Document:

Exhibit 4.1

 

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 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 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.

 

(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 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.

 

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 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.

 

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.

 

(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.

 

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.  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).  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 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, and the Committee may in other cases waive in whole or in part
restrictions or forfeiture conditions relating to Restricted Stock or
Restricted Stock Units.

 

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 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, 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
prorata 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 prorata 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.  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; 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 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, 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 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.

 

17.4.                        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.

 

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.Exhibit
4.2

 

MICRON
TECHNOLOGY, INC.

1989
EMPLOYEE STOCK PURCHASE PLAN

 

The following constitute the provisions of
the 1989 Employee Stock Purchase Plan of Micron Technology, Inc.:

 

1.                                       Purpose.  The purpose of the Plan is to provide
employees of the Company and its Designated Subsidiaries with an opportunity to
purchase Common Stock of the Company through accumulated payroll
deductions.  It is the intention of the
Company to have the Plan qualify as an “Employee Stock Purchase Plan” under Section 423
of the Internal Revenue Code of 1986, as amended.  The provisions of the Plan shall,
accordingly, be construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code.

 

2.                                       Definitions.

 

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

 

(b)                                 “Code” shall
mean the Internal Revenue Code of 1986, as amended.

 

(c)                                  “Committee”
shall mean the committee of the Board appointed by the Board to administer the
Plan, if any is appointed.

 

(d)                                 “Common Stock” shall
mean the Common Stock, $.10 par value, of the Company.

 

(e)                                  “Company”
shall mean Micron Technology, Inc., a Delaware corporation.

 

(f)                                    “Compensation”
with respect to any Employee means such Employee’s wages, salaries, fees for
professional services and other amounts received for personal services actually
rendered in the course of employment with the Company or its designated
subsidiaries to the extent that the amounts are includible in gross income
(including, but not limited to, commissions paid to salesmen, compensation for
services on the basis of a percentage of profits, tips, and bonuses).

 

Compensation shall exclude (a)(1)
contributions made by the employer to a plan of deferred compensation to the
extent that, the contributions are not includible in the gross income of the
Employee for the taxable year in which contributed, (2) employer contributions
made on behalf of an Employee to a simplified employee pension plan described
in Code Section 408(k) to the extent such contributions are excludable
from the Employee’s gross income, (3) any distributions from a plan of deferred
compensation; (b) amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by an Employee either
becomes freely transferable or is no longer subject to substantial risk of
forfeiture; (c) amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; (d) other amounts which
receive special tax benefits, such as premiums for group-term life insurance
(but only to the extent that the premiums are not includible in the gross
income of the employee), or contributions made by the employer (whether or not
under a salary reduction agreement) towards the purchase of any annuity contract
described in Code Section 403(b) (whether or not the contributions are
actually excludable from the Employee’s gross income); (e) reimbursements or
other expense allowances; (f) fringe benefits (cash and noncash); (g) moving
expenses; and (h) welfare benefits.

 

(g)                                 “Continuous Status
as an Employee” shall mean the absence of any interruption or termination
of service as an Employee.  Continuous
Status as an Employee shall not be considered interrupted in the case of a
leave of absence agreed to in writing by the Company, provided that such leave
is for a period of not more than 90 days or reemployment upon the expiration of
such leave is guaranteed by contract or statute.

 

(h)                                 “Designated
Subsidiaries” shall mean the Subsidiaries which have been designated by the
Board from time to time in its sole discretion as eligible to participate in
the Plan.

 

 

(i)                                     “Employee”
shall mean any person, including an officer, who is continuously employed for
at least twenty (20) hours per week and more than five (5) months in a calendar
year by the Company or one of its Designated Subsidiaries.

 

(j)                                     “Enrollment
Date” shall mean the first day of each Offering Period.

 

(k)                                  “Exercise
Date” shall mean the last Trading Day of each Offering Period of the Plan.

