ROSS STORES, INC.
NOTICE OF GRANT OF PERFORMANCE SHARES
 
The Participant has been granted an award of Performance Shares (the “Award”)
pursuant to the Ross Stores, Inc. 2008 Equity Incentive Plan (the “Plan”) and
the Performance Share Agreement attached hereto (the “Agreement”), as follows:
 

Participant:                            Employee ID:          Grant Date:  
Grant No.:       Target Number of
Performance Shares: [_______________], subject to adjustment as provided by the
Agreement.   Maximum Number of
Performance Shares: [_______________], subject to adjustment as provided by the
Agreement. [Not to exceed 500,000 shares for each full fiscal year in the
Performance Period]     Adjusted Pre-Tax Profit
Target: $ ____________________   Performance Period: Company fiscal year
beginning ________, and ending _______.   Performance Share
Vesting Date: __________, except as provided by the Agreement.   Vested
Performance
Shares: Provided that the Participant’s Service has not terminated prior to the
Performance Share Vesting Date, except as provided by the Agreement, on the
Performance Share Vesting Date the number of Vested Performance Shares (not to
exceed the Maximum Number of Performance Shares) shall be determined by
multiplying the Target Number of Performance Shares by the Adjusted Pre-Tax
Profit Multiplier (as defined by the Agreement).     Settlement Date: The
Performance Share Vesting Date, except as otherwise provided by the Agreement.  
Vested Common Shares: Except as provided by the Agreement and provided that the
Participant’s Service has not terminated prior to the relevant date, the number
of Vested Common Shares shall cumulatively increase on each respective date set
forth below by the Vested Percentage set forth opposite such date, as follows:

Common Share Vesting Date Vested Percentage Settlement Date 30% 1st Anniversary
of Settlement Date 30% 2nd Anniversary of Settlement Date 40%

--------------------------------------------------------------------------------

Employment Agreement:      Executive Employment Agreement between the Company
and the Participant, as in effect at any applicable time.

By their signatures below or by electronic acceptance or authentication in a
form authorized by the Company, the Company and the Participant agree that the
Award is governed by this Notice and by the provisions of the Plan and the
Performance Share Agreement, both of which are made a part of this document. The
Participant acknowledges that copies of the Plan, Performance Share Agreement
and the prospectus for the Plan are available on the Company’s internal web site
and may be viewed and printed by the Participant for attachment to the
Participant’s copy of this Grant Notice. The Participant represents that the
Participant has read and is familiar with the provisions of the Plan and
Performance Share Agreement, and hereby accepts the Award subject to all of
their terms and conditions.
 

ROSS STORES, INC.           PARTICIPANT   By:       Signature Its:       Date
Address: 4440 Rosewood Drive   Pleasanton, CA 94588 Address  

ATTACHMENTS:           2008 Equity Incentive Plan, as amended to the Grant Date,
Performance Share Agreement and Plan Prospectus

- 1 -
 

--------------------------------------------------------------------------------

ROSS STORES, INC.
PERFORMANCE SHARE AGREEMENT
 
     Ross Stores, Inc. has granted to the Participant named in the Notice of
Grant of Performance Shares (the “Grant Notice”) to which this Performance Share
Agreement (the “Agreement”) is attached an Award consisting of Performance
Shares subject to the terms and conditions set forth in the Grant Notice and
this Agreement. The Award has been granted pursuant to and shall in all respects
be subject to the terms and conditions of the Ross Stores, Inc. 2008 Equity
Incentive Plan (the “Plan”), as amended to the Grant Date, the provisions of
which are incorporated herein by reference. By signing the Grant Notice, the
Participant: (a) acknowledges receipt of and represents that the Participant has
read and is familiar with the Grant Notice, this Agreement, the Plan and a
prospectus for the Plan (the “Plan Prospectus”) in the form most recently
prepared in connection with the registration with the Securities and Exchange
Commission of shares issuable pursuant to the Plan, (b) accepts the Award
subject to all of the terms and conditions of the Grant Notice, this Agreement
and the Plan and (c) agrees to accept as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising under
the Grant Notice, this Agreement or the Plan.
 
     1. DEFINITIONS AND CONSTRUCTION.
 
          1.1 Definitions. Unless otherwise defined herein, capitalized terms
shall have the meanings assigned in the Grant Notice or the Plan. Whenever used
herein, the following terms shall have their respective meanings set forth
below:
 
               (a) “Adjusted Pre-Tax Profit” means the earnings before taxes as
reported in the Consolidated Statements of Earnings of the Company for the
fiscal year of the Company coinciding with the Performance Period, adjusted to
exclude from the determination of such amount the reduction in earnings
resulting from the accrual of compensation expense for Performance Awards under
the Plan and incentive awards under the Second Amended and Restated Ross Stores,
Inc. Incentive Compensation Plan, granted in each case, with respect to the
Performance Period.
 
               (b) “Adjusted Pre-Tax Profit Multiplier” means a number
determined as follows:
 

Percentage of Adjusted Pre- Adjusted Pre-Tax Profit Tax Profit Target Achieved
      Multiplier Less than 90% 0.00% 90%   66.70% 95%   83.33% 100%   100.00%
105%   125.00% 110%   150.00% 115%   175.00% Equal to or greater than 120%
200.00%

The Adjusted Pre-Tax Profit Multiplier for percentages of Adjusted Pre-Tax
Profit Target achieved falling between the percentages set forth in the table
above shall be determined by linear interpolation.
 
