 

(q)                                 “Fair
Market Value” of the Stock, on any date, means: (i) if the Stock is listed or
traded on any Exchange, the average closing price for such Stock (or the
closing bid, if no sales were reported) as quoted on such Exchange (or the
Exchange with the greatest volume of trading in the Stock) for the last market
trading day prior to the day of determination, as reported by Bloomberg L.P. or such other source as the
Committee deems reliable; (ii) if the Stock is quoted on the over-the-counter
market or is regularly quoted by a recognized securities dealer, but selling
prices are not reported, the Fair Market Value of the Stock shall be the mean
between the high bid and low asked prices for the Stock on the last market
trading day prior to the day of determination, as reported by Bloomberg L.P. or such other source as the
Committee deems reliable, or (iii) in the absence of an established market for
the Stock, the Fair Market Value shall be determined in good faith by the
Committee.

 

(r)                                    “Full
Value Award” means an Award other than in the
form of an Option or SAR, and which is settled by the issuance of Stock.

 

(s)                                  “Grant
Date” of an Award means the first date on which all necessary corporate action
has been taken to approve the grant of the Award as provided in the Plan, or
such later date as is determined and specified as part of that authorization
process.  Notice of the grant shall be
provided to the grantee within a reasonable time after the Grant Date.

 

(t)                                    “Incentive
Stock Option” means an Option that is intended to be an incentive stock option
and meets the requirements of Section 422 of the Code or any successor
provision thereto.

 

(u)                                 “Non-Employee
Director” means a director of the Company who is not a common law employee of
the Company or an Affiliate.

 

(v)                                 “Nonstatutory
Stock Option” means an Option that is not an Incentive Stock Option.

 

3

 

(w)                               “Option”
means a right granted to a Participant under Article 7 of the Plan to
purchase Stock at a specified price during specified time periods.  An Option may be either an Incentive Stock
Option or a Nonstatutory Stock Option.

 

(x)                                   “Other
Stock-Based Award” means a right, granted to a Participant under Article 13
that relates to or is valued by reference to Stock or other Awards relating to
Stock.

 

(y)                                 “Parent”
means a corporation, limited liability company, partnership or other entity
which owns or beneficially owns a majority of the outstanding voting stock or
voting power of the Company. Notwithstanding the above, with respect to an
Incentive Stock Option, Parent shall have the meaning set forth in Section 424(e)
of the Code.

 

(z)                                   “Participant”
means a person who, as an employee, officer, director or consultant of the
Company or any Affiliate, has been granted an Award under the Plan; provided
that in the case of the death of a Participant, the term “Participant” refers
to a beneficiary designated pursuant to Section 14.5 or the legal guardian
or other legal representative acting in a fiduciary capacity on behalf of the
Participant under applicable state law and court supervision.

 

(aa)                            “Performance
Share” means any right granted to a Participant under Article 9 to a unit
to be valued by reference to a designated number of Shares to be paid upon
achievement of such performance goals as the Committee establishes with regard
to such Performance Share.

 

(bb)                          “Person”
means any individual, entity or group, within the meaning of Section 3(a)(9)
of the 1934 Act and as used in Section 13(d)(3) or 14(d)(2) of the 1934
Act.

 

(cc)                            “Plan”
means the Micron Technology, Inc. 2004 Equity Incentive Plan, as amended from
time to time.

 

(dd)                          “Public
Offering” shall occur on closing date of a public offering of any class or
series of the Company’s equity securities pursuant to a registration statement
filed by the Company under the 1933 Act.

 

(ee)                            “Qualified
Performance-Based Award” means an Award that is either (i) intended to qualify
for the Section 162(m) Exemption and is made subject to performance goals
based on Qualified Business Criteria as set forth in Section 14.10(b), or
(ii) an Option or SAR.

 

(ff)                                “Qualified
Business Criteria” means one or more of the Business Criteria listed in Section 14.10(b)
upon which performance goals for certain Qualified Performance-Based Awards may
be established by the Committee.

 

(gg)                          “Restricted
Stock Award” means Stock granted to a Participant under Article 10 that is
subject to certain restrictions and to risk of forfeiture.

 

(hh)                          “Restricted
Stock Unit Award” means the right granted to a Participant under Article 10
to receive shares of Stock (or the equivalent value in cash or other property
if the Committee so provides) in the future, which right is subject to certain
restrictions and to risk of forfeiture.

 

(ii)                                  “Section 162(m)
Exemption” means the exemption from the limitation on deductibility imposed by Section 162(m)
of the Code that is set forth in Section 162(m)(4)(C) of the Code or any
successor provision thereto.

 

(jj)                                  “Shares”
means shares of the Company’s Stock.  If
there has been an adjustment or substitution pursuant to Section 15.1, the
term “Shares” shall also include any shares of stock or other securities that
are substituted for Shares or into which Shares are adjusted pursuant to Section 15.1.

 

(kk)                            “Stock”
means the $.10 par value common stock of the Company and such other

 

4

 

securities of the Company as may be substituted for
Stock pursuant to Article 15.

 

(ll)                                  “Stock
Appreciation Right” or “SAR” means a right granted to a Participant under Article 8
to receive a payment equal to the difference between the Fair Market Value of a
Share as of the date of exercise of the SAR over the base price of the SAR, all
as determined pursuant to Article 8.

 

(mm)                      “Subsidiary”
means any corporation, limited liability company, partnership or other entity
of which a majority of the outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Company. Notwithstanding the
above, with respect to an Incentive Stock Option, Subsidiary shall have the
meaning set forth in Section 424(f) of the Code.

 

(nn)                          “1933
Act” means the Securities Act of 1933, as amended from time to time.

 

(oo)                          “1934
Act” means the Securities Exchange Act of 1934, as amended from time to time.

 

ARTICLE 3

EFFECTIVE TERM OF PLAN

 

3.1.                              EFFECTIVE
DATE.  The Plan shall be effective as
of the date it is approved by both the Board and the stockholders of the
Company (the “Effective Date”).

 

3.2.                              TERMINATION
OF PLAN.  The Plan shall terminate on
the tenth anniversary of the Effective Date unless earlier terminated as
provided herein.  The termination of the
Plan on such date shall not affect the validity of any Award outstanding on the
date of termination.

 

ARTICLE 4

ADMINISTRATION

 

4.1.                              COMMITTEE.  The Plan shall be administered by a Committee
appointed by the Board (which Committee shall consist of at least two
directors) or, at the discretion of the Board from time to time, the Plan may
be administered by the Board.  It is
intended that at least two of the directors appointed to serve on the Committee
shall be “non-employee directors” (within the meaning of Rule 16b-3 promulgated
under the 1934 Act) and “outside directors” (within the meaning of Code Section 162(m))
and that any such members of the Committee who do not so qualify shall abstain
from participating in any decision to make or administer Awards that are made
to Eligible Participants who at the time of consideration for such Award (i)
are persons subject to the short-swing profit rules of Section 16 of the
1934 Act, or (ii) are reasonably anticipated to become Covered Employees during
the term of the Award.  However, the mere
fact that a Committee member shall fail to qualify under either of the
foregoing requirements or shall fail to abstain from such action shall not
invalidate any Award made by the Committee which Award is otherwise validly
made under the Plan.  The members of the
Committee shall be appointed by, and may be changed at any time and from time
to time in the discretion of, the Board. 
The Board may reserve to itself any or all of the authority and
responsibility of the Committee under the Plan or may act as administrator of
the Plan for any and all purposes.  To
the extent the Board has reserved any authority and responsibility or during
any time that the Board is acting as administrator of the Plan, it shall have
all the powers of the Committee hereunder, and any reference herein to the
Committee (other than in this Section 4.1) shall include the Board.  To the extent any action of the Board under
the Plan conflicts with actions taken by the Committee, the actions of the
Board shall control.