 

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

 

(i)                                     If
the Common Stock is listed on any established stock exchange, including without
limitation the New York Stock Exchange (“NYSE”), or a national market system,
the Fair Market Value of a Share of Common Stock shall be the average closing
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or system (or the exchange with the greatest volume of trading
in Common 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 Administrator deems reliable;

 

(ii)                                  If
the Common 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 a Share of Common Stock shall be the mean between the
high bid and low asked prices for the Common Stock on the last market trading
day prior to the day of determination, as reported by Bloomberg L.P. or such other source as the
Administrator deems reliable;

 

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

 

(m)                               “Offering Period”
shall mean a period of three (3) months during which an option granted pursuant
to the Plan may be exercised.

 

(n)                                 “Plan” shall
mean this Employee Stock Purchase Plan.

 

(o)                                 “Subsidiary”
shall mean a corporation, domestic or foreign, of which not less than 50% of the
voting shares are held by the Company or a Subsidiary, whether or not such
corporation now exists or is hereafter organized or acquired by the Company or
a Subsidiary.

 

(p)                                 “Trading Day”
shall mean a day on which the national stock exchanges and Nasdaq system are
open for trading.

 

3.                                       Eligibility.

 

(a)                                  Any Employee as
defined in paragraph 2 who is employed by the Company or any Subsidiary of the
Company on a given Enrollment Date shall be eligible to participate in the
Plan.

 

(b)                                 Any provisions of the
Plan to the contrary notwithstanding, no Employee shall be granted an option
under the Plan (i) if, immediately after the grant, such Employee (or any other
person whose stock would be attributed to such Employee pursuant to Section 424(d)
of the Code) would own stock and/or hold outstanding options to purchase stock
possessing five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company or of any Subsidiary of the
Company, or (ii) which permits his rights to purchase stock under all employee
stock purchase plans (described in Section 423 of the Code) of the Company
and its Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand
Dollars ($25,000) of Fair Market Value of such stock (determined at the time
such option is granted) for each calendar year in which such option is
outstanding at any time.

 

 

(c)                                  All Employees who
participate in the Plan shall have the same rights and privileges, except for
differences that may be mandated by local law and that are consistent with Code
Section 423(b)(5); provided that Employees participating in any sub-plan
adopted pursuant to Section 14(c) that is not designed to qualify under Section 423
of the Code need not have the same rights and privileges as Employees participating
in the Code Section 423 plan.

 

4.                                       Offering
Periods.  The Plan shall be
implemented by consecutive Offering Periods with a new Offering Period
commencing on or about January 1, April 1, July 1, and October 1
of each year commencing on or about January 1, 1989 or, in the discretion
of the committee, April 1, 1989, and continuing thereafter until
terminated in accordance with paragraph 20 hereof.  Subject to the shareholder approval
requirements of paragraph 20, the Board of Directors of the Company shall have
the power to change the duration of offering periods with respect to future
offerings if such change is announced at least fifteen (15) days prior to the
scheduled beginning of the first offering period to be affected.

 

5.                                       Participation.

 

(a)                                  An eligible Employee may become a participant
in the Plan by completing a Company approved enrollment form authorizing
payroll deductions and filing it with the Company’s Global Stock Plans
Department at least ten (10) business days prior to the applicable Enrollment
Date, unless a different time for filing the subscription agreement is set by
the Board for all eligible Employees with respect to a given Offering Period.

 

(b)                                 Payroll
deductions for a participant shall commence on the first payroll following the
Enrollment Date and shall end on the last payroll in the Offering Period to
which such authorization is applicable, unless sooner terminated by the
participant as provided in paragraph 11.

 

6.                                       Payroll
Deductions.

 

(a)                                  At the time a
participant files his subscription agreement, he or she shall elect to have
payroll deductions made on each payday during the Offering Period in an amount
not less than one percent (1%) and not greater than twenty percent (20%) of the
Compensation which he or she received on the payday immediately preceding the
Enrollment Date, and the aggregate of such payroll deductions during the
Offering Period shall not exceed twenty percent (20%) of his or her aggregate
Compensation during said Offering Period.