               (c) “Change in Control” means a “Change in Control” as defined by
the Employment Agreement.
 
- 1 -
 

--------------------------------------------------------------------------------

               (d) “Common Shares” mean shares of Stock issued in settlement of
the Award.
 
               (e) “Expiration of Participant’s Employment Agreement Due to
Non-Renewal” means the expiration of the Employment Agreement due to its
“Non-Renewal,” as provided by the Employment Agreement.
 
               (f) “Performance Share” means a right to receive on the
Settlement Date one (1) Common Share, subject to further restrictions as
provided by this Agreement, if such Performance Share is then a Vested
Performance Share.
 
               (g) “Termination Due to Disability” means the termination of the
Participant’s employment due to “Disability” as defined by and upon terms set
forth in the Employment Agreement.
 
               (h) “Termination for Cause” means the termination of the
Participant’s employment for “Cause” as defined by the Employment Agreement.
 
               (i) “Termination for Good Reason” means the Participant’s
termination of employment for “Good Reason” as defined by the Employment
Agreement.
 
               (j) “Termination Without Cause” means the termination of the
Participant’s employment “Without Cause” as defined by the Employment Agreement.
 
               (k) “Voluntary Termination” means the “Voluntary Termination” of
the Participant’s employment as defined by the Employment Agreement.
 
          1.2 Construction. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of this Agreement. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term “or” is not intended to be exclusive, unless the context clearly
requires otherwise.
 
     2. ADMINISTRATION.
 
          All questions of interpretation concerning the Grant Notice, this
Agreement and the Plan shall be determined by the Committee. All determinations
by the Committee shall be final and binding upon all persons having an interest
in the Award as provided by the Plan. Any Officer shall have the authority to
act on behalf of the Company with respect to any matter, right, obligation, or
election which is the responsibility of or which is allocated to the Company
herein, provided the Officer has apparent authority with respect to such matter,
right, obligation, or election. If the Participant is a Covered Employee,
compensation realized by the Participant pursuant to the Award is intended to
constitute qualified performance-based compensation within the meaning of
Section 162(m) of the Code and the regulations thereunder, and the provisions of
this Agreement shall be construed and administered in a manner consistent with
this intent. The Company intends that the Award comply with Section 409A of the
Code (including any amendments or replacements of such section) and the
regulations thereunder, and the provisions of this Agreement shall be construed
and administered in a manner consistent with this intent.
 

--------------------------------------------------------------------------------

     3. THE AWARD.
 
          3.1 Grant of Performance Shares. On the Grant Date, the Participant
shall acquire, subject to the provisions of this Agreement, a right to receive a
number of Performance Shares which shall not exceed the Maximum Number of
Performance Shares set forth in the Grant Notice, subject to adjustment as
provided in Section 12. The number of Performance Shares, if any, ultimately
earned by the Participant, shall be that number of Performance Shares which
become Vested Performance Shares.
 
          3.2 No Monetary Payment Required. The Participant is not required to
make any monetary payment (other than applicable tax withholding, if any) as a
condition to receiving the Performance Shares or the Common Shares issued upon
settlement of the Performance Shares, the consideration for which shall be past
services actually rendered and/or future services to be rendered to a
Participating Company or for its benefit. Notwithstanding the foregoing, if
required by applicable state corporate law, the Participant shall furnish
consideration in the form of cash or past services rendered to a Participating
Company or for its benefit having a value not less than the par value of the
Common Shares issued upon settlement of the Performance Shares.
 
     4. CERTIFICATION OF THE COMMITTEE.
 
          4.1 Level of Adjusted Pre-Tax Profit Attained. As soon as practicable
following completion of the Performance Period, and in any event prior to the
Performance Share Vesting Date, the Committee shall certify in writing the level
of attainment of Adjusted Pre-Tax Profit during the Performance Period and the
resulting number of Performance Shares which shall become Vested Performance
Shares on the Performance Share Vesting Date, subject to the Participant’s
continued Service until the Performance Share Vesting Date, except as otherwise
provided by Section 5. The Company shall promptly notify the Participant of the
determination by the Plan Administrator.
 
          4.2 Adjustment to Adjusted Pre-Tax Profit for Extraordinary Items. The
Committee shall adjust Adjusted Pre-Tax Profit, as it deems appropriate, to
exclude the effect (whether positive or negative) of any of the following
occurring after the grant of the Award: (a) a change in accounting standards
required by generally accepted accounting principles or (b) any extraordinary,
unusual or nonrecurring item. Each such adjustment, if any, shall be made solely
for the purpose of providing a consistent basis from period to period for the
calculation of Adjusted Pre-Tax Profit in order to prevent the dilution or
enlargement of the Participant’s rights with respect to the Award.
 
     5. VESTING OF PERFORMANCE SHARES.
 
          5.1 In General. Except as provided by this Section 5 and Section 11,
the Performance Shares shall vest and become Vested Performance Shares as
provided in the Grant Notice and certified by the Committee.
 
          5.2 Effect of Termination for Cause or Voluntary Termination. In the
event of the Termination for Cause or Voluntary Termination of the Participant
prior to the Performance Share Vesting Date, the Participant shall forfeit and
the Company shall automatically reacquire all of the Performance Shares subject
to the Award. The Participant shall not be entitled to any payment for such
forfeited Performance Shares.
 