 

4.2.                              ACTION
AND INTERPRETATIONS BY THE COMMITTEE. 
For purposes of administering the Plan, the Committee may from time to
time adopt rules, regulations, guidelines and procedures for carrying out the
provisions and purposes of the Plan and make such other determinations, not
inconsistent with the Plan, as the Committee may deem appropriate.  The Committee’s interpretation of the Plan,
any Awards granted under the Plan, any Award Certificate and all decisions and
determinations by the Committee with respect to the Plan are final, binding,
and conclusive on all parties.  Each
member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other employee
of the Company or any Affiliate, the Company’s or an Affiliate’s independent
certified public accountants, Company counsel or any executive compensation
consultant or other professional retained by the Company to assist in the
administration of the Plan.

 

5

 

4.3.                              AUTHORITY
OF COMMITTEE.  Except as provided
below, the Committee has the exclusive power, authority and discretion to:

 

(a)                                  Grant
Awards;

 

(b)                                 Designate
Participants;

 

(c)                                  Determine
the type or types of Awards to be granted to each Participant;

 

(d)                                 Determine
the number of Awards to be granted and the number of Shares or dollar amount to
which an Award will relate;

 

(e)                                  Determine
the terms and conditions of any Award granted under the Plan, including but not
limited to, the exercise price, base price, or purchase price, any restrictions
or limitations on the Award, any schedule for lapse of forfeiture
restrictions or restrictions on the exercisability of an Award, and
accelerations or waivers thereof, based in each case on such considerations as
the Committee in its sole discretion determines;

 

(f)                                    Accelerate
the vesting, exercisability or lapse of restrictions of any outstanding Award,
in accordance with Article 14, based in each case on such considerations
as the Committee in its sole discretion determines;

 

(g)                                 Determine
whether, to what extent, and under what circumstances an Award may be settled
in, or the exercise price of an Award may be paid in, cash, Stock, other
Awards, or other property, or an Award may be canceled, forfeited, or
surrendered;

 

(h)                                 Prescribe
the form of each Award Certificate, which need not be identical for each
Participant;

 

(i)                                     Decide
all other matters that must be determined in connection with an Award;

 

(j)                                     Establish,
adopt or revise any rules, regulations, guidelines or procedures as it may deem
necessary or advisable to administer the Plan;

 

(k)                                  Make
all other decisions and determinations that may be required under the Plan or
as the Committee deems necessary or advisable to administer the Plan;

 

(l)                                     Amend
the Plan or any Award Certificate as provided herein; and

 

(m)                               Adopt
such modifications, procedures, and subplans as may be necessary or desirable
to comply with provisions of the laws of non-U.S. jurisdictions in which the
Company or any Affiliate may operate, in order to assure the viability of the
benefits of Awards granted to participants located in such other jurisdictions
and to meet the objectives of the Plan.

 

Notwithstanding the foregoing, grants of Awards to
Non-Employee Directors hereunder shall be made only in accordance with the
terms, conditions and parameters of a plan, program or policy for the
compensation of Non-Employee Directors as in effect from time to time, and the
Committee may not make discretionary grants hereunder to Non-Employee
Directors.

 

Notwithstanding the above, the Board or the Committee
may, by resolution, expressly delegate to a special committee, consisting of
one or more directors who are also officers of the Company, the authority,
within specified parameters, to (i) designate officers, employees and/or
consultants of the Company or any of its Affiliates to be recipients of Awards
under the Plan, and (ii) to determine the number of such Awards to be received
by any such Participants; provided, however, that such delegation of duties and
responsibilities to an officer of the Company may not be made with respect to
the grant of Awards to eligible participants (a) who are subject to Section 16(a)
of the

 

6

 

1934
Act at the Grant Date, or (b) who as of the Grant Date are reasonably
anticipated to be become Covered Employees during the term of the Award.  The acts of such delegates shall be treated
hereunder as acts of the Board and such delegates shall report regularly to the
Board and the Compensation Committee regarding the delegated duties and
responsibilities and any Awards so granted.

 

4.4.                              AWARD
CERTIFICATES.  Each Award shall be
evidenced by an Award Certificate.  Each
Award Certificate shall include such provisions, not inconsistent with the
Plan, as may be specified by the Committee.

 

ARTICLE 5

SHARES SUBJECT TO THE PLAN

 

5.1.                              NUMBER
OF SHARES.  Subject to adjustment as
provided in Sections 5.2 and 15.1, the aggregate number of Shares reserved and
available for issuance pursuant to Awards granted under the Plan shall be 14,000,000;
provided, however, that each Share issued under the Plan pursuant to a Full
Value Award shall reduce the number of available Shares by two (2) shares.  The maximum number of Shares that may be
issued upon exercise of Incentive Stock Options granted under the Plan shall be
2,000,000.

 

5.2.                              SHARE
COUNTING.

 

(a)                                  To
the extent that an Award is canceled, terminates, expires, is forfeited or
lapses for any reason, any unissued Shares subject to the Award will again be
available for issuance pursuant to Awards granted under the Plan.

 

(b)                                 Shares
subject to Awards settled in cash will again be available for issuance pursuant
to Awards granted under the Plan.

 

(c)                                  If
the exercise price of an Option is satisfied by delivering Shares to the
Company (by either actual delivery or attestation), only the number of Shares
issued in excess of the delivery or attestation (less any shares delivered by
the optionee to satisfy an applicable tax withholding obligation) shall be
considered for purposes of determining the number of Shares remaining available
for issuance pursuant to Awards granted under the Plan.

 

(d)                                 To
the extent that the full number of Shares subject to an Option is not issued
upon exercise of the Option for any reason, only the number of Shares issued
and delivered upon exercise of the Option shall be considered for purposes of
determining the number of Shares remaining available for issuance pursuant to
Awards granted under the Plan.  Nothing
in this subsection shall imply that any particular type of cashless
exercise of an Option is permitted under the Plan, that decision being reserved
to the Committee or other provisions of the Plan.

 

5.3.                              STOCK
DISTRIBUTED.  Any Stock distributed
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Stock, treasury Stock or Stock purchased on the open market.

 

5.4.                              LIMITATION
ON AWARDS.  Notwithstanding any
provision in the Plan to the contrary (but subject to adjustment as provided in
Section 15.1), the maximum number of Shares with respect to one or more
Options and/or SARs that may be granted during any one calendar year under the
Plan to any one Participant shall be 2,000,000. 
The maximum aggregate grant with respect to Awards of Restricted Stock,
Restricted Stock Units, Deferred Stock Units, Performance Shares or other
Stock-Based Awards (other than Options or SARs) granted in any one calendar
year to any one Participant shall be 2,000,000.