 

(b)                                 All payroll deductions
made by a participant shall be credited to his or her account under the
Plan.  A participant may not make any
additional payments into such account.

 

(c)                                  A
participant may discontinue his or her participation in the Plan as provided in
paragraph 11, but may not otherwise change, their rate of payroll deductions
during the Offering Period.  A
participant’s subscription agreement shall remain in effect for successive
Offering Periods unless revised as provided herein or terminated as provided in
paragraph 11.

 

(d)                                 Notwithstanding the
foregoing, to the extent necessary to comply with Section 423(b)(8) of the
Code and paragraph 3(b) herein, a participant’s payroll deductions may be
decreased to 0% at such time during any Offering Period which is scheduled to end
during the current calendar year that the aggregate of all payroll deductions
accumulated with respect to such Offering Period and any other Offering Period
ending within the same calendar year equals $21,250.  Payroll deductions shall recommence at the
rate provided in such participant’s subscription agreement at the beginning of
the first Offering Period which is scheduled to end in the following calendar
year, unless terminated by the participant as provided in paragraph 11.

 

7.                                       Grant of
Option.

 

(a)                                  On
the Enrollment Date of each Offering Period, each eligible Employee
participating in such Offering Period shall be granted an option to purchase on
each Exercise Date during such Offering Period up to a number of shares of the
Company’s Common Stock determined by dividing such Employee’s payroll
deductions accumulated prior to such Exercise Date and retained in the
participant’s account as of the Exercise Date by the lower of (i) eighty-five
percent (85%) of the Fair Market Value of a share of the Company’s Common Stock
on the

 

 

Enrollment Date or
(ii) eighty-five percent (85%) of the Fair Market Value of a share of the
Company’s Common Stock on the Exercise Date; provided that in no event shall an
Employee be permitted to purchase during each Offering Period more than 2,000
shares, and provided further that such purchase shall be subject to the
limitations set forth in Section 3(b) and 13 hereof.  Exercise of the option shall occur as
provided in Section 8, unless the participant has withdrawn pursuant to Section 11,
and shall expire on the last day of the Offering Period.  Fair Market Value or a share of the Company’s
Common Stock shall be determined as provided in Section 7(b) herein.

 

(b)                                 The option price per share of the shares offered
in a given Offering Period shall be the lower of:  (i) 85% of the Fair Market Value of a share
of the Common Stock of the Company on the Enrollment Date; or (ii) 85% of the
Fair Market Value of a share of the Common Stock of the Company on the Exercise
Date.

 

8.                                       Exercise of
Option.  Unless a participant
withdraws from the Plan as provided in paragraph 11, his or her option for the
purchase of shares will be exercised automatically on the Exercise Date of the
Offering Period, and the maximum number of full shares subject to option will
be purchased for him or her at the applicable option price with the accumulated
payroll deductions in his account.  The
shares purchased upon exercise of an option hereunder shall be deemed to be
transferred to the participant on the Exercise Date.  During his or her lifetime, a participant’s
option to purchase shares hereunder is exercisable only by such participant.

 

9.                                       Maximum
Number of Shares per Offering Period. 
The maximum number of shares of the Company’s Common Stock which shall
be made available for sale under the Plan in each Offering Period shall be
1,250,000, subject to adjustment upon changes in capitalization of the Company
as provided in paragraph 19.  If the
total number of shares which would otherwise be subject to options granted
pursuant to Section 7(a) hereof on the Enrollment Date of an Offering
Period exceeds 1,250,000 shares, the Company shall make a pro rata allocation
of the shares available for option grant in as uniform a manner as shall be
practicable and as it shall determine to be equitable.  In such event, the Company shall give written
notice of such reduction of the number of shares subject to the option to each
participant affected thereby and shall similarly reduce the rate of payroll
deductions, if necessary.

