Exhibit 10.56
[EMPL_NAME]
Employee ID Number: [EMPLID]
Grant Number: [GRANT_ID]
APPLIED MATERIALS, INC.
PERFORMANCE SHARES AGREEMENT
NOTICE OF GRANT
     Applied Materials, Inc. (the “Company”) hereby grants you, [EMPL_NAME] (the
“Employee”), an award of Performance Shares (also referred to as restricted
stock units) under the Company’s Employee Stock Incentive Plan (the “Plan”). The
date of this Performance Shares Agreement (the “Agreement”) is [GRANT_DATE] (the
“Grant Date”). Subject to the provisions of the Terms and Conditions of
Performance Shares Agreement (the “Terms and Conditions”), which constitute part
of this Agreement, and of the Plan, the principal features of this grant are as
follows:

     
Number of Performance Shares:
  [MAX_SHARES]
(also referred to as restricted stock units)
   
 
   
Vesting of Performance Shares:
  Please refer to the UBS One Source website for the vesting schedule related to
this grant of performance shares (click on the specific grant under the tab
labeled “Grants/Awards/Units.”).*

 

*   Except as otherwise provided in the Terms and Conditions of this Agreement,
Employee will not vest in the Performance Shares unless he or she is employed by
the Company or one of its Affiliates through the applicable vesting date.

IMPORTANT:
     Your electronic or written signature below indicates your agreement and
understanding that this grant is subject to all of the terms and conditions
contained in the Terms and Conditions to this Agreement and the Plan. For
example, important additional information on vesting and forfeiture of this
grant is contained in paragraphs 3 through 5 and paragraph 7 of the Terms and
Conditions. PLEASE BE SURE TO READ ALL OF THE TERMS AND CONDITIONS OF THIS
GRANT. CLICK HERE TO READ THE TERMS AND CONDITIONS.
     By clicking the “ACCEPT” button below, you agree to the following: “This
electronic contract contains my electronic signature, which I have executed with
the intent to sign this Agreement.”
     Please be sure to retain a copy of your returned electronically signed
Agreement; you may obtain a paper copy at any time and at the Company’s expense
by requesting one from Stock Programs (see paragraph 12 of the Terms and
Conditions). If you prefer not to electronically sign this Agreement, you may
accept this Agreement by signing a paper copy of the Agreement and delivering it
to Stock Programs.

 

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     For Employees employed in China on the Grant Date: Under the State
Administration of Foreign Exchange (“SAFE”) regulations, the receipt of funds by
you from the sale of Performance Shares must be approved by SAFE. In order to
comply with the SAFE regulations, the proceeds from the sale of Performance
Shares must be repatriated into China through an approved bank account set up
and monitored by the Company.
     For Employees employed in the United Kingdom (U.K.) on the Grant Date:
National Insurance Contribution (“NIC”) The grant of your Performance Shares is
subject to the execution of a joint election between the Company and you (the
“Election”), being formally approved by the H.M. Revenue & Customs (the “HMR&C”)
and remaining in force thereafter under which you agree to pay all NICs that may
become due in connection with the grant or vesting of Performance Shares. The
NICs include the “primary” NIC payable by an employee as well as the “secondary”
NIC payable by the employer in the absence of any election (referred to as the
Secondary Class 1 NIC). By accepting the Performance Shares, to the extent
allowable by applicable law, you hereby consent and agree to satisfy any
liability the Company and/or your employer realizes with respect to Secondary
Class 1 NIC payments required to be paid by the Company and/or your employer in
connection with the grant or vesting of the Performance Shares.
     In addition, by accepting the Performance Shares, you hereby authorize the
Company or your employer to withhold any such Secondary Class 1 NICs from the
sale of a sufficient number of Shares upon vesting of the Performance Shares. In
addition and to the maximum extent permitted by law, the Company (or the
employing Affiliate) has the right to retain without notice from salary or other
amounts payable to you to satisfy such Secondary Class 1 NICs. The Company, in
its discretion, may require you, and you hereby agree, to make payment on demand
for such contributions by cash or check to UBS Financial Services, Inc., the
Company or your employer, and such contributions will be remitted to the HMR&C.
If additional consents and/or elections are required to accomplish the
foregoing, you agree to provide them promptly upon request. If the foregoing is
not allowed under applicable law, the Company may rescind your Performance
Shares. If you do not enter an Election prior to the first vesting date or if
the Election is revoked at any time by the HMR&C, the Performance Shares shall
become null and void without any liability to the Company and/or your employer
and shall lapse with immediate effect.