 

ARTICLE 6

ELIGIBILITY

 

6.1.                              GENERAL.  Awards may be granted only to Eligible
Participants; except that Incentive Stock Options may be granted to only to
Eligible Participants who are employees of the Company or a Parent or
Subsidiary as defined in Section 424(e) and (f) of the Code.

 

7

 

ARTICLE 7

STOCK OPTIONS

 

7.1.                              GENERAL.  The Committee is authorized to grant Options
to Participants on the following terms and conditions:

 

(a)                                  EXERCISE
PRICE.  The exercise price per Share
under an Option shall be determined by the Committee; provided that the
exercise price for any Option shall not be less than the Fair Market Value as
of the Grant Date.

 

(b)                                 TIME
AND CONDITIONS OF EXERCISE.  The
Committee shall determine the time or times at which an Option may be exercised
in whole or in part, subject to Section 7.1(d).  The Committee shall also determine the
performance or other conditions, if any, that must be satisfied before all or
part of an Option may be exercised or vested. 
The Committee may waive any exercise or vesting provisions at any time
in whole or in part based upon factors as the Committee may determine in its
sole discretion so that the Option becomes exercisable or vested at an earlier
date.  The Committee may permit an
arrangement whereby receipt of Stock upon exercise of an Option is delayed
until a specified future date.

 

(c)                                  PAYMENT.  The Committee shall determine the methods by
which the exercise price of an Option may be paid, the form of payment,
including, without limitation, cash, Shares, or other property (including “cashless
exercise” arrangements), and the methods by which Shares shall be delivered or
deemed to be delivered to Participants; provided, however, that if Shares are
used to pay the exercise price of an Option, such Shares must have been held by
the Participant for at least such period of time, if any, as necessary to avoid
the recognition of an expense under generally accepted accounting principles as
a result of the exercise of the Option.

 

(d)                                 EXERCISE
TERM.  In no event may any Option be
exercisable for more than ten years from the Grant Date.

 

(e)                                  SUSPENSION.  Any Participant who is also a participant in the Retirement at Micron (“RAM”)
Section 401(k) Plan and who requests and receives a hardship distribution
from the RAM Plan, is prohibited from making, and must suspend, his or her
employee elective contributions and employee contributions including, without
limitation on the foregoing, the exercise of any Option granted from the date of
receipt by that employee of the RAM hardship distribution.

 

7.2.                              INCENTIVE
STOCK OPTIONS.  The terms of any
Incentive Stock Options granted under the Plan must comply with the following
additional rules:

 

(a)                                  EXERCISE
PRICE.  The exercise price of an
Incentive Stock Option shall not be less than the Fair Market Value as of the
Grant Date.

 

(b)                                 LAPSE
OF OPTION.  Subject to any earlier
termination provision contained in the Award Certificate, an Incentive Stock
Option shall lapse upon the earliest of the following circumstances; provided,
however, that the Committee may, prior to the lapse of the Incentive Stock
Option under the circumstances described in subsections (3), (4) or (5) below,
provide in writing that the Option will extend until a later date, but if an
Option is so extended and is exercised after the dates specified in subsections
(3) and (4) below, it will automatically become a Nonstatutory Stock Option:

 

(1)                                  The
expiration date set forth in the Award Certificate.

 

(2)                                  The
tenth anniversary of the Grant Date.

 

(3)                                  Three
months after termination of the Participant’s Continuous Status as a
Participant for any reason other than the Participant’s Disability or death.

 

8

 

(4)                                  One
year after the Participant’s Continuous Status as a Participant by reason of
the Participant’s Disability.

 

(5)                                  One
year after the termination of the Participant’s death if the Participant dies
while employed, or during the three-month period described in paragraph (3) or
during the one-year period described in paragraph (4) and before the Option
otherwise lapses.

 

Unless the exercisability of the Incentive Stock
Option is accelerated as provided in Article 14, if a Participant
exercises an Option after termination of employment, the Option may be
exercised only with respect to the Shares that were otherwise vested on the
Participant’s termination of employment. 
Upon the Participant’s death, any exercisable Incentive Stock Options
may be exercised by the Participant’s beneficiary, determined in accordance
with Section 14.5.

 

(c)                                  INDIVIDUAL
DOLLAR LIMITATION.  The aggregate
Fair Market Value (determined as of the Grant Date) of all Shares with respect
to which Incentive Stock Options are first exercisable by a Participant in any
calendar year may not exceed $100,000.00.

 

(d)                                 TEN
PERCENT OWNERS.  No Incentive Stock
Option shall be granted to any individual who, at the Grant Date, owns stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or any Parent or Subsidiary unless the exercise
price per share of such Option is at least 110% of the Fair Market Value per
Share at the Grant Date and the Option expires no later than five years after
the Grant Date.

 

(e)                                  EXPIRATION
OF AUTHORITY TO GRANT INCENTIVE STOCK OPTIONS.  No Incentive Stock Option may be granted
pursuant to the Plan after the day immediately prior to the tenth anniversary
of the date the Plan was adopted by the Board, or the termination of the Plan,
if earlier.

 

(f)                                    RIGHT
TO EXERCISE.  During a Participant’s
lifetime, an Incentive Stock Option may be exercised only by the Participant
or, in the case of the Participant’s Disability, by the Participant’s guardian
or legal representative.

 

(g)                                 ELIGIBLE
GRANTEES.  The Committee may not
grant an Incentive Stock Option to a person who is not at the Grant Date an
employee of the Company or a Parent or Subsidiary.

 

ARTICLE 8

STOCK APPRECIATION RIGHTS

 

8.1.                              GRANT
OF STOCK APPRECIATION RIGHTS.  The
Committee is authorized to grant Stock Appreciation Rights to Participants on
the following terms and conditions:

 

(a)                                  RIGHT
TO PAYMENT.  Upon the exercise of a
Stock Appreciation Right, the Participant to whom it is granted has the right
to receive the excess, if any, of:

 

(1)                                  The
Fair Market Value of one Share on the date of exercise; over

 

(2)                                  The
base price of the Stock Appreciation Right as determined by the Committee,
which shall not be less than the Fair Market Value of one Share on the Grant
Date.

 

(b)                                 OTHER
TERMS.  All awards of Stock
Appreciation Rights shall be evidenced by an Award Certificate.  The terms, methods of exercise, methods of
settlement, form of consideration payable in settlement, and any other terms
and conditions of any Stock Appreciation Right shall be determined by the
Committee at the time of the grant of the Award and shall be reflected in the
Award Certificate.

 

9

 

ARTICLE 9

PERFORMANCE SHARES

 

9.1.                              GRANT
OF PERFORMANCE SHARES.  The Committee
is authorized to grant Performance Shares to Participants on such terms and
conditions as may be selected by the Committee. 
The Committee shall have the complete discretion to determine the number
of Performance Shares granted to each Participant, subject to Section 5.4,
and to designate the provisions of such Performance Shares as provided in Section 4.3.  All Performance Shares shall be evidenced by
an Award Certificate or a written program established by the Committee,
pursuant to which Performance Shares are awarded under the Plan under uniform
terms, conditions and restrictions set forth in such written program.