 

10.                                 Delivery.  Following the Exercise Date of each Offering
Period, unless a participant requests the issuance of a certificate
representing the participant’s shares, the Company shall as soon as practicable
record the participant’s full shares in book entry form.  Upon request from a participant, the Company
shall arrange for the delivery to the participant of a certificate representing
the full shares purchased.  Any cash remaining
to the credit of a participant’s account under the Plan after a purchase by the
participant of shares at the termination of each Offering Period, which is
insufficient to purchase a full share of Common Stock of the Company, shall be
returned to said participant or retained in the participant’s account for the
subsequent Offering Period, as determined by the Company as to all participants
for a given Offering Period.

 

11.                                 Withdrawal;
Termination of Employment.

 

(a)                                  A participant may
withdraw all but not less than all the payroll deductions credited to such
participant’s account under the Plan at any time prior to the Exercise Date of
the Offering Period by giving written notice to the Company.  All of the participant’s payroll deductions
credited to his or her account will be paid to him or her promptly after
receipt of the notice of withdrawal and the participant’s option for the
current Offering Period will be automatically terminated, and no further
payroll deductions for the purchase of shares will be made during the Offering
Period.  If a participant withdraws from
an Offering Period, payroll deductions will not resume at the beginning of the
succeeding Offering Period unless the participant delivers to the Company a new
subscription agreement as described in Section 5(a).

 

(b)                                 Upon
termination of the participant’s Continuous Status as an Employee prior to the
Exercise Date of the Offering Period for any reason, including retirement or
death, the payroll deductions credited to such participant’s account will be
returned to him or her or, in the case of his or her death, to the person or
persons entitled thereto under paragraph 15, and such participant’s option will
be automatically terminated.

 

(c)                                  In the event an
Employee fails to remain in Continuous Status as an Employee of the Company for
at least twenty (20) hours per week during the Offering Period in which the
Employee is a participant, he or she will be deemed to have elected to withdraw
from the Plan and the payroll deductions credited to his or her account will be
returned to him or her and the option terminated.

 

 

(d)                                 A participant’s
withdrawal from an Offering Period will not have any effect upon his or her
eligibility to participate in a succeeding Offering Period or in any similar
plan which may hereafter be adopted by the Company.

 

12.                                 Interest.  No interest shall accrue on the payroll
deductions of a participant in the Plan.

 

13.                                 Stock.

 

(a)                                  The
maximum number of shares of the Company’s Common Stock which shall be made
available for sale under the Plan shall be 29,500,000, subject to adjustment
upon changes in capitalization of the Company as provided in paragraph 19.  If the total number of shares which would
otherwise be subject to options granted pursuant to Section 7(a) hereof on
the Enrollment Date of an Offering Period exceeds the number of shares then
available under the Plan (after deduction of all shares for which options have
been exercised or are then outstanding), the Company shall make a pro rata
allocation of the shares remaining available for option grant in as uniform a
manner as shall be practicable and as it shall determine to be equitable.  In such event, the Company shall give written
notice of such reduction of the number of shares subject to the option to each
participant affected thereby and shall similarly reduce the rate of payroll
deductions, if necessary.

 

(b)                                 The participant will
have no interest or voting right in shares covered by his or her option until
such option has been exercised.

 

(c)                                  Shares to be
delivered to a participant under the Plan will be registered in the name of the
participant.

 

14.                                 Administration.  The Plan shall be administered by the Board
of the Company or a committee of members of the Board appointed by the
Board.  The administration,
interpretation or application of the Plan by the Board or its committee shall
be final, conclusive and binding upon all participants.  Members of the Board who are eligible
Employees are permitted to participate in the Plan, provided that:

 

(a)                                  Members of the Board
who are eligible to participate in the Plan may not vote on any matter affecting
the administration of the Plan or the grant of any option pursuant to the Plan.

 

(b)                                 If a Committee is
established to administer the Plan, no member of the Board who is eligible to
participate in the Plan may be a member of the Committee.