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TERMS AND CONDITIONS OF
PERFORMANCE SHARES AGREEMENT
     1. Grant. Applied Materials, Inc. (the “Company”) hereby grants to the
Employee under the Company’s Employee Stock Incentive Plan (the “Plan”) the
number of Performance Shares (also referred to as restricted stock units) set
forth on the first page of the Notice of Grant of this Agreement, subject to all
of the terms and conditions in this Agreement and the Plan. When Shares are paid
to the Employee in payment for the Performance Shares, par value will be deemed
paid by the Employee for each Performance Share by past services rendered by the
Employee, and will be subject to the appropriate tax withholdings. Unless
otherwise defined herein, capitalized terms used herein will have the meanings
ascribed to them in the Plan.
     2. Company’s Obligation to Pay. Each Performance Share has a value equal to
the Fair Market Value of a Share on the date of grant. Unless and until the
Performance Shares have vested in the manner set forth in paragraphs 3 through
5, or paragraph 11, the Employee will have no right to payment of such
Performance Shares. Prior to actual payment of any vested Performance Shares,
such Performance Shares will represent an unsecured obligation. Payment of any
vested Performance Shares will be made in whole Shares only, provided, however,
that if the Company determines that it is necessary or advisable, the Shares
subject to this Performance Share award shall be sold immediately upon
settlement of the Performance Shares award, and the Employee shall receive the
proceeds from the sale, less any applicable fees and taxes or other required
withholding.
     3. Vesting Schedule/Period of Restriction. Except as provided in paragraphs
4, 5 and 11, and subject to paragraph 7, the Performance Shares awarded by this
Agreement will vest in accordance with the vesting provisions set forth on the
UBS One Source website (click on the specific grant under the tab labeled
“Grants/Awards/Units”). Performance Shares will not vest in the Employee in
accordance with any of the provisions of this Agreement unless the Employee will
have been continuously employed by the Company or by one of its Affiliates from
the Grant Date until the date the Performance Shares are otherwise scheduled to
vest occurs.
     4. Modifications to Vesting Schedule.
     (a) Vesting upon Personal Leave of Absence. In the event that the Employee
takes a personal leave of absence (“PLOA”), the Performance Shares awarded by
this Agreement that are scheduled to vest will be modified as follows:
          (i) If the duration of the Employee’s PLOA is six (6) months or less,
the vesting schedule set forth on the UBS One Source website (click on the
specific grant under the tab labeled “Grants/Awards/Units”) will not be affected
by the Employee’s PLOA.
          (ii) If the duration of the Employee’s PLOA is greater than six
(6) months but not more than twelve (12) months, the scheduled vesting of any
Performance Shares awarded by this Agreement that are not then vested will be
deferred for a period of time equal to the duration of the Employee’s PLOA less
six (6) months.