--------------------------------------------------------------------------------

          5.3 Effect of Death or Termination Due to Disability. In the event of
the death or Termination Due to Disability of the Participant prior to the
Performance Share Vesting Date, then on the Performance Share Vesting Date a
number of Performance Shares shall become Vested Performance Shares equal to
that number of Performance Shares that would have become Vested Performance
Shares had no such death or termination occurred.
 
          5.4 Effect of Termination Without Cause, Termination for Good Reason
or Effect of Expiration of Participant’s Employment Agreement Due to
Non-Renewal. In the event of the Participant’s Termination Without Cause,
Termination for Good Reason or Expiration of Employment Agreement Due to
Non-Renewal prior to the Performance Share Vesting Date, then on the Performance
Share Vesting Date the number of Performance Shares that shall become Vested
Performance Shares shall be determined by multiplying (a) that number of
Performance Shares that would have become Vested Performance Shares had no such
termination occurred, however, in no case shall the number of Performance Shares
that become Vested Performance Shares exceed 100% of the Target Number of
Performance Shares set forth in the Notice of Grant of Performance Shares by (b)
the ratio of the number of full months of the Participant’s employment with the
Company during the Performance Period to the number of full months contained in
the Performance Period.
 
          5.5 Forfeiture of Unvested Performance Shares. Except as otherwise
provided by this Section 5 or Section 11, on the Performance Share Vesting Date,
the Participant shall forfeit and the Company shall automatically reacquire all
Performance Shares subject to the Award which have not become Vested Performance
Shares (“Unvested Performance Shares”). The Participant shall not be entitled to
any payment for such forfeited Performance Shares.
 
          5.6 Ownership Change Event, Dividends, Distributions and Adjustments.
Upon the occurrence of an Ownership Change Event, a dividend or distribution to
the stockholders of the Company paid in shares of Stock or other property, or
any other adjustment upon a change in the capital structure of the Company as
described in Section 4.4 of the Plan, any and all new, substituted or additional
securities or other property (other than regular, periodic dividends paid on
Stock pursuant to the Company’s dividend policy) to which the Participant is
entitled by reason of the Participant’s ownership of Unvested Performance Shares
shall be immediately subject to the Company Reacquisition Right and included in
the terms “Performance Shares” and “Unvested Performance Shares” for all
purposes of this Section 5 with the same force and effect as the Unvested
Performance Shares immediately prior to the Ownership Change Event, dividend,
distribution or adjustment, as the case may be. For purposes of determining the
number of Vested Performance Shares following an Ownership Change Event,
dividend, distribution or adjustment, credited Service shall include all Service
with any corporation which is a Participating Company at the time the Service is
rendered, whether or not such corporation is a Participating Company both before
and after any such event.
 

--------------------------------------------------------------------------------

     6. SETTLEMENT OF THE AWARD.
 
          6.1 Issuance of Common Shares. Subject to the provisions of Section
6.3 below, the Company shall issue to the Participant on the Settlement Date
with respect to each Vested Performance Share one (1) Common Share. Common
Shares issued in settlement of Performance Shares shall be subject to the
vesting conditions, Company Reacquisition Right and restrictions on transfer set
forth in Sections 7, 8.1 and 15, respectively, and any such other restrictions
as may be required pursuant to Section 6.3, Section 10 or the Insider Trading
Policy.
 
          6.2 Beneficial Ownership of Common Shares; Certificate Registration.
The Participant hereby authorizes the Company, in its sole discretion, to
deposit for the benefit of the Participant with any broker with which the
Participant has an account relationship of which the Company has notice any or
all vested Common Shares acquired by the Participant pursuant to the settlement
of the Award. Further, the Participant hereby authorizes the Company, in its
sole discretion, to deposit unvested Common Shares with the Company’s transfer
agent, including any successor transfer agent, to be held in book entry form
during the term of the Escrow pursuant to Section 9. Except as otherwise
provided by this Section, a certificate for the Common Shares as to which the
Award is settled shall be registered in the name of the Participant, or, if
applicable, in the names of the heirs of the Participant.
 
          6.3 Restrictions on Grant of the Award and Issuance of Common Shares.
The grant of the Award and issuance of Common Shares upon settlement of the
Award shall be subject to compliance with all applicable requirements of
federal, state law or foreign law with respect to such securities. No Common
Shares may be issued hereunder if the issuance of such shares would constitute a
violation of any applicable federal, state or foreign securities laws or other
law or regulations or the requirements of any stock exchange or market system
upon which the Stock may then be listed. The inability of the Company to obtain
from any regulatory body having jurisdiction the authority, if any, deemed by
the Company’s legal counsel to be necessary to the lawful issuance of any Common
Shares subject to the Award shall relieve the Company of any liability in
respect of the failure to issue such shares as to which such requisite authority
shall not have been obtained. As a condition to the settlement of the Award, the
Company may require the Participant to satisfy any qualifications that may be
necessary or appropriate, to evidence compliance with any applicable law or
regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.
 
          6.4 Fractional Shares. The Company shall not be required to issue
fractional Common Shares upon the settlement of the Award. Any fractional share
resulting from the determination of the number of Vested Performance Shares
shall be rounded up to the nearest whole number.
 