 

9.2.                              PERFORMANCE
GOALS.  The Committee may establish
performance goals for Performance Shares which may be based on any criteria
selected by the Committee.  Such
performance goals may be described in terms of Company-wide objectives or in
terms of objectives that relate to the performance of the Participant, an
Affiliate or a division, region, department or function within the Company or
an Affiliate.  If the Committee
determines that a change in the business, operations, corporate structure or
capital structure of the Company or the manner in which the Company or an
Affiliate conducts its business, or other events or circumstances render
performance goals to be unsuitable, the Committee may modify such performance
goals in whole or in part, as the Committee deems appropriate.  If a Participant is promoted, demoted or
transferred to a different business unit or function during a performance
period, the Committee may determine that the performance goals or performance
period are no longer appropriate and may (i) adjust, change or eliminate the
performance goals or the applicable performance period as it deems appropriate
to make such goals and period comparable to the initial goals and period, or
(ii) make a cash payment to the participant in amount determined by the
Committee.  The foregoing two sentences
shall not apply with respect to an Award of Performance Shares that is intended
to be a Qualified Performance-Based Award.

 

9.3.                              RIGHT
TO PAYMENT.  The grant of a
Performance Share to a Participant will entitle the Participant to receive at a
specified later time a specified number of Shares, or the equivalent value in
cash or other property, if the performance goals established by the Committee
are achieved and the other terms and conditions thereof are satisfied.  The Committee shall set performance goals and
other terms or conditions to payment of the Performance Shares in its
discretion which, depending on the extent to which they are met, will determine
the number of the Performance Shares that will be earned by the Participant.

 

9.4.                              OTHER
TERMS.  Performance Shares may be
payable in cash, Stock, or other property, and have such other terms and
conditions as determined by the Committee and reflected in the Award
Certificate.

 

ARTICLE 10

RESTRICTED STOCK AND RESTRICTED STOCK
UNIT AWARDS

 

10.1.                        GRANT OF RESTRICTED STOCK
AND RESTRICTED STOCK UNITS.  Subject
to the terms and conditions of this Article 10, the Committee is
authorized to make Awards of Restricted Stock or Restricted Stock Units to
Participants in such amounts and subject to such terms and conditions as may be
selected by the Committee.  An Award of
Restricted Stock or Restricted Stock Units shall be evidenced by an Award
Certificate setting forth the terms, conditions, and restrictions applicable to
the Award.

 

10.2.                        ISSUANCE AND RESTRICTIONS.  Restricted Stock or Restricted Stock Units
shall be subject to such restrictions on transferability and other restrictions
as the Committee may impose (including, without limitation, limitations on the
right to vote Restricted Stock or the right to receive dividends on the
Restricted Stock); provided, however, at a minimum, all Restricted Stock and
Restricted Stock Units shall be subject to the restrictions set forth in Section 14.4
for a period of no less than (a) one year from the date of award with respect
to Restricted Stock or Restricted Stock Units subject to restrictions that
lapse based upon satisfaction of performance goals, and (b) three years from
the date of award with respect to Restricted Stock or Restricted Stock Units
subject to time-based restrictions that lapse based upon one’s Continuous
Status as a Participant.  For avoidance
of doubt, nothing in the foregoing shall preclude any applicable restriction,
including those set forth in Section 14.4 hereof, from lapsing ratably,
including, but not limited to, roughly annual increments over three years, with
respect to the Restricted Stock or Restricted Stock Units referred to in Section 10.2(b).  Moreover, nothing in the foregoing shall
preclude or be

 

10

 

interpreted
to preclude Awards to Non-employee Directors from containing a period of
restriction shorter than that set forth above. 
Finally, nothing in this Section 10.2 shall be deemed or
interpreted to preclude the waiver, lapse or the acceleration of lapse, of any
restrictions with respect to Restricted Stock or Restricted Stock Units in
accordance with or as permitted by Sections 14.7 through Section 14.9,
respectively, Article 15 or any other provision of the Plan.  Subject to the remaining terms and conditions
of the Plan, these restrictions may lapse separately or in combination at such
times, under such circumstances, in such installments, upon the satisfaction of
performance goals or otherwise, as the Committee determines at the time of the
grant of the Award or thereafter.  Except
as otherwise provided in an Award Certificate or any special Plan document
governing an Award, the Participant shall have all of the rights of a
stockholder with respect to the Restricted Stock, and the Participant shall
have none of the rights of a stockholder with respect to Restricted Stock Units
until such time as Shares of Stock are paid in settlement of the Restricted
Stock Units.

 

10.3.                        FORFEITURE.  Except as otherwise determined by the
Committee at the time of the grant of the Award or thereafter, upon termination
of Continuous Status as a Participant during the applicable restriction period
or upon failure to satisfy a performance goal during the applicable restriction
period, Restricted Stock or Restricted Stock Units that are at that time
subject to restrictions shall be forfeited; provided, however, that the Committee
may provide in any Award Certificate, subject to the terms and conditions of
the Plan, that restrictions or forfeiture conditions relating to Restricted
Stock or Restricted Stock Units will be waived in whole or in part in the event
of terminations resulting from specified causes, including, but not limited to,
death, Disability, or for the convenience or in the best interests of the
Company.

 

10.4.                        DELIVERY OF RESTRICTED STOCK.  Shares of Restricted Stock shall be delivered
to the Participant at the time of grant either by book-entry registration or by
delivering to the Participant, or a custodian or escrow agent (including,
without limitation, the Company or one or more of its employees) designated by
the Committee, a stock certificate or certificates registered in the name of
the Participant.  If physical
certificates representing shares of Restricted Stock are registered in the name
of the Participant, such certificates must bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such Restricted Stock.

 

ARTICLE 11

DEFERRED STOCK UNITS

 

11.1.                        GRANT OF DEFERRED STOCK
UNITS.  The Committee is authorized
to grant Deferred Stock Units to Participants subject to such terms and
conditions as may be selected by the Committee. 
Deferred Stock Units shall entitle the Participant to receive Shares of
Stock (or the equivalent value in cash or other property if so determined by
the Committee) at a future time as determined by the Committee, or as
determined by the Participant within guidelines established by the Committee in
the case of voluntary deferral elections. 
An Award of Deferred Stock Units shall be evidenced by an Award
Certificate setting forth the terms and conditions applicable to the Award.

 

ARTICLE 12

DIVIDEND EQUIVALENTS

 

12.1.                        GRANT OF DIVIDEND
EQUIVALENTS.  The Committee is
authorized to grant Dividend Equivalents to Participants subject to such terms
and conditions as may be selected by the Committee.  Dividend Equivalents shall entitle the
Participant to receive payments equal to dividends with respect to all or a
portion of the number of Shares subject to an Award, as determined by the
Committee.  The Committee may provide
that Dividend Equivalents be paid or distributed when accrued or be deemed to
have been reinvested in additional Shares, or otherwise reinvested.