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          (iii) If the duration of the Employee’s PLOA is greater than twelve
(12) months, any Performance Shares awarded by this Agreement that are not then
vested will immediately terminate.
          (iv) Example 1. Employee is scheduled to vest in Performance Shares on
January 1, 2007. On May 1, 2006, Employee begins a six-month PLOA. Employee’s
Performance Shares will still be scheduled to vest on January 1, 2007.
          (v) Example 2. Employee is scheduled to vest in Performance Shares on
January 1, 2007. On May 1, 2006, Employee begins a nine-month PLOA. Employee’s
Performance Shares awarded by this Agreement that are scheduled to vest after
November 2, 2006 will be modified (this is the date on which the Employee’s PLOA
exceeds six (6) months). Employee’s Performance Shares now will be scheduled to
vest on April 1, 2007 (three (3) months after the originally scheduled date).
          (vi) Example 3. Employee is scheduled to vest in Performance Shares on
January 1, 2007. On May 1, 2006, Employee begins a 13-month PLOA. Employee’s
Performance Shares will terminate on May 2, 2007.
     In general, a “personal leave of absence” does not include any legally
required leave of absence. The duration of the Employee’s PLOA will be
determined over a rolling twelve (12) month measurement period. Performance
Shares awarded by this Agreement that are scheduled to vest during the first six
(6) months of the Employee’s PLOA will continue to vest as scheduled. However,
Performance Shares awarded by this Agreement that are scheduled to vest after
the first six (6) months of the Employee’s PLOA will be deferred or terminated
depending on the length of the Employee’s PLOA. The Employee’s right to vest in
Performance Shares awarded by this Agreement will be modified as soon as the
duration of the Employee’s PLOA exceeds six (6) months.
     (b) Death of Employee. In the event that the Employee incurs a Termination
of Service due to his or her death, one hundred percent (100%) of the
Performance Shares subject to this Performance Shares award will vest on the
date of the Employee’s death. In the event that any applicable law limits the
Company’s ability to accelerate the vesting of this award of Performance Shares,
this paragraph 4(b) will be limited to the extent required to comply with
applicable law. Notwithstanding any contrary provision of this Agreement, if the
Employee is subject to Hong Kong’s ORSO provisions, the first sentence of this
paragraph 4(b) will not apply to this award of Performance Shares.
     5. Committee Discretion. The Committee, in its discretion, may accelerate
the vesting of the balance, or some lesser portion of the balance, of the
Performance Shares at any time, subject to the terms of the Plan. If so
accelerated, such Performance Shares will be considered as having vested as of
the date specified by the Committee. Subject to the provisions of this paragraph
5, if the Committee, in its discretion, accelerates the vesting of the balance,
or some lesser portion of the balance, of the Performance Shares, the payment of
such accelerated Performance Shares shall be made within two and one-half (21/2)
months following the end of the Company’s tax year that includes the date such
accelerated Performance Shares vest.

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     Notwithstanding anything in the Plan or this Agreement to the contrary, if
the vesting of the balance, or some lesser portion of the balance, of the
Performance Shares is accelerated in connection with Employee’s Termination of
Service (provided that such termination is a “separation from service” within
the meaning of Section 409A, as determined by the Company), other than due to
death, and if (a) the Employee is a “specified employee” within the meaning of
Section 409A at the time of such Termination of Service and (b) the payment of
such accelerated Performance Shares will result in the imposition of additional
tax under Section 409A if paid to the Employee on or within the six (6) month
period following Employee’s Termination of Service, then the payment of such
accelerated Performance Shares will not be made until the date six (6) months
and one (1) day following the date of Employee’s Termination of Service, unless
the Employee dies following his or her Termination of Service, in which case,
the Performance Shares will be paid in Shares to the Employee’s estate as soon
as practicable following his or her death. It is the intent of this Agreement to
comply with the requirements of Section 409A so that none of the Performance
Shares provided under this Agreement or Shares issuable thereunder will be
subject to the additional tax imposed under Section 409A, and any ambiguities
herein will be interpreted to so comply. For purposes of this Agreement,
“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), and any proposed, temporary or final Treasury Regulations
and Internal Revenue Service guidance thereunder, as each may be amended from
time to time.
     6. Payment after Vesting. Any Performance Shares that vest in accordance
with paragraphs 3 or 4 will be paid to the Employee (or in the event of the
Employee’s death, to his or her estate) as soon as practicable following the
date of vesting, but in all cases within two and one-half (21/2) months
following the end of the Company’s tax year that includes the date such
Performance Shares vest, subject to paragraph 8. Any Performance Shares that
vest in accordance with paragraphs 5 or 11 will be paid to the Employee (or in
the event of the Employee’s death, to his or her estate) in accordance with the
provisions of such paragraphs, subject to paragraph 8. For each Performance
Share that vests, the Employee will receive one Share, subject to paragraph 8.
     7. Forfeiture. Notwithstanding any contrary provision of this Agreement,
the balance of the Performance Shares that have not vested pursuant to
paragraphs 3 through 5 or paragraph 11 at the time of the Employee’s Termination
of Service for any or no reason will be forfeited and automatically transferred
to and reacquired by the Company at no cost to the Company.
     8. Withholding of Taxes. When Shares are issued as payment for vested
Performance Shares or, in the discretion of the Company, such earlier time as
the Tax Obligations (defined below) are due, the Company (or the employing
Affiliate) will withhold a portion of the Shares that have an aggregate market
value sufficient to pay all taxes and social insurance liability and other
requirements in connection with the Shares, including, without limitation,
(a) all federal, state and local income, employment and any other applicable
taxes that are required to be withheld by the Company or the employing
Affiliate, (b) the Employee’s and, to the extent required by the Company (or the
employing Affiliate), the Company’s (or the employing Affiliate’s) fringe
benefit tax liability, if any, associated with the grant, vesting, or sale of
the Performance Shares awarded and the Shares issued thereunder, and (c) all
other taxes or social insurance liabilities with respect to which the Employee
has agreed to bear responsibility (collectively, the “Tax Obligations”). The
number of Shares withheld pursuant to the prior sentence will be rounded up to
the nearest whole Share, with no refund provided in the U. S. for any value of
the Shares withheld in excess of the tax obligation as a result of such
rounding. Notwithstanding the foregoing, the Company, in its sole discretion,
may require the Employee to make alternate arrangements satisfactory to the
Company for such