 

(c)                                  The Board or the
Committee may adopt rules or procedures relating to the operation and
administration of the Plan to accommodate the specific requirements of local
laws and procedures.  Without limiting
the generality of the foregoing, the Board or the Committee is specifically
authorized to adopt rules and procedures regarding handling of payroll
deductions, payment of interest, conversion of local currency, payroll tax,
withholding procedures and handling of stock certificates which vary with local
requirements.  With respect to any
Designated Subsidiary that employs participants who reside outside of the
United States and notwithstanding anything herein to the contrary, the Board or
the Committee may, in its sole discretion, amend or vary the terms of the Plan
in order to conform such terms with the requirements of local law or to meet
the objectives and purpose of the Plan. 
The Board or the Committee may, where appropriate, establish one or more
sub-plans applicable to particular Designated Subsidiaries or locations to
reflect such amended or varied provisions and which sub-plans may be designed
to be outside the scope of Code Section 423.  The rules of such sub-plans may take
precedence over other provisions of the Plan, with the exception of Section 13(a),
but unless otherwise superseded by the terms of such sub-plan, the provisions
of the Plan shall govern the operation of such sub-plan.

 

15.                                 Designation of
Beneficiary.

 

(a)                                  A participant may
file a written designation of a beneficiary who is to receive any shares and
cash, if any, from the participant’s account under the Plan in the event of
such participant’s death subsequent to the end of the Offering Period but prior
to delivery to him of such shares and cash. 
In addition, a participant may file

 

 

a written designation of a beneficiary who is to receive any cash from
the participant’s account under the Plan in the event of such participant’s
death prior to the Exercise Date of the Offering Period.

 

(b)                                 Such designation of
beneficiary may be changed by the participant at any time by written
notice.  In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant’s death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may designate.

 

16.                                 Transferability of
Rights.  Neither payroll deductions
credited to a participant’s account nor any rights with regard to the exercise
of an option or to receive shares under the Plan may be assigned, transferred,
pledged or otherwise disposed of in any way (other than by will, the laws of
descent and distribution or as provided in paragraph 15 hereof) by the
participant.  Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds in
accordance with paragraph 11.

 

17.                                 Use of Funds.  All payroll deductions received or held by
the Company under the Plan may be used by the Company for any corporate
purpose, and the Company shall not be obligated to segregate such payroll
deductions.

 

18.                                 Reports.  Individual accounts will be maintained for
each participant in the Plan.  Statements
of account will be given to participating Employees; on no less than an annual
basis, promptly following the Exercise Date, which statements will set forth
the amounts of payroll deductions, the per share purchase price, the number of
shares purchased and the remaining cash balance, if any.

 

19.                                 Adjustments Upon
Changes in Capitalization.  Subject
to any required action by the shareholders of the Company, the number of shares
of Common Stock covered by each option under the Plan which has not yet been
exercised and the number of shares of Common Stock which have been authorized
for issuance under the Plan but have not yet been placed under option
(collectively, the “Reserves”), as well as the price per share of Common Stock
covered by each option under the Plan which has not yet been exercised, shall
be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock, or
any other increase or decrease in the number of shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been “effected without receipt of consideration.”  Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and
conclusive.  Except as expressly provided
herein, no issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an option.

 

In the event of the proposed dissolution or
liquidation of the Company, the Offering Period will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Board.  In the event of a reorganization,
merger, or consolidation of the Company with one or more corporations in which
the Company is not the surviving corporation (or survives as a direct or
indirect subsidiary of other such other constituent corporation or its parent),
or upon a sale of all or substantially all of the property or stock of the
Company to another corporation, then, in the discretion of the Board or the
Committee, (i) each outstanding option shall be assumed, or an equivalent
option substituted, by the successor corporation or its parent, or (ii) the
Offering Period then in progress shall be shortened by setting a new Exercise
Date, which shall be on or before the date of the proposed transaction.  If the Committee sets a new Exercise Date,
the Company shall notify each participant, at least ten (10) business days
prior to the new Exercise Date, that the original Exercise Date has been
changed to the new Exercise Date and that the participant’s option shall be
exercised automatically on the new Exercise Date, unless the participant has
withdrawn from the Offering Period, as provided in Section 11(a) hereof,
prior to the new Exercise Date.