 

ARTICLE 13

STOCK OR OTHER STOCK-BASED AWARDS

 

13.1.                        GRANT OF STOCK OR OTHER
STOCK-BASED AWARDS.  The Committee is
authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that are payable in, valued in whole or in part
by reference to, or otherwise based on or related to Shares, as deemed by the
Committee to be consistent with the purposes of the Plan, including without
limitation Shares awarded purely as a “bonus” and not

 

11

 

subject
to any restrictions or conditions, convertible or exchangeable debt securities,
other rights convertible or exchangeable into Shares, and Awards valued by
reference to book value of Shares or the value of securities of or the
performance of specified Parents or Subsidiaries.  The Committee shall determine the terms and
conditions of such Awards.

 

ARTICLE 14

PROVISIONS APPLICABLE TO AWARDS

 

14.1.                        STAND-ALONE AND TANDEM
AWARDS.  Awards granted under the
Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, any other Award granted under the Plan.  Subject to Section 16.2, awards granted
in addition to or in tandem with other Awards may be granted either at the same
time as or at a different time from the grant of such other Awards.

 

14.2.                        TERM OF AWARD.  The term of each Award shall be for the
period as determined by the Committee, provided that in no event shall the term
of any Incentive Stock Option or a Stock Appreciation Right granted in tandem
with the Incentive Stock Option exceed a period of ten years from its Grant
Date (or, if Section 7.2(d) applies, five years from its Grant Date).

 

14.3.                        FORM OF PAYMENT FOR AWARDS.  Subject to the terms of the Plan and any
applicable law or Award Certificate, payments or transfers to be made by the
Company or an Affiliate on the grant or exercise of an Award may be made in
such form as the Committee determines at or after the Grant Date, including
without limitation, cash, Stock, other Awards, or other property, or any
combination, and may be made in a single payment or transfer, in installments,
or on a deferred basis, in each case determined in accordance with rules
adopted by, and at the discretion of, the Committee.

 

14.4.                        LIMITS ON TRANSFER.  No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Company or an Affiliate, or shall be subject
to any lien, obligation, or liability of such Participant to any other party
other than the Company or an Affiliate. 
No unexercised or restricted Award shall be assignable or transferable
by a Participant other than by will or the laws of descent and distribution or,
except in the case of an Incentive Stock Option, pursuant to a domestic
relations order that would satisfy Section 414(p)(1)(A) of the Code if
such Section applied to an Award under the Plan; provided, however, that
the Committee may (but need not) permit other transfers where the Committee
concludes that such transferability (i) does not result in accelerated
taxation, (ii) does not cause any Option intended to be an Incentive Stock
Option to fail to be described in Code Section 422(b), and (iii) is
otherwise appropriate and desirable, taking into account any factors deemed
relevant, including without limitation, state or federal tax or securities laws
applicable to transferable Awards.

 

14.5.                        BENEFICIARIES.  Notwithstanding Section 14.4, a
Participant may, in the manner determined by the Committee, designate a
beneficiary to exercise the rights of the Participant and to receive any
distribution with respect to any Award upon the Participant’s death.  A beneficiary, legal guardian, legal representative,
or other person claiming any rights under the Plan is subject to all terms and
conditions of the Plan and any Award Certificate applicable to the Participant,
except to the extent the Plan and Award Certificate otherwise provide, and to any
additional restrictions deemed necessary or appropriate by the Committee.  If no beneficiary has been designated or
survives the Participant, payment shall be made to the Participant’s
estate.  Subject to the foregoing, a
beneficiary designation may be changed or revoked by a Participant at any time
provided the change or revocation is filed with the Committee.

 

14.6.                        STOCK CERTIFICATES.  All Stock issuable under the Plan is subject
to any stop-transfer orders and other restrictions as the Committee deems necessary
or advisable to comply with federal or state securities laws, rules and
regulations and the rules of any national securities exchange or automated
quotation system on which the Stock is listed, quoted, or traded.  The Committee may place legends on any Stock
certificate or issue instructions to the transfer agent to reference
restrictions applicable to the Stock.

 

14.7.                        ACCELERATION UPON A CHANGE
IN CONTROL.  Except as otherwise
provided in the Award Certificate or any special Plan document governing an
Award, upon the occurrence of a Change in Control,

 

12

 

all
outstanding Options, SARs, and other Awards in the nature of rights that may be
exercised shall become fully exercisable, and all time-based vesting
restrictions on outstanding Awards shall lapse. 
Except as otherwise provided in the Award Certificate or any special
Plan document governing an Award, upon the occurrence of a Change in Control,
the target payout opportunities attainable under all outstanding
performance-based Awards shall be deemed to have been fully earned as of the
effective date of the Change in Control based upon an assumed achievement of
all relevant performance goals at the “target” level and there shall be pro rata
payout to Participants within thirty (30) days following the effective date of
the Change in Control based upon the length of time within the performance
period that has elapsed prior to the Change in Control.

 

14.8                           ACCELERATION
UPON DEATH OR DISABILITY.  Except as
otherwise provided in the Award Certificate or any special Plan document
governing an Award, upon the Participant’s death or Disability during his or
her Continuous Status as a Participant, (i) all of such Participant’s
outstanding Options, SARs, and other Awards in the nature of rights that may be
exercised shall become fully exercisable, (ii) all time-based vesting
restrictions on the Participant’s outstanding Awards shall lapse, and (iii) the
target payout opportunities attainable under all of such Participant’s
outstanding performance-based Awards shall be deemed to have been fully earned
as of the date of termination based upon an assumed achievement of all relevant
performance goals at the “target” level and there shall be a pro rata payout to
the Participant or his or her estate within thirty (30) days following the date
of termination based upon the length of time within the performance period that
has elapsed prior to the date of termination. 
Any Awards shall thereafter continue or lapse in accordance with the
other provisions of the Plan and the Awards Certificate.  To the extent that this provision causes
Incentive Stock Options to exceed the dollar limitation set forth in Section 7.2(c),
the excess Options shall be deemed to be Nonstatutory Stock Options.

 

14.9.                        ACCELERATION FOR ANY OTHER
REASON.  Regardless of whether an
event has occurred as described in Section 14.7 or 14.8 above, and subject
to Section 14.11 as to Qualified Performance-Based Awards, the Committee
may in its sole discretion at any time determine that all or a portion of a
Participant’s Options, SARs, and other Awards in the nature of rights that may
be exercised shall become fully or partially exercisable, that all or a part of
the time-based vesting restrictions on all or a portion of the outstanding
Awards shall lapse, and/or that any performance-based criteria with respect to
any Awards shall be deemed to be wholly or partially satisfied, in each case,
as of such date as the Committee may, in its sole discretion, declare; provided,
however, the Committee shall not exercise such discretion with respect to Full
Value Awards comprised of Shares of Restricted Stock or Restricted Stock Units
which, in the aggregate, exceed five percent (5%) of the aggregate number of
Shares reserved and available for issuance pursuant to Awards granted under the
Plan; provided, further, that when calculating whether the five percent (5%)
maximum has been reached, the Committee shall not count or consider any Shares
of Restricted Stock or Restricted Stock Units granted to Non-Employee Directors
or regarding which the Committee accelerated vesting rights, waived
restrictions or determined performance-based criteria had been satisfied
resulting from an event described in Section 14.7, 24.8. Article 15, a
Participant’s termination of employment or separation from service resulting
from death, Disability or for the convenience or in the bests interests of the
Company.  The Committee may discriminate
among Participants and among Awards granted to a Participant in exercising its
discretion pursuant to this Section 14.9.