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withholdings or remittances in advance of the arising of any remittance
obligations to which the Employee has agreed or any withholding obligations.
     Notwithstanding any contrary provision of this Agreement, no Shares will be
issued unless and until satisfactory arrangements (as determined by the Company)
have been made by the Employee with respect to the payment of any income and
other taxes which the Company determines must be withheld or collected with
respect to such Shares. In addition and to the maximum extent permitted by law,
the Company (or the employing Affiliate) has the right to retain without notice
from salary or other amounts payable to the Employee, cash having a sufficient
value to satisfy any Tax Obligations that the Company determines cannot be
satisfied through the withholding of otherwise deliverable Shares or that are
due prior to the issuance of Shares under the Performance Shares award. All Tax
Obligations related to the Performance Shares award and any Shares delivered in
payment thereof are the sole responsibility of the Employee. Further, Employee
shall be bound by any additional withholding requirements included in the Notice
of Grant of this Agreement.
     9. Rights as Stockholder. Neither the Employee nor any person claiming
under or through the Employee will have any of the rights or privileges of a
stockholder of the Company in respect of any Shares deliverable hereunder unless
and until certificates representing such Shares (which may be in book entry
form) will have been issued, recorded on the records of the Company or its
transfer agents or registrars, and delivered to the Employee (including through
electronic delivery to a brokerage account). Notwithstanding any contrary
provisions in this Agreement, any quarterly or other regular, periodic dividends
or distributions (as determined by the Company) paid on Shares will affect
neither unvested Performance Shares nor Performance Shares that are vested but
unpaid, and no such dividends or other distributions will be paid on unvested
Performance Shares or Performance Shares that are vested but unpaid. After such
issuance, recordation and delivery, the Employee will have all the rights of a
stockholder of the Company with respect to voting such Shares and receipt of
dividends and distributions on such Shares.
     10. No Effect on Employment. Subject to any employment contract with the
Employee, the terms of such employment will be determined from time to time by
the Company, or the Affiliate employing the Employee, as the case may be, and
the Company, or the Affiliate employing the Employee, as the case may be, will
have the right, which is hereby expressly reserved, to terminate or change the
terms of the employment of the Employee at any time for any reason whatsoever,
with or without good cause. The transactions contemplated hereunder and the
vesting schedule set forth on the UBS One Source website (click on the specific
grant under the tab labeled “Grants/Awards/Units”) do not constitute an express
or implied promise of continued employment for any period of time. A leave of
absence or an interruption in service (including an interruption during military
service) authorized or acknowledged by the Company or the Affiliate employing
the Employee, as the case may be, will not be deemed a Termination of Service
for the purposes of this Agreement.
     11. Changes in Performance Shares. In the event that as a result of a stock
or extraordinary cash dividend, stock split, distribution, reclassification,
recapitalization, combination of Shares or the adjustment in capital stock of
the Company or otherwise, or as a result of a merger, consolidation, spin-off or
other corporate transaction or event, the Performance Shares will be increased,
reduced or otherwise affected, and by virtue of any such event the Employee will
in his or her capacity as owner of unvested Performance Shares which have been
awarded to him or her (the