     7. VESTING OF COMMON SHARES.
 
          7.1 In General. Except as provided by this Section 7 and Section 11,
the Common Shares issued in settlement of the Award shall vest and become Vested
Common Shares as provided in the Grant Notice; provided however, that Common
Shares that would otherwise become Vested Common Shares on a date (the “Original
Vesting Date”) on which a sale of such shares by the Participant would violate
the Insider Trading Policy shall, not withstanding the vesting schedule set
forth in the Grant Notice, become Vested Common Shares on the first to occur of
(a) the next business day on which such sale would not violate the Insider
Trading Policy or (b) the later of (i) the last day of the calendar year in
which the Original Vesting Date occurred or (ii) the last day of the Company’s
taxable year in which the Original Vesting Date occurred.
 

--------------------------------------------------------------------------------

          7.2 Effect of Termination for Cause or Voluntary Termination. In the
event of the Termination for Cause or Voluntary Termination of the Participant
on or after the Settlement Date, no additional Common Shares shall become Vested
Common Shares.
 
          7.3 Effect of Death, Termination Due to Disability, Termination
Without Cause, Termination for Good Reason Expiration of Participant’s
Employment Agreement Due to Non-Renewal. In the event of the death, Termination
Due to Disability, Termination Without Cause, Termination for Good Reason or
Expiration of Employment Agreement Due to Non-Renewal of the Participant prior
to the Performance Share Vesting Date, then on the Settlement Date the Company
shall issue to the Participant one (1) Vested Common Share for each Vested
Performance Share determined in accordance with Section 5.3 or Section 5.4. In
the event of the death, Termination Due to Disability, Termination Without
Cause, Termination for Good Reason or Expiration of Employment Agreement Due to
Non-Renewal of the Participant on or after the Settlement Date, then the vesting
of all Unvested Common Shares issued in settlement of the Award shall be
accelerated in full effective as of the date of such death, termination or
contract expiration; provided however, that if such vesting acceleration would
otherwise result in shares becoming Vested Common Shares on a date on which a
sale of such shares by the Participant would violate the Insider Trading Policy,
then such shares shall become Vested Common Shares on the first to occur of (a)
the next business day on which such sale would not violate the Insider Trading
Policy or (b) the later of (i) the last day of the calendar year in which the
Original Vesting Date occurred or (ii) the last day of the Company’s taxable
year in which the Original Vesting Date occurred.
 
     8. COMPANY REACQUISITION RIGHT.
 
          8.1 Grant of Company Reacquisition Right. Except to the extent
otherwise provided by this Agreement, in the event that (a) the Participant’s
Service terminates or (b) the Participant, the Participant’s legal
representative, or other holder of the shares, attempts to sell, exchange,
transfer, pledge, or otherwise dispose of (other than pursuant to an Ownership
Change Event), including, without limitation, any transfer to a nominee or agent
of the Participant, any Common Shares which are not Vested Common Shares
(“Unvested Common Shares”), the Company shall automatically reacquire the
Unvested Common Shares, and the Participant shall not be entitled to any payment
therefor (the “Company Reacquisition Right”).
 
          8.2 Ownership Change Event, Non-Cash Dividends, Distributions and
Adjustments. Upon the occurrence of an Ownership Change Event, a dividend or
distribution to the stockholders of the Company paid in shares of Stock or other
property, or any other adjustment upon a change in the capital structure of the
Company as described in Section 4.4 of the Plan, any and all new, substituted or
additional securities or other property (other than regular, periodic cash
dividends paid on Stock pursuant to the Company’s dividend policy) to which the
Participant is entitled by reason of the Participant’s ownership of Unvested
Common Shares shall be immediately subject to the Company Reacquisition Right
and included in the terms “Common Shares,” “Stock” and “Unvested Common Shares”
for all purposes of the Company Reacquisition Right with the same force and
effect as the Unvested Common Shares immediately prior to the Ownership Change
Event, dividend, distribution or adjustment, as the case may be. For purposes of
determining the number of Vested Common Shares following an Ownership Change
Event, dividend, distribution or adjustment, credited Service shall include all
Service with any corporation which is a Participating Company at the time the
Service is rendered, whether or not such corporation is a Participating Company
both before and after any such event.
 

--------------------------------------------------------------------------------

          8.3 Obligation to Repay Certain Cash Dividends and Distributions. The
Participant shall, at the discretion of the Company, be obligated to promptly
repay to the Company upon termination of the Participant’s Service any dividends
and other distributions paid to the Participant in cash with respect to Unvested
Common Shares reacquired by the Company pursuant to the Company Reacquisition
Right.
 
     9. ESCROW.
 
          9.1 Appointment of Agent. To ensure that Common Shares subject to the
Company Reacquisition Right will be available for reacquisition, the Participant
and the Company hereby appoint the Secretary of the Company, or any other person
designated by the Company, as their agent and as attorney-in-fact for the
Participant (the “Agent”) to hold any and all Unvested Common Shares and to
sell, assign and transfer to the Company any such Unvested Common Shares
reacquired by the Company pursuant to the Company Reacquisition Right. The
Participant understands that appointment of the Agent is a material inducement
to make this Agreement and that such appointment is coupled with an interest and
is irrevocable. The Agent shall not be personally liable for any act the Agent
may do or omit to do hereunder as escrow agent, agent for the Company, or
attorney in fact for the Participant while acting in good faith and in the
exercise of the Agent’s own good judgment, and any act done or omitted by the
Agent pursuant to the advice of the Agent’s own attorneys shall be conclusive
evidence of such good faith. The Agent may rely upon any letter, notice or other
document executed by any signature purporting to be genuine and may resign at
any time.
 