 

14.10.                  EFFECT OF ACCELERATION.  If an Award is accelerated under Section 14.7,
Section 14.8 or Section 14.9, the Committee may, in its sole
discretion, provide (i) that the Award will expire after a designated period of
time after such acceleration to the extent not then exercised, (ii) that the
Award will be settled in cash rather than Stock, (iii) that the Award will be
assumed by another party to a transaction giving rise to the acceleration or
otherwise be equitably converted or substituted in connection with such
transaction, (iv) that the Award may be settled by payment in cash or cash
equivalents equal to the excess of the Fair Market Value of the underlying
Stock, as of a specified date associated with the transaction, over the
exercise price of the Award, or (v) any combination of the foregoing.  The Committee’s determination need not be
uniform and may be different for different Participants whether or not such
Participants are similarly situated.  To
the extent that such acceleration causes Incentive Stock Options to exceed the
dollar limitation set forth in Section 7.2(c), the excess Options shall be
deemed to be Nonstatutory Stock Options.

 

14.11.                  QUALIFIED PERFORMANCE-BASED AWARDS.

 

(a)                                  The
provisions of the Plan are intended to ensure that all Options and Stock
Appreciation Rights granted hereunder to any Covered Employee shall qualify for
the Section 162(m) Exemption;

 

13

 

provided that the
exercise or base price of such Award is not less than the Fair Market Value of
the Shares on the Grant Date.

 

(b)                                 When
granting any other Award, the Committee may designate such Award as a Qualified
Performance-Based Award, based upon a determination that the recipient is or
may be a Covered Employee with respect to such Award, and the Committee wishes
such Award to qualify for the Section 162(m) Exemption.  If an Award is so designated, the Committee
shall establish performance goals for such Award within the time period
prescribed by Section 162(m) of the Code based on one or more of the
following Qualified Business Criteria, which may be expressed in terms of
Company-wide objectives or in terms of objectives that relate to the
performance of an Affiliate or a unit, division, region, department or function
within the Company or an Affiliate:

 

•                                          Gross and/or
net revenue (including whether in the aggregate or attributable to specific
products)

•                                          Cost of Goods
Sold and Gross Margin

•                                          Costs and
expenses, including Research & Development and Selling, General &
Administrative

•                                          Income
(gross, operating, net, etc.)

•                                          Earnings,
including before interest, taxes, depreciation and amortization (whether in the
aggregate or on a per share basis

•                                          Cash flows
and share price

•                                          Return on
investment, capital, equity

•                                          Manufacturing
efficiency (including yield enhancement and cycle time reductions), quality
improvements and customer satisfaction

•                                          Product life
cycle management (including product and technology design, development,
transfer, manufacturing introduction, and sales price optimization and
management)

•                                          Economic
profit or loss

•                                          Market share

•                                          Employee
retention, compensation, training and development, including succession
planning

•                                          Objective
goals consistent with the Participant’s specific officer duties and
responsibilities, designed to further the financial, operational and other
business interests of the Company, including goals and objectives with respect
to regulatory compliance matters.

 

Performance goals
with respect to the foregoing Qualified Business Criteria may be specified in
absolute terms (including completion of pre-established projects, such as the
introduction of specified products), in percentages, or in terms of growth from
period to period or growth rates over time as well as measured relative to an
established or specially-created performance index of Company competitors,
peers or other members of high tech industries. 
Any member of an index that disappears during a measurement period shall
be disregarded for the entire measurement period.  Performance Goals need not be based upon an
increase or positive result under a business criterion and could include, for
example, the maintenance of the status quo or the limitation of economic losses
(measured, in each case, by reference to a specific business criterion).

 

(c)                                  Each
Qualified Performance-Based Award (other than an Option or SAR) shall be
earned, vested and payable (as applicable) only upon the achievement of
performance goals established by the Committee based upon one or more of the
Qualified Business Criteria, together with the satisfaction of any other
conditions, including the condition as to continued employment as set forth in
subsection (g) below, as the Committee may determine to be appropriate;
provided, however, that the Committee may provide, in its sole and absolute
discretion, either in connection with the grant thereof or by amendment
thereafter, that achievement of such performance goals will be waived upon the
death or Disability of the Participant, or upon a Change in Control.
Performance periods established by the Committee for any such Qualified
Performance-Based Award may be as short as ninety (90) days and may be any
longer period.

 

(d)                                 The
Committee may provide in any Qualified Performance-Based Award that any
evaluation

 

14

 

of performance may
include or exclude any of the following events that occurs during a performance
period: (a) asset write-downs or impairment charges; (b) litigation or claim
judgments or settlements; (c) the effect of changes in tax laws, accounting
principles or other laws or provisions affecting reported results; (d) accruals
for reorganization and restructuring programs; (e) extraordinary nonrecurring
items as described in Accounting Principles Board Opinion No. 30 and/or in
management’s discussion and analysis of financial condition and results of
operations appearing in the Company’s annual report to stockholders for the
applicable year; (f) acquisitions or divestitures; and (g) foreign exchange
gains and losses. To the extent such inclusions or exclusions affect Awards to
Covered Employees, they shall be prescribed in a form and at a time that meets
the requirements of Code Section 162(m) for deductibility.

 

(e)                                  Any
payment of a Qualified Performance-Based Award granted with performance goals
pursuant to subsection (c) above shall be conditioned on the written
certification of the Committee in each case that the performance goals and any
other material conditions were satisfied. Written certification may take the
form of a Committee resolution passed by a majority of the Committee at a
properly convened meeting or through unanimous action by the Committee via
action by written consent.  The certification
requirement also may be satisfied by a separate writing executed by the
Chairman of the Committee, acting in his capacity as such, following the
foregoing Committee action or by the Chairman executing approved minutes of the
Committee in which such determinations were made.  Except as specifically provided in subsection (c),
no Qualified Performance-Based Award held by a Covered Employee or an employee
who in the reasonable judgment of the Committee may be a Covered Employee on
the date of payment, may be amended, nor may the Committee exercise any
discretionary authority it may otherwise have under the Plan with respect to a
Qualified Performance-Based Award under the Plan, in any manner to waive the
achievement of the applicable performance goal based on Qualified Business
Criteria or to increase the amount payable pursuant thereto or the value
thereof, or otherwise in a manner that would cause the Qualified
Performance-Based Award to cease to qualify for the Section 162(m)
Exemption.

 

(f)                                    Section 5.4
sets forth the maximum number of Shares or dollar value that may be granted in
any one-year period to a Participant in designated forms of Qualified
Performance-Based Awards.

 

(g)                                 With
respect to a Participant who is an officer of the Company, any payment of a
Qualified Performance-Based Award granted with performance goals pursuant to
subsection (c) above shall be conditioned on the officer having remained continuously
employed by the Company or an Affiliate for the entire performance or measurement
period, including, as well, through the date of determination and certification
of the payment of any such Award pursuant to subsection (e) above (the “Certification
Date”).  For purposes of the Plan, with
respect to any given performance or measurement period, an officer of the
Company who (i) terminates employment (regardless of cause) or who otherwise
ceases to be an officer, prior to the Certification Date and (ii) who, pursuant
to a separate contractual arrangement with the Company is entitled to receive payments
from the Company thereunder extending to or beyond such Certification Date as a
result of such termination or cessation in officer status, shall be deemed to
have been employed by the Company as an officer through the Certification Date
for purposes of payment eligibility.