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“Prior Performance Shares”) be entitled to new or additional or different shares
of stock, cash or other securities or property (other than rights or warrants to
purchase securities); such new or additional or different shares, cash or
securities or property will thereupon be considered to be unvested Performance
Shares and will be subject to all of the conditions and restrictions that were
applicable to the Prior Performance Shares pursuant to this Agreement and the
Plan. If the Employee receives rights or warrants with respect to any Prior
Performance Shares, such rights or warrants may be held or exercised by the
Employee, provided that until such exercise, any such rights or warrants, and
after such exercise, any shares or other securities acquired by the exercise of
such rights or warrants, will be considered to be unvested Performance Shares
and will be subject to all of the conditions and restrictions which were
applicable to the Prior Performance Shares pursuant to the Plan and this
Agreement. The Committee in its sole discretion at any time may accelerate the
vesting of all or any portion of such new or additional shares of stock, cash or
securities, rights or warrants to purchase securities or shares or other
securities acquired by the exercise of such rights or warrants; provided,
however, that the payment of such accelerated new or additional awards will be
made in accordance with the provisions of paragraph 5.
     12. Address for Notices. Any notice to be given to the Company under the
terms of this Agreement shall be addressed to the Company, in care of Stock
Programs, at Applied Materials, Inc., 2881 Scott Boulevard, M/S 2023, P. O. Box
58039, Santa Clara, CA 95050, U.S.A., or at such other address as the Company
may hereafter designate in writing.
     13. Grant is Not Transferable. Except to the limited extent provided in
this Agreement, this grant of Performance Shares and the rights and privileges
conferred hereby shall not be sold, pledged, assigned, hypothecated, transferred
or disposed of any way (whether by operation of law or otherwise) and shall not
be subject to sale under execution, attachment or similar process, until the
Employee has been issued Shares in payment of the Performance Shares. Upon any
attempt to sell, pledge, assign, hypothecate, transfer or otherwise dispose of
this grant, or any right or privilege conferred hereby, or upon any attempted
sale under any execution, attachment or similar process, this grant and the
rights and privileges conferred hereby immediately will become null and void.
     14. Restrictions on Sale of Securities. The Shares issued as payment for
vested Performance Shares under this Agreement will be registered under U. S.
federal securities laws and will be freely tradable upon receipt. However,
Employee’s sale of the Shares may be subject to any market blackout period that
may be imposed by the Company and must comply with the Company’s insider trading
policies, and any other applicable securities laws.
     15. Binding Agreement. Subject to the limitation on the transferability of
this grant contained herein, this Agreement will be binding upon and inure to
the benefit of the heirs, legatees, legal representatives, successors and
assigns of the parties hereto.
     16. Additional Conditions to Issuance of Certificates for Shares. The
Company will not be required to issue any certificate or certificates (which may
be in book entry form) for Shares hereunder prior to fulfillment of all the
following conditions: (a) the admission of such Shares to listing on all stock
exchanges on which such class of stock is then listed; (b) the completion of any
registration or other qualification of such Shares under any U. S. state or
federal law or under the rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body, which the Committee will,
in its sole discretion, deem necessary or advisable; (c) the obtaining of any
approval or other clearance from any U. S. state or federal governmental