          9.2 Establishment of Escrow. The Participant authorizes the Company to
deposit the Unvested Common Shares with the Company’s transfer agent to be held
in book entry form, as provided in Section 6.2, and the Participant agrees to
deliver to and deposit with the Agent each certificate, if any, evidencing the
Unvested Common Shares and, if required by the Company, an Assignment Separate
from Certificate with respect to such book entry shares and each such
certificate duly endorsed (with date and number of Common Shares blank) in the
form attached to the Notice, to be held by the Agent under the terms and
conditions of this Section 9 (the “Escrow”). Upon the occurrence of a Change in
Control or a change, as described in Section 12, in the character or amount of
any outstanding stock of the corporation the stock of which is subject to the
provisions of this Agreement, any and all new, substituted or additional
securities or other property to which the Participant is entitled by reason of
his or her ownership of the Unvested Common Shares that remain, following such
Change in Control or change described in Section 12, subject to the Company
Reacquisition Right shall be immediately subject to the Escrow to the same
extent as the Unvested Common Shares immediately before such event. The Company
shall bear the expenses of the Escrow.
 

--------------------------------------------------------------------------------

          9.3 Delivery of Common Shares to Participant. The Escrow shall
continue with respect to any Common Shares for so long as such Common Shares
remain subject to the Company Reacquisition Right. Upon termination of the
Company Reacquisition Right with respect to Common Shares, the Company shall so
notify the Agent and direct the Agent to deliver such number of Common Shares to
the Participant. As soon as practicable after receipt of such notice, the Agent
shall cause to be delivered to the Participant the Common Shares specified by
such notice, and the Escrow shall terminate with respect to such Common Shares.
 
     10. TAX MATTERS.
 
          10.1 Tax Withholding.
 
               (a) In General. At the time the Grant Notice is executed, or at
any time thereafter as requested by the Company, the Participant hereby
authorizes withholding from payroll and any other amounts payable to the
Participant, and otherwise agrees to make adequate provision for, any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company, if any, which arise in connection with the Award or
the issuance of Common Shares in settlement thereof. The Company shall have no
obligation to process the settlement of the Award or to deliver Common Shares
until the tax withholding obligations as described in this Section have been
satisfied by the Participant.
 
               (b) Assignment of Sale Proceeds; Payment of Tax Withholding by
Check. Subject to compliance with applicable law and the Company’s Insider
Trading Policy, the Company may permit the Participant to satisfy the
Participating Company’s tax withholding obligations in accordance with
procedures established by the Company providing for either (i) delivery by the
Participant to the Company or a broker approved by the Company of properly
executed instructions, in a form approved by the Company, providing for the
assignment to the Company of the proceeds of a sale with respect to some or all
of the Vested Shares, or (ii) payment by check. The Participant shall deliver
written notice of any such permitted election to the Company on a form specified
by the Company for this purpose at least thirty (30) days (or such other period
established by the Company) prior to the date on which the Company’s tax
withholding obligation arises (the “Withholding Date”). If the Participant
elects payment by check, the Participant agrees to deliver a check for the full
amount of the required tax withholding to the applicable Participating Company
on or before the third business day following the Withholding Date. If the
Participant elects payment by check but fails to make such payment as required
by the preceding sentence, the Company is hereby authorized, at its discretion,
to satisfy the tax withholding obligations through any means authorized by this
Section 10.1, including by directing a sale for the account of the Participant
of some or all of the Vested Shares from which the required taxes shall be
withheld, by withholding from payroll and any other amounts payable to the
Participant or by withholding shares in accordance with Section 10.1(c).
 

--------------------------------------------------------------------------------

               (c) Withholding in Common Shares. The Company may require the
Participant to satisfy its tax withholding obligations by deducting from the
Common Shares otherwise deliverable to the Participant in settlement of the
Award or from the Common Shares otherwise to be released from the Company
Reacquisition Right a number of whole, Vested Common Shares having a fair market
value, as determined by the Company as of the date on which the tax withholding
obligations arise, not in excess of the amount of such tax withholding
obligations determined by the applicable minimum statutory withholding rates.
 
          10.2 Election Under Section 83(b) of the Code.
 
               (a) The Participant understands that Section 83 of the Code taxes
as ordinary income the difference between the amount paid for the Common Shares,
if anything, and the fair market value of the Common Shares as of the date on
which the Common Shares are “substantially vested,” within the meaning of
Section 83. In this context, “substantially vested” means that the right of the
Company to reacquire the Common Shares pursuant to the Company Reacquisition
Right has lapsed. The Participant understands that he or she may elect to have
his or her taxable income determined at the time he or she acquires the Common
Shares rather than when and as the Company Reacquisition Right lapses by filing
an election under Section 83(b) of the Code with the Internal Revenue Service no
later than thirty (30) days after the date of acquisition of the Common Shares.
The Participant understands that failure to make a timely filing under Section
83(b) will result in his or her recognition of ordinary income, as the Company
Reacquisition Right lapses, on the difference between the purchase price, if
anything, and the fair market value of the Common Shares at the time such
restrictions lapse. The Participant further understands, however, that if Common
Shares with respect to which an election under Section 83(b) has been made are
forfeited to the Company pursuant to its Company Reacquisition Right, such
forfeiture will be treated as a sale on which there is realized a loss equal to
the excess (if any) of the amount paid (if any) by the Participant for the
forfeited Common Shares over the amount realized (if any) upon their forfeiture.
If the Participant has paid nothing for the forfeited Common Shares and has
received no payment upon their forfeiture, the Participant understands that he
or she will be unable to recognize any loss on the forfeiture of the Common
Shares even though the Participant incurred a tax liability by making an
election under Section 83(b).
 