 

 

The Board may, if it so determines in the
exercise of its sole discretion, also make provision for adjusting the
Reserves, as well as the price per share of Common Stock covered by each
outstanding option, in the event that the Company effects one or more
reorganizations, recapitalizations, rights offerings or other increases or
reductions of shares of its outstanding Common Stock, and in the event of the
Company being consolidated with or merged into any other corporation.

 

20.                                 Amendment or
Termination.  The Board of Directors
of the Company may at any time terminate or amend the Plan.  Except as provided in paragraph 19, no such termination
can affect options previously granted, nor may an amendment make any change in
any option theretofore granted which adversely affects the rights of any
participant, nor may an amendment be made without prior approval of the
shareholders of the Company (obtained in the manner described in paragraph 22)
if such amendment would:

 

(a)                                  Increase the number
of shares that may be issued under the Plan;

 

(b)                                 Change the designation
of the employees (or class of employees) eligible for participation in the Plan;
or

 

(c)                                  Materially increase
the benefits which may accrue to participants under the Plan.

 

(d)                                 In the event that the
Board determines that the ongoing operation of the Plan may result in
unfavorable financial accounting consequences, the Board may, in its discretion
and, to the extent necessary or desirable, modify or amend the Plan by means of
the following to reduce or eliminate such unfavorable accounting consequence
including, but not limited to:

 

(i)                                     altering the
option price per share for any Offering Period, including an Offering Period
underway at the time of the change in Purchase Price including an alteration of
the option price under paragraph 7(b) to 85% of the Fair Market Value of a
share of the Common Stock of the Company on the Exercise Date (without a
lookback to the Fair Market Value on the Enrollment Date); and

 

(ii)                                  shortening
any Offering Period so that Offering Period ends on a new Exercise Date,
including an Offering Period underway at the time of the Board action.

 

Such modifications or amendments shall not
require stockholder approval or the consent of any Plan participants.

 

21.                                 Notices.  All notices or other communications by a
participant to the Company under or in connection with the Plan shall be deemed
to have been duly given when received in the form specified by the Company at
the location, or by the person, designated by the Company for the receipt
thereof.

 

22.                                 Shareholder
Approval.  Continuance of the Plan
shall be subject to approval by the shareholders of the Company within twelve
months before or after the date the Plan is adopted.  If such shareholder approval is obtained at a
duly held shareholders’ meeting, it may be obtained by the affirmative vote of
the holders of a majority of the shares of the Company present or represented
and entitled to vote thereon, which approval shall be:

 

(a)                                  (1) solicited
substantially in accordance with Section 14(a) of the Securities Exchange
Act of 1934, as amended (the “Act”) and the rules and regulations promulgated
thereunder, or (2) solicited after the Company has furnished in writing to the
holders entitled to vote substantially the same information concerning the Plan
as that which would be required by the rules and regulations in effect under Section 14(a)
of the Act at the time such information is furnished; and

 

(b)                                 obtained at or prior
to the first annual meeting of shareholders held subsequent to the first
registration of Common Stock under Section 12 of the Act.

 

In the case of approval by written consent,
it must be obtained by the unanimous written consent of all shareholders of the
Company, or by written consent of a smaller percentage of shareholders but only
if the Board determines, on the basis of advice of the Company’s legal counsel,
that the written consent of such a smaller

 

 

percentage of shareholders will comply with all applicable laws and
will not adversely affect the qualifications of the Plan under Section 423
of the Code.

 

23.                                 Conditions Upon
Issuance of Shares.  Shares shall not
be issued with respect to an option unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Act, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
upon which the shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

 

As a condition to the exercise of an option,
the Company may require the person exercising such option to represent and
warrant at the time of any such exercise that the shares are being purchased
only for investment and without any present intention to sell or distribute
such shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned applicable provisions
of law.

 

24.                                 Term of Plan.  The Plan shall become effective upon the
earlier to occur of its adoption by the Board of Directors or its approval by
the shareholders of the Company as described in paragraph 22.  It shall continue in effect for a term of
twenty (20) years unless sooner terminated under paragraph 20.

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