 

14.12.                  TERMINATION OF EMPLOYMENT.  Whether military, government or other service
or other leave of absence shall constitute a termination of employment shall be
determined in each case by the Committee at its discretion, and any determination
by the Committee shall be final and conclusive. 
A Participant’s Continuous Status as a Participant shall not be deemed
to terminate (i) in a circumstance in which a Participant transfers from the
Company to an Affiliate, transfers from an Affiliate to the Company, or
transfers from one Affiliate to another Affiliate, or (ii) in the discretion of
the Committee as specified at or prior to such occurrence, in the case of a
spin-off, sale or disposition of the Participant’s employer from the Company or
any Affiliate.  To the extent that this
provision causes Incentive Stock Options to extend beyond three months from the
date a Participant is deemed to be an employee of the Company, a Parent or
Subsidiary for purposes of Sections 424(e) and 424(f) of the Code, the Options
held by such Participant shall be deemed to be Nonstatutory Stock Options.

 

14.13.                  DEFERRAL.  Subject to applicable law, the Committee may
permit or require a Participant to defer such Participant’s receipt of the
payment of cash or the delivery of Shares that would otherwise be due to such
Participant by virtue of the exercise of an Option or SAR, the lapse or waiver
of restrictions with respect to Restricted Stock or Restricted Stock Units, or
the satisfaction of any requirements or goals with respect to Performance
Shares,

 

15

 

and
Other Stock-Based Awards. If any such deferral election is required or
permitted, the Board shall, in its sole discretion, establish rules and
procedures for such payment deferrals.

 

14.14.                  FORFEITURE EVENTS.  The Committee may specify in an Award
Certificate that the Participant’s rights, payments and benefits with respect
to an Award shall be subject to reduction, cancellation, forfeiture or
recoupment upon the occurrence of certain specified events, in addition to any
otherwise applicable vesting or performance conditions of an Award. Such events
shall include, but shall not be limited to, termination of employment for
cause, violation of material Company or Affiliate policies, breach of
noncompetition, confidentiality or other restrictive covenants that may apply
to the Participant, or other conduct by the Participant that is detrimental to
the business or reputation of the Company or any Affiliate.

 

14.15.                  SUBSTITUTE AWARDS.  The Committee may grant Awards under the Plan
in substitution for stock and stock-based awards held by employees of another
entity who become employees of the Company or an Affiliate as a result of a
merger or consolidation of the former employing entity with the Company or an
Affiliate or the acquisition by the Company or an Affiliate of property or
stock of the former employing corporation. 
The Committee may direct that the substitute awards be granted on such
terms and conditions as the Committee considers appropriate in the
circumstances.

 

ARTICLE 15

CHANGES IN CAPITAL STRUCTURE

 

15.1.                        GENERAL.  In the
event of a corporate event or transaction involving the Company (including,
without limitation, any stock dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination or exchange of shares), the authorization limits
under Section 5.1 and 5.4 shall be adjusted proportionately, and the Committee may adjust the Plan and Awards to
preserve the benefits or potential benefits of the Awards.  Action by the Committee may include: (i)
adjustment of the number and kind of shares which may be delivered under the
Plan; (ii) adjustment of the number and kind of shares subject to outstanding
Awards; (iii) adjustment of the exercise price of outstanding Awards or the
measure to be used to determine the amount of the benefit payable on an Award;
and (iv) any other adjustments that the Committee determines to be equitable.  In addition, the Committee may, in its
sole discretion, provide (i) that Awards will be settled in cash or other
property rather than Stock, (ii) that Awards will become immediately vested and
exercisable and will expire after a designated period of time to the extent not
then exercised, (iii) that Awards will be assumed by another party to a
transaction or otherwise be equitably converted or substituted in connection
with such transaction, (iv) that outstanding Awards may be settled by payment
in cash or cash equivalents equal to the excess of the Fair Market Value of the
underlying Stock, as of a specified date associated with the transaction, over
the exercise price of the Award, (v) that applicable performance targets and
performance periods for Awards will be modified, consistent with Code Section 162(m)
where applicable, or (vi) any combination of the foregoing.  The Committee’s determination need not be
uniform and may be different for different Participants whether or not such
Participants are similarly situated.  Without limiting the foregoing, in the
event of a subdivision of the outstanding Stock (stock-split), a declaration of
a dividend payable in Shares, or a combination or consolidation of the
outstanding Stock into a lesser number of Shares, the authorization limits
under Section 5.1 and 5.4 shall automatically be adjusted proportionately,
and the Shares then subject to each Award shall automatically be adjusted
proportionately without any change in the aggregate purchase price
therefor.  To the extent that any
adjustments made pursuant to this Article 15 cause Incentive Stock Options
to cease to qualify as Incentive Stock Options, such Options shall be deemed to
be Nonstatutory Stock Options.

 

ARTICLE 16

AMENDMENT, MODIFICATION AND TERMINATION

 

16.1.                        AMENDMENT, MODIFICATION AND
TERMINATION.  The Board or the
Committee may, at any time and from time to time, amend, modify or terminate
the Plan without stockholder approval; provided, however, that if an amendment
to the Plan would, in the reasonable opinion of the Board or the Committee,
either (i) materially increase the number of Shares available under the Plan,
(ii) expand the types of awards under the Plan, (iii) materially expand the
class of participants eligible to participate in the Plan, (iv) materially
extend the term of the Plan, or (v) otherwise constitute a material change
requiring stockholder approval under applicable laws, policies or regulations
or the applicable listing or other requirements of an Exchange, then such
amendment shall be subject to

 

16

 

stockholder
approval; and provided, further, that the Board or Committee may condition any
other amendment or modification on the approval of stockholders of the Company
for any reason, including by reason of such approval being necessary or deemed
advisable to (i) permit Awards made hereunder to be exempt from liability under
Section 16(b) of the 1934 Act, (ii) to comply with the listing or other
requirements of an Exchange, or (iii) to satisfy any other tax, securities or
other applicable laws, policies or regulations.

 

16.2.                        AWARDS PREVIOUSLY GRANTED.  At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however:

 

(a)                                  Subject
to the terms of the applicable Award Certificate, such amendment, modification
or termination shall not, without the Participant’s consent, reduce or diminish
the value of such Award determined as if the Award had been exercised, vested,
cashed in or otherwise settled on the date of such amendment or termination
(with the per-share value of an Option or Stock Appreciation Right for this
purpose being calculated as the excess, if any, of the Fair Market Value as of
the date of such amendment or termination over the exercise or base price of
such Award);

 

(b)                                 The
original term of an Option may not be extended without the prior approval of
the stockholders of the Company;

 

(c)                                  Except
as otherwise provided in Article 15, the exercise price of an Option may
not be reduced, directly or indirectly, without the prior approval of the
stockholders of the Company; and

 

(d)                                 No
termination, amendment, or modification of the Plan shall adversely affect any
Award previously granted under the Plan, without the written consent of the
Participant affected thereby.  An
outstanding Award shall not be deemed to be “adversely affected” by a Plan
amendment if such amendment would not reduce or diminish the value of such
Award determined as if the Award had been exercised, vested, cashed in or
otherwise settled on the date of such amendment (with the per-share value of an
Option or Stock Appreciation Right for this purpose being calculated as the
excess, if any, of the Fair Market Value as of the date of such amendment over
the exercise or base price of such Award).

 

ARTICLE 17

GENERAL PROVISIONS

 

17.1.                        NO RIGHTS TO AWARDS;
NON-UNIFORM DETERMINATIONS.  No
Participant or any Eligible Participant shall have any claim to be granted any
Award under the Plan.  Neither the
Company, its Affiliates nor the Committee is obligated to treat Participants or
Eligible Participants uniformly, and determinations made under the Plan may be
made by the Committee selectively among Eligible Participants who receive, or
are eligible to receive, Awards (whether or not such Eligible Participants are
similarly situated).

 

17.2.                        NO STOCKHOLDER RIGHTS.  No Award gives a Participant any of the
rights of a stockholder of the Company unless and until Shares are in fact
issued to such person in connection with such Award.

 

17.3.                        WITHHOLDING.  The Company or any Affiliate shall have the
authority and the right to deduct or withhold, or require a Participant to
remit to the Company, an amount sufficient to satisfy federal, state, and local
taxes (including the Participant’s FICA obligation) required by law to be
withheld with respect to any exercise, lapse of restriction or other taxable
event arising as a result of the Plan. 
If Shares are surrendered to the Company to satisfy withholding
obligations in excess of the minimum withholding obligation, such Shares must
have been held by the Participant as fully vested shares for such period of
time, if any, as necessary to avoid the recognition of an expense under
generally accepted accounting principles. 
The Company shall have the authority to require a Participant to remit
cash to the Company in lieu of the surrender of Shares for tax withholding
obligations if the surrender of Shares in satisfaction of such withholding
obligations would result in the Company’s recognition of expense under
generally accepted accounting principles. 
With respect to withholding required upon any taxable event under the
Plan, the Committee may, at the time the Award is granted or thereafter,
require or permit that any such withholding requirement be satisfied, in whole
or in part, by withholding from the Award Shares having a Fair Market Value on
the date of withholding equal to the minimum amount (and not any greater
amount) required to be withheld for tax purposes, all in accordance with such
procedures as the Committee establishes.

 

17

 

17.4.                        NO RIGHT TO CONTINUED
SERVICE.  Nothing in the Plan, any
Award Certificate or any other document or statement made with respect to the
Plan, shall interfere with or limit in any way the right of the Company or any
Affiliate to terminate any Participant’s employment or status as an officer,
director or consultant at any time, nor confer upon any Participant any right
to continue as an employee, officer, director or consultant of the Company or
any Affiliate, whether for the duration of a Participant’s Award or otherwise.

 

17.5.                        UNFUNDED STATUS OF AWARDS.  The Plan is intended to be an “unfunded” plan
for incentive and deferred compensation. 
With respect to any payments not yet made to a Participant pursuant to
an Award, nothing contained in the Plan or any Award Certificate shall give the
Participant any rights that are greater than those of a general creditor of the
Company or any Affiliate.  This Plan is
not intended to be subject to ERISA.

 

17.6.                        RELATIONSHIP TO OTHER
BENEFITS.  No payment under the Plan
shall be taken into account in determining any benefits under any pension,
retirement, savings, profit sharing, group insurance, welfare or benefit plan
of the Company or any Affiliate unless provided otherwise in such other plan.

 

17.7.                        EXPENSES.  The expenses of administering the Plan shall
be borne by the Company and its Affiliates.

 

17.8.                        TITLES AND HEADINGS.  The titles and headings of the Sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.

 

17.9.                        GENDER AND NUMBER.  Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural
shall include the singular and the singular shall include the plural.

 

17.10.                  FRACTIONAL SHARES.  No fractional Shares shall be issued and the
Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional Shares or whether such fractional Shares shall be eliminated
by rounding up or down.

 

17.11.                  GOVERNMENT AND OTHER REGULATIONS.

 

(a)                                  Notwithstanding
any other provision of the Plan, no Participant who acquires Shares pursuant to
the Plan may, during any period of time that such Participant is an affiliate
of the Company (within the meaning of the rules and regulations of the
Securities and Exchange Commission under the 1933 Act), sell such Shares,
unless such offer and sale is made (i) pursuant to an effective registration
statement under the 1933 Act, which is current and includes the Shares to be
sold, or (ii) pursuant to an appropriate exemption from the registration
requirement of the 1933 Act, such as that set forth in Rule 144 promulgated
under the 1933 Act.

 

(b)                                 Notwithstanding
any other provision of the Plan, if at any time the Committee shall determine
that the registration, listing or qualification of the Shares covered by an
Award upon any Exchange or under any foreign, federal, state or local law or
practice, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting
of such Award or the purchase or receipt of Shares thereunder, no Shares may be
purchased, delivered or received pursuant to such Award unless and until such
registration, listing, qualification, consent or approval shall have been
effected or obtained free of any condition not acceptable to the
Committee.  Any Participant receiving or
purchasing Shares pursuant to an Award shall make such representations and
agreements and furnish such information as the Committee may request to assure
compliance with the foregoing or any other applicable legal requirements.  The Company shall not be required to issue or
deliver any certificate or certificates for Shares under the Plan prior to the
Committee’s determination that all related requirements have been
fulfilled.  The Company shall in no event
be obligated to register any securities pursuant to the 1933 Act or applicable
state or foreign law or to take any other action in order to cause the issuance
and delivery of such certificates to comply with any such law, regulation or
requirement.

 

18

 

17.12.                  GOVERNING LAW.  To the extent not governed by federal law,
the Plan and all Award Certificates shall be construed in accordance with and
governed by the laws of the State of Delaware.

 

17.13.                  ADDITIONAL PROVISIONS.  Each Award Certificate may contain such other
terms and conditions as the Committee may determine; provided that such other
terms and conditions are not inconsistent with the provisions of the Plan.

 

17.14.                  NO LIMITATIONS ON RIGHTS OF
COMPANY.  The grant of any Award
shall not in any way affect the right or power of the Company to make
adjustments, reclassification or changes in its capital or business structure
or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part
of its business or assets.  The Plan
shall not restrict the authority of the Company, for proper corporate purposes,
to draft or assume awards, other than under the Plan, to or with respect to any
person.  If the Committee so directs, the
Company may issue or transfer Shares to an Affiliate, for such lawful
consideration as the Committee may specify, upon the condition or understanding
that the Affiliate will transfer such Shares to a Participant in accordance
with the terms of an Award granted to such Participant and specified by the
Committee pursuant to the provisions of the Plan.

 

17.15.                  INDEMNIFICATION.  Each person who is or shall have been a
member of the Committee, or of the Board, or an officer of the Company to whom
authority was delegated in accordance with Article 4 shall be indemnified
and held harmless by the Company against and from 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 and against and 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
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,
unless such loss, cost, liability, or expense is a result of his or her own
willful misconduct or except as expressly provided by statute.  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, as
a matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.

 

19

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