               (b) The Participant understands that he or she should consult
with his or her tax advisor regarding the advisability of filing with the
Internal Revenue Service an election under Section 83(b) of the Code, which must
be filed no later than thirty (30) days after the date of the acquisition of the
Common Shares pursuant to this Agreement. Failure to file an election under
Section 83(b), if appropriate, may result in adverse tax consequences to the
Participant. The Participant acknowledges that he or she has been advised to
consult with a tax advisor regarding the tax consequences to the Participant of
the acquisition of Common Shares hereunder. ANY ELECTION UNDER SECTION 83(b) THE
PARTICIPANT WISHES TO MAKE MUST BE FILED NO LATER THAN 30 DAYS AFTER THE DATE ON
WHICH THE PARTICIPANT ACQUIRES THE COMMON SHARES. THIS TIME PERIOD CANNOT BE
EXTENDED. THE PARTICIPANT ACKNOWLEDGES THAT TIMELY FILING OF A SECTION 83(b)
ELECTION IS THE PARTICIPANT’S SOLE RESPONSIBILITY, EVEN IF THE PARTICIPANT
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO FILE SUCH ELECTION ON HIS OR HER
BEHALF.
 

--------------------------------------------------------------------------------

               (c) The Participant will notify the Company in writing if the
Participant files an election pursuant to Section 83(b) of the Code. The Company
intends, in the event it does not receive from the Participant evidence of such
filing, to claim a tax deduction for any amount which would otherwise be taxable
to the Participant in the absence of such an election.
 
     11. CHANGE IN CONTROL.
 
          11.1 Effect of Change in Control on Performance Shares. In the event
of the consummation of a Change in Control prior to the Performance Share
Vesting Date, the vesting of 100% of the Target Number of Performance Shares
shall be accelerated and such Performance Shares shall be deemed Vested
Performance Shares effective as of the date of the Change in Control. The Award
shall be settled in full in accordance with Section 6 immediately prior to the
Change in Control, provided that the Participant’s Service has not terminated
prior to the Change in Control. In settlement of the Award, the Company shall
issue to the Participant one (1) Vested Common Share for each Vested Performance
Share determined in accordance with this Section. The vesting of Performance
Shares and settlement of the Award that was permissible solely by reason of this
Section shall be conditioned upon the consummation of the Change in Control.
 
          11.2 Effect of Change in Control on Common Shares. In the event of the
consummation of a Change in Control on or after the Settlement Date, the vesting
of all Unvested Common Shares issued in settlement of the Award shall be
accelerated in full effective as of the date of the Change in Control.
 
          11.3 Federal Excise Tax Under Section 4999 of the Code.
 
               (a) Excess Parachute Payment. In the event that any acceleration
of vesting the Performance Shares or the Common Shares and any other payment or
benefit received or to be received by the Participant would subject the
Participant to any excise tax pursuant to Section 4999 of the Code due to the
characterization of such acceleration of vesting, payment or benefit as an
“excess parachute payment” under Section 280G of the Code, the amount of any
acceleration of vesting called for by this Agreement shall not exceed the amount
which produces the greatest after-tax benefit to the Participant.
 
               (b) Determination by Independent Accountants. Upon the occurrence
of any event that might reasonably be anticipated to result in an “excess
parachute payment” to the Participant as described in Section 11.3(a) (an
“Event”), the Company shall request a determination in writing by independent
public accountants selected by the Company (the “Accountants”). Unless the
Company and the Participant otherwise agree in writing, the Accountants shall
determine and report to the Company and the Participant within twenty (20) days
of the date of the Event the amount of such acceleration of vesting, payments
and benefits which would produce the greatest after-tax benefit to the
Participant. For the purposes of such determination, the Accountants may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and the Participant shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make their required determination. The Company shall bear
all fees and expenses the Accountants may reasonably charge in connection with
their services contemplated by this Section.
 

--------------------------------------------------------------------------------

     12. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.
 
          Subject to any required action by the stockholders of the Company and
the requirements of Section 409A of the Code to the extent applicable, in the
event of any change in the Stock effected without receipt of consideration by
the Company, whether through merger, consolidation, reorganization,
reincorporation, recapitalization, reclassification, stock dividend, stock
split, reverse stock split, split-up, split-off, spin-off, combination of
shares, exchange of shares, or similar change in the capital structure of the
Company, or in the event of payment of a dividend or distribution to the
stockholders of the Company in a form other than Stock (excepting normal cash
dividends) that has a material effect on the Fair Market Value of shares of
Stock, appropriate adjustments shall be made in the number of Performance Shares
and/or the number and kind of shares to be issued in settlement of the Award, in
order to prevent dilution or enlargement of the Participant’s rights under the
Award. For purposes of the foregoing, conversion of any convertible securities
of the Company shall not be treated as “effected without receipt of
consideration by the Company.” Any fractional share resulting from an adjustment
pursuant to this Section shall be rounded down to the nearest whole number. Such
adjustments shall be determined by the Committee, and its determination shall be
final, binding and conclusive.
 