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agency, which the Committee will, in its sole discretion, determine to be
necessary or advisable; and (d) the lapse of such reasonable period of time
following the date of vesting of the Performance Shares as the Committee may
establish from time to time for reasons of administrative convenience.
     17. Plan Governs. This Agreement is subject to all the terms and provisions
of the Plan. In the event of a conflict between one or more provisions of this
Agreement and one or more provisions of the Plan, the provisions of the Plan
will govern.
     18. Committee Authority. The Committee will have the power to interpret the
Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret or revoke any such rules (including, but not limited to, the
determination of whether or not any Performance Shares have vested). All actions
taken and all interpretations and determinations made by the Committee in good
faith will be final and binding upon the Employee, the Company and all other
interested persons. No member of the Committee will be personally liable for any
action, determination or interpretation made in good faith with respect to the
Plan or this Agreement.
     19. Captions. Captions provided herein are for convenience only and are not
to serve as a basis for interpretation or construction of this Agreement.
     20. Agreement Severable. In the event that any provision in this Agreement
will be held invalid or unenforceable, such provision will be severable from,
and such invalidity or unenforceability will not be construed to have any effect
on, the remaining provisions of this Agreement.
     21. Modifications to the Agreement. This Agreement constitutes the entire
understanding of the parties on the subjects covered. The Employee expressly
warrants that he or she is not accepting this Agreement in reliance on any
promises, representations, or inducements other than those contained herein.
Modifications to this Agreement or the Plan can be made only in an express
written contract executed by a duly authorized officer of the Company.
Notwithstanding anything to the contrary in the Plan or this Agreement, the
Company reserves the right to revise this Agreement as it deems necessary or
advisable, in its sole discretion and without the consent of the Employee, to
comply with Section 409A or to otherwise avoid imposition of any additional tax
or income recognition under Section 409A prior to the actual payment of Shares
pursuant to this award of Performance Shares.
     22. Amendment, Suspension or Termination of the Plan. By accepting this
Performance Shares award, the Employee expressly warrants that he or she has
received a right to receive stock under the Plan, and has received, read and
understood a description of the Plan. The Employee understands that the Plan is
discretionary in nature and may be amended, suspended or terminated by the
Company at any time.
     23. Labor Law. By accepting this Performance Shares award, the Employee
acknowledges that: (a) the grant of these Performance Shares is a one-time
benefit which does not create any contractual or other right to receive future
grants of Performance Shares, or benefits in lieu of Performance Shares; (b) all
determinations with respect to any future grants, including, but not limited to,
the times when the Performance Shares will be granted, the number of Performance
Shares subject to each Performance Share award and the time or times when the
Performance Shares

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will vest, shall be at the sole discretion of the Company; (c) the Employee’s
participation in the Plan is voluntary; (d) the value of these Performance
Shares is an extraordinary item of compensation which is outside the scope of
the Employee’s employment contract, if any; (e) these Performance Shares are not
part of the Employee’s normal or expected compensation for purposes of
calculating any severance, resignation, redundancy, end of service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments; (f) the vesting of these Performance Shares shall cease upon
termination of employment for any reason except as may otherwise be explicitly
provided in the Plan or this Agreement; (g) the future value of the underlying
Shares is unknown and cannot be predicted with certainty; (h) these Performance
Shares have been granted to the Employee in the Employee’s status as an employee
of the Company or its Affiliates; (i) any claims resulting from these
Performance Shares will be enforceable, if at all, against the Company; and
(j) there shall be no additional obligations for any Affiliate employing the
Employee as a result of these Performance Shares.
     24. Disclosure of Employee Information. By accepting this Performance
Shares award, the Employee consents to the collection, use and transfer of
personal data as described in this paragraph. The Employee understands that the
Company and its Affiliates hold certain personal information about him or her,
including his or her name, home address and telephone number, date of birth,
social security or identity number, salary, nationality, job title, any shares
of stock or directorships held in the Company, details of all awards of
Performance Shares or any other entitlement to shares of stock awarded,
canceled, exercised, vested, unvested or outstanding in his or her favor, for
the purpose of managing and administering the Plan (“Data”).
     The Employee further understands that the Company and/or its Affiliates
will transfer Data among themselves as necessary for the purpose of
implementation, administration and management of his or her participation in the
Plan, and that the Company and/or any of its Affiliates may each further
transfer Data to any third parties assisting the Company in the implementation,
administration and management of the Plan. The Employee understands that these
recipients may be located in the European Economic Area, or elsewhere, such as
in the U.S. or Asia.
     The Employee authorizes the Company to receive, possess, use, retain and
transfer the Data in electronic or other form, for the purposes of implementing,
administering and managing his or her participation in the Plan, including any
requisite transfer to a broker or other third party with whom he or she may
elect to deposit any Shares of stock acquired from this award of Performance
Shares of such Data as may be required for the administration of the Plan and/or
the subsequent holding of Shares of stock on his or her behalf. The Employee
understands that he or she may, at any time, view the Data, require any
necessary amendments to the Data or withdraw the consent herein in writing by
contacting the Human Resources department and/or the Stock Programs
Administrator for the Company and/or its applicable Affiliates.
     25. Notice of Governing Law. This award of Performance Shares will be
governed by, and construed in accordance with, the laws of the State of
California, in the U.S.A., without regard to principles of conflict of laws.

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