ex1038.htm


    Exhibit
10.38       

      


      


      


      


      


      PG&E
Corporation

      


      2006
Long-Term Incentive Plan

      


       

      



      
        
          
             

          

           


        

        
           


          
            

          

        

        
           


        

      


      


        PLAN HISTORY AND NOTES TO
COMPANY

        


        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    December 15,
      2004

                                  	
                                    Board
      adopts Plan with a reserve of 12 million shares.

                                  
	 	 
	
                                    April
      20, 2005

                                  	
                                    Shareholders
      approve Plan.

                                  
	 	 
	
                                    January
      1, 2006

                                  	
                                    Plan
      Effective Date

                                  
	 	 
	
                                    February
      15, 2006

                                  	
                                    Change
      in control provisions are amended

                                  
	 	 
	
                                    December
      20, 2006

                                  	
                                    Board
      amends Section 7 containing the terms for automatic awards for
      Non-Employee Directors, effective January 1, 2007

                                  
	 	 
	
                                    October
      17, 2007

                                  	
                                    Board
      amends Section 7 as follows:

                                    Define
      “Grant Date” for a particular calendar year as the first business day in
      March of that calendar year.  Previously, the grant date for
      awards in 2006 and 2007 was the first business day in January of that
      particular calendar year.  This amendment becomes effective
      starting with grants for 2008.

                                    Amend
      the basis for calculating the per share value of stock option awards, so
      it is based on the average closing price of Stock during the months of
      November, December, and January preceding the
      grant.  Previously, the per share value of stock options awards
      for grants in 2006 and 2007 was based on the average closing price of
      Stock during the preceding month of November.  This amendment
      becomes effective starting with grants for 2008.

                                    Clarify
      the language for settling restricted stock awards upon a Nonemployee
      Director’s retirement from the Board, to indicate that shares credited to
      a Nonemployee Director’s Restricted Stock Unit account may be settled
      after a Nonemployee Director ceases to be a member of the Board of
      Directors following five years of service on the Board.

                                  
	 	 
	
                                    September
      17, 2008

                                  	
                                    Board
      amends Section 7 containing the terms for automatic awards for Nonemployee
      Directors, effective January 1, 2009, to increase the total value of
      annual equity awards to Nonemployee Directors from $80,000 to
      $90,000.  Of this amount, $45,000 of equity awards shall be
      Restricted Stock, and the remaining $45,000 shall be a mixture of Options
      and Restricted Stock Units, consistent with the Plan and with each
      Nonemployee Director’s election.

                                  
	 	 
	
                                    Effective
      January 1, 2009

                                  	
                                    Plan
      is amended to comply with the final regulations under Section 409A of the
      Code

                                  


                          

                           

                           

                           

                          
                            
                              
                              

                            

                            
                              i

                              
                                

                              

                            

                            
                              
                              

                            

                          

                           

                          	 	 
	
                                  February
      18, 2009

                                	
                                  Plan
      is amended to delay grant and pricing of 2009 grants for non-employee
      directors, to be consistent with 2009 grants to
  employees.

                                


                        

                      

                    

                  

                

              

            

          

        



        
           

          
            
              
              

            

            
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                        
                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                      
                                                                                                                                                                                                                                                        	 	TABLE OF
      CONTENTS	 
	 	 	 
	
                                                                                                                                                                                                                                                                1.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Establishment,
      Purpose and Term of Plan

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                1

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                1.1

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Establishment

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                1

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                1.2

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Purpose

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                1

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                1.3

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Term
      of Plan

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                1

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                2.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Definitions
      and Construction

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                1

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                2..1

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Definitions

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                1

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                2.2

                                                                                                                                                                                                                                                              	Construction	
                                                                                                                                                                                                                                                                7

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                3.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Administration

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                7

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                3.1

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Administration
      by the Committee

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                7

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                3.2

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Authority
      of Officers

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                8

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                3.3

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Administration
      with Respect to Insiders

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                8

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                3.4

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Committee
      Complying with Section 162(m)

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                8

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                3.5

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Powers
      of the Committee

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                8

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                3.6

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Option
      or SAR Repricing

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                9

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                3.7

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Indemnification

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                10

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                4.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Shares
      Subject to Plan

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                10

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                4.1

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Maximum
      Number of Shares Issuable

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                10

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                4.2

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Adjustments
      for Changes in Capital Structure

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                10

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                5.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Eligibility
      and Award Limitations

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                11

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                5.1

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Persons
      Eligible for Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                11

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                5.2

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Participation

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                11

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                5.3

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Incentive
      Stock Option Limitations