     13. RIGHTS AS A STOCKHOLDER OR EMPLOYEE.
 
          The Participant shall have no rights as a stockholder with respect to
any Common Shares which may be issued in settlement of this Award until the date
of the issuance of a certificate for such shares (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company). No adjustment shall be made for dividends, distributions
or other rights for which the record date is prior to the date such certificate
is issued, except as provided in Section 12. If the Participant is an Employee,
the Participant understands and acknowledges that, except as otherwise provided
in a separate, written employment agreement between the Company or a Parent or
Subsidiary and the Participant, the Participant’s employment is “at will” and is
for no specified term. Nothing in this Agreement shall confer upon the
Participant any right to continue in Service interfere in any way with any right
of the Company or any Parent or Subsidiary to terminate the Participant’s
Service at any time.
 
     14. LEGENDS.
 
          The Company may at any time place legends referencing any applicable
federal, state or foreign securities law restrictions on all certificates
representing Common Shares issued pursuant to this Agreement. The Participant
shall, at the request of the Company, promptly present to the Company any and
all certificates representing shares acquired pursuant to this Award in the
possession of the Participant in order to carry out the provisions of this
Section. Unless otherwise specified by the Company, legends placed on such
certificates may include, but shall not be limited to, the following:
 

--------------------------------------------------------------------------------

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS SET
FORTH IN AN AGREEMENT BETWEEN THIS CORPORATION AND THE REGISTERED HOLDER, OR HIS
PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF
THIS CORPORATION.”
 
     15. RESTRICTIONS ON TRANSFER OF COMMON SHARES.
 
          No Common Shares may be sold, exchanged, transferred (including,
without limitation, any transfer to a nominee or agent of the Participant),
assigned, pledged, hypothecated or otherwise disposed of, including by operation
of law, in any manner which violates any of the provisions of this Agreement
and, except pursuant to an Ownership Change Event, until the date on which such
shares become Vested Common Shares, and any such attempted disposition shall be
void. The Company shall not be required (a) to transfer on its books any Common
Shares which will have been transferred in violation of any of the provisions
set forth in this Agreement or (b) to treat as owner of such Common Shares or to
accord the right to vote as such owner or to pay dividends to any transferee to
whom such Common Shares will have been so transferred. In order to enforce its
rights under this Section, the Company shall be authorized to give a stop
transfer instruction with respect to the Common Shares to the Company’s transfer
agent.
 
     16. COMPLIANCE WITH SECTION 409A.
 
          It is intended that any election, payment or benefit which is made or
provided pursuant to or in connection with this Award that may result in Section
409A Deferred Compensation shall comply in all respects with the applicable
requirements of Section 409A (including applicable regulations or other
administrative guidance thereunder, as determined by the Committee in good
faith) to avoid the unfavorable tax consequences provided therein for
non-compliance. In connection with effecting such compliance with Section 409A,
the following shall apply:
 
          16.1 Required Delay in Payment to Specified Employee. If the
Participant is a “specified employee” of a publicly traded corporation as
defined under Section 409A(a)(2)(B)(i) of the Code, unless subject to an
applicable exception under Section 409A, any payment of Section 409A Deferred
Compensation in connection with a “separation from service” (as determined for
purposes of Section 409A) shall not be made until six (6) months after the
Participant’s separation from service (the “Section 409A Deferral Period”). In
the event such payments are otherwise due to be made in installments or
periodically during the Section 409A Deferral Period, to the extent permitted
under Section 409A, the payments of Section 409A Deferred Compensation which
would otherwise have been made in the Section 409A Deferral Period shall be
accumulated and paid in a lump sum as soon as the Section 409A Deferral Period
ends, and the balance of the payments shall be made as otherwise scheduled.
 
          16.2 Other Delays in Payment. Neither the Participant nor the Company
shall take any action to accelerate or delay the payment of any benefits under
this Agreement in any manner which would not be in compliance with Code Section
409A (including any transition or grandfather rules thereunder).
 

--------------------------------------------------------------------------------

          16.3 Amendments to Comply with Section 409A; Indemnification.
Notwithstanding any other provision of this Agreement to the contrary, the
Company is authorized to amend this Agreement, to void or amend any election
made by the Participant under this Agreement and/or to delay the payment of any
monies and/or provision of any benefits in such manner as may be determined by
the Company, in its discretion, to be necessary or appropriate to comply with
Section 409A (including any transition or grandfather rules thereunder) without
prior notice to or consent of the Participant. The Participant hereby releases
and holds harmless the Company, its directors, officers and stockholders from
any and all claims that may arise from or relate to any tax liability,
penalties, interest, costs, fees or other liability incurred by the Participant
in connection with the Award, including as a result of the application of
Section 409A.
 
          16.4 Advice of Independent Tax Advisor. The Company has not obtained a
tax ruling or other confirmation from the Internal Revenue Service with regard
to the application of Section 409A to the Award, and the Company does not
represent or warrant that this Agreement will avoid adverse tax consequences to
the Participant, including as a result of the application of Section 409A to the
Award. The Participant hereby acknowledges that he or she has been advised to
seek the advice of his or her own independent tax advisor prior to entering into
this Agreement and is not relying upon any representations of the Company or any
of its agents as to the effect of or the advisability of entering into this
Agreement.
 
     17. MISCELLANEOUS PROVISIONS.
 
          17.1 Termination or Amendment. The Committee may terminate or amend
the Plan or this Agreement at any time; provided, however, that except as
provided in Section 11 in connection with a Change in Control, no such
termination or amendment may adversely affect the Participant’s rights under
this Agreement without the consent of the Participant unless such termination or
amendment is necessary to comply with applicable law or government regulation,
including, but not limited to, Section 409A. No amendment or addition to this
Agreement shall be effective unless in writing.
 
          17.2 Nontransferability of the Award. Prior the issuance of Common
Shares on the Settlement Date, neither this Award nor any Performance Shares
subject to this Award shall be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or
garnishment by creditors of the Participant or the Participant’s beneficiary,
except transfer by will or by the laws of descent and distribution. All rights
with respect to the Award shall be exercisable during the Participant’s lifetime
only by the Participant or the Participant’s guardian or legal representative.
 
          17.3 Unfunded Obligation. The Participant shall have the status of a
general unsecured creditor of the Company. Any amounts payable to the
Participant pursuant to the Award shall be an unfunded and unsecured obligation
for all purposes, including, without limitation, Title I of the Employee
Retirement Income Security Act of 1974. The Company shall not be required to
segregate any monies from its general funds, or to create any trusts, or
establish any special accounts with respect to such obligations. The Company
shall retain at all times beneficial ownership of any investments, including
trust investments, which the Company may make to fulfill its payment obligations
hereunder. Any investments or the creation or maintenance of any trust or any
Participant account shall not create or constitute a trust or fiduciary
relationship between the Committee or the Company and the Participant, or
otherwise create any vested or beneficial interest in the Participant or the
Participant’s creditors in any assets of the Company. The Participant shall have
no claim against the Company for any changes in the value of any assets which
may be invested or reinvested by the Company with respect to the Award.
 

--------------------------------------------------------------------------------

          17.4 Further Instruments. The parties hereto agree to execute such
further instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement.
 
          17.5 Binding Effect. This Agreement shall inure to the benefit of the
successors and assigns of the Company and, subject to the restrictions on
transfer set forth herein, be binding upon the Participant and the Participant’s
heirs, executors, administrators, successors and assigns.
 
          17.6 Delivery of Documents and Notices. Any document relating to
participation in the Plan or any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given (except to the extent
that this Agreement provides for effectiveness only upon actual receipt of such
notice) upon personal delivery, electronic delivery at the e-mail address, if
any, provided for the Participant by the Company or a Parent or Subsidiary, or
upon deposit in the U.S. Post Office or foreign postal service, by registered or
certified mail, or with a nationally recognized overnight courier service, with
postage and fees prepaid, addressed to the other party at the address shown
below that party’s signature to the Grant Notice or at such other address as
such party may designate in writing from time to time to the other party.
 
               (a) Description of Electronic Delivery. The Plan documents, which
may include but do not necessarily include: the Plan, the Grant Notice, this
Agreement, the Plan Prospectus, and any reports of the Company provided
generally to the Company’s stockholders, may be delivered to the Participant
electronically. In addition, the Participant may deliver electronically the
Grant Notice to the Company or to such third party involved in administering the
Plan as the Company may designate from time to time. Such means of electronic
delivery may include but do not necessarily include the delivery of a link to a
Company intranet or the Internet site of a third party involved in administering
the Plan, the delivery of the document via e-mail or such other means of
electronic delivery specified by the Company.
 
               (b) Consent to Electronic Delivery. The Participant acknowledges
that the Participant has read Section 17.6(a) of this Agreement and consents to
the electronic delivery of the Plan documents and Grant Notice, as described in
Section 17.6(a). The Participant acknowledges that he or she may receive from
the Company a paper copy of any documents delivered electronically at no cost to
the Participant by contacting the Company by telephone or in writing. The
Participant further acknowledges that the Participant will be provided with a
paper copy of any documents if the attempted electronic delivery of such
documents fails. Similarly, the Participant understands that the Participant
must provide the Company or any designated third party administrator with a
paper copy of any documents if the attempted electronic delivery of such
documents fails. The Participant may revoke his or her consent to the electronic
delivery of documents described in Section 17.6(a) or may change the electronic
mail address to which such documents are to be delivered (if Participant has
provided an electronic mail address) at any time by notifying the Company of
such revoked consent or revised e-mail address by telephone, postal service or
electronic mail. Finally, the Participant understands that he or she is not
required to consent to electronic delivery of documents described in Section
17.6(a).
 

--------------------------------------------------------------------------------

          17.7 Integrated Agreement. The Grant Notice, this Agreement and the
Plan, together with the Employment Agreement, shall constitute the entire
understanding and agreement of the Participant and the Company with respect to
the subject matter contained herein or therein and supersede any prior
agreements, understandings, restrictions, representations, or warranties between
the Participant and the Company with respect to such subject matter other than
those as set forth or provided for herein or therein. To the extent contemplated
herein or therein, the provisions of the Grant Notice, this Agreement and the
Plan shall survive any settlement of the Award and shall remain in full force
and effect.
 
          17.8 Applicable Law. This Agreement shall be governed by the laws of
the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.
 
          17.9 Counterparts. The Grant Notice may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
 
          17.10 Recoupment Policy. Subject to the discretion and approval of the
Board, the Company may, to the extent permitted by governing law, require
reimbursement and/or cancellation of any Performance Share or Common Share
issued in settlement of a Performance Share where all of the following factors
are present: (a) the award was predicated upon the achievement of certain
financial results that were subsequently the subject of a material restatement,
(b) the Board determines that the Participant engaged in fraud or intentional
misconduct that was a substantial contributing cause to the need for the
restatement, and (c) a lower award would have been made to the Participant based
upon the restated financial results.
 

--------------------------------------------------------------------------------