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                11

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                5.4

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Award
      Limits

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                12

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                6.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Terms
      and Conditions of Options

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                13

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                6.1

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Exercise
      Price

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                13

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                6.2

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Exercisability
      and Term of Options

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                13

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                6.3

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Payment
      of Exercise Price

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                14

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                6.4

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Effect
      of Termination of Service

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                14

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                6.5

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Transferability
      of Options

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                15

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                7.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Terms
      and Conditions of Nonemployee Director Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                15

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                7.1

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Automatic
      Grant of Restricted Stock

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                15

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                7.2

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Annual
      Election to Receive Nonstatutory Stock Option and Restricted Stock
      Units

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                15

                                                                                                                                                                                                                                                              


                                                                                                                                                                                                                                                      

                                                                                                                                                                                                                                                       

                                                                                                                                                                                                                                                      
                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                          

                                                                                                                                                                                                                                                        

                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                          i

                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                            

                                                                                                                                                                                                                                                          

                                                                                                                                                                                                                                                        

                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                          

                                                                                                                                                                                                                                                        

                                                                                                                                                                                                                                                      

                                                                                                                                                                                                                                                      
                                                                                                                                                                                                                                                        	
                                                                                                                                                                                                                                                                 

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                7.3

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Grant
      of Nonstatutory Stock Option

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                16

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                7.4

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Grant
      of Restricted Stock Unit

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                16

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                7.5

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Effect
      of Termination of Service as a Nonemployee Director

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                18

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                7.6

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Effect
      of Change in Control on Nonemployee Director Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                19

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                7.7

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Right
      to Decline Nonemployee Director Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                19

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                8.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Terms
      and Conditions of Stock Appreciation Rights

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                19

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                8.1

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Types
      of SARs Authorized

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                20

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                8.2

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Exercise
      Price

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                20

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                8.3

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Exercisability
      and Term of SARs

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                20

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                8.4

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Deemed
      Exercise of SARs

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                20

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                8.5

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Effect
      of Termination of Service

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                20

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                8.6

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Nontransferability
      of SARs

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                20

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                9.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Terms
      and Conditions of Restricted Stock Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                21

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                9.1

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Types
      of Restricted Stock Awards Authorized

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                21

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                9.2

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Purchase
      Price

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                21

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                9.3

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Purchase
      Period

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                21

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                9.4

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Vesting
      and Restrictions on Transfer

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                21

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                9.5

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Voting
      Rights, Dividends and Distributions

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                21

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                9.6

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Effect
      of Termination of Service

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                22

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                9.7

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Nontransferability
      of Restricted Stock Award Rights

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                22

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                10.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Terms
      and Conditions of Performance Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                22

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                10.1

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Types
      of Performance Awards Authorized

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                22

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                10.2

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Initial
      Value of Performance Shares and Performance Units

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                22

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                10.3

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Establishment
      of Performance Period, Performance Goals and Performance Award
      Formula

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                23

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                10.4

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Measurement
      of Performance Goals

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                23

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                10.5

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Settlement
      of Performance Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                24

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                10.6

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Voting
      Rights, Dividend Equivalent Rights and Distributions

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                24

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                10.7

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Effect
      of Termination of Service

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                25

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                10.8

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Nontransferability
      of Performance Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                25

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                11.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Terms
      and Conditions of Restricted Stock Unit Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                26

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                11.1

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Grant
      of Restricted Stock Unit Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                26

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                11.2

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Vesting

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                26

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                11.3

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Voting
      Rights, Dividend Equivalent Rights and Distributions

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                26

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                11.4

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Effect
      of Termination of Service

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                27

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                11.5

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Settlement
      of Restricted Stock Unit Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                27

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                11.6

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Nontransferability
      of Restricted Stock Unit Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                27

                                                                                                                                                                                                                                                              


                                                                                                                                                                                                                                                      

                                                                                                                                                                                                                                                       

                                                                                                                                                                                                                                                      
                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                          

                                                                                                                                                                                                                                                        

                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                          ii

                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                            

                                                                                                                                                                                                                                                          

                                                                                                                                                                                                                                                        

                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                          

                                                                                                                                                                                                                                                        

                                                                                                                                                                                                                                                      

                                                                                                                                                                                                                                                       

                                                                                                                                                                                                                                                      
                                                                                                                                                                                                                                                        	 
      	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                12.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Deferred
      Compensation Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                27

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                12.1

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Establishment
      of Deferred Compensation Award Programs

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                27

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                12.2

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Terms
      and Conditions of Deferred Compensation Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                28

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                13.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Other
      Stock-Based Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                29

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                14.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Change
      in Control

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                29

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                14.1

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Effect
      of Change in Control on Options and SARs

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                29

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                14.2

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Effect
      of Change in Control on Restricted Stock and Other Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                29

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                14.3

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Nonemployee
      Director Awards

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                29

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                15.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Compliance
      with Securities Law

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                30

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                16.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Tax
      Withholding

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                30

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                16.1

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Tax
      Withholding in General

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                30

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                16.2

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Withholding
      in Shares

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                30

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                17.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Amendment
      or Termination of Plan

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                30

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      
	
                                                                                                                                                                                                                                                                18.

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Miscellaneous
      Provisions

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                31

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                18.1

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Repurchase
      Rights

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                31

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                18.2

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Provision
      of Information

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                31

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                18.3

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Rights
      as Employee, Consultant or Director

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                31

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                18.4

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Rights
      as a Shareholder

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                31

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                18.5

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Fractional
      Shares

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                31

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                18.6

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Severability

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                31

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                18.7

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Beneficiary
      Designation

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                32

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                18.8

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Unfunded
      Obligation

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                32

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                18.9

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Choice
      of Law

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                32

                                                                                                                                                                                                                                                              
	 
      	
                                                                                                                                                                                                                                                                18.10

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                Section
      409A of the Code

                                                                                                                                                                                                                                                              	
                                                                                                                                                                                                                                                                32

                                                                                                                                                                                                                                                              
	 
      	 
      	 
      


                                                                                                                                                                                                                                                      

                                                                                                                                                                                                                                                    

                                                                                                                                                                                                                                                  

                                                                                                                                                                                                                                                

                                                                                                                                                                                                                                              

                                                                                                                                                                                                                                            

                                                                                                                                                                                                                                          

                                                                                                                                                                                                                                        

                                                                                                                                                                                                                                      

                                                                                                                                                                                                                                    

                                                                                                                                                                                                                                  

                                                                                                                                                                                                                                

                                                                                                                                                                                                                              

                                                                                                                                                                                                                            

                                                                                                                                                                                                                          

                                                                                                                                                                                                                        

                                                                                                                                                                                                                      

                                                                                                                                                                                                                    

                                                                                                                                                                                                                  

                                                                                                                                                                                                                

                                                                                                                                                                                                              

                                                                                                                                                                                                            

                                                                                                                                                                                                          

                                                                                                                                                                                                        

                                                                                                                                                                                                      

                                                                                                                                                                                                    

                                                                                                                                                                                                  

                                                                                                                                                                                                

                                                                                                                                                                                              

                                                                                                                                                                                            

                                                                                                                                                                                          

                                                                                                                                                                                        

                                                                                                                                                                                      

                                                                                                                                                                                    

                                                                                                                                                                                  

                                                                                                                                                                                

                                                                                                                                                                              

                                                                                                                                                                            

                                                                                                                                                                          

                                                                                                                                                                        

                                                                                                                                                                      

                                                                                                                                                                    

                                                                                                                                                                  

                                                                                                                                                                

                                                                                                                                                              

                                                                                                                                                            

                                                                                                                                                          

                                                                                                                                                        

                                                                                                                                                      

                                                                                                                                                    

                                                                                                                                                  

                                                                                                                                                

                                                                                                                                              

                                                                                                                                            

                                                                                                                                          

                                                                                                                                        

                                                                                                                                      

                                                                                                                                    

                                                                                                                                  

                                                                                                                                

                                                                                                                              

                                                                                                                            

                                                                                                                          

                                                                                                                        

                                                                                                                      

                                                                                                                    

                                                                                                                  

                                                                                                                

                                                                                                              

                                                                                                            

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

        
 

      

      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

       

      PG&E
Corporation

      2006
Long-Term Incentive Plan

      (As
adopted effective January 1, 2006, and

      as
amended effective on February 15, 2006, December 20, 2006, October 17, 2007,
September 17, 2008, January 1, 2009, and February 18, 2009)

      


      1.           Establishment,
Purpose and Term of Plan.

       

      1.1           Establishment.  The
PG&E Corporation 2006 Long-Term Incentive Plan (the “Plan”) is hereby established
effective as of January 1, 2006 (the “Effective
Date”), provided
it has been approved by the shareholders of the Company.

       

      1.2           Purpose.  The
purpose of the Plan is to advance the interests of the Participating Company
Group and its shareholders by providing an incentive to attract and retain the
best qualified personnel to perform services for the Participating Company
Group, by motivating such persons to contribute to the growth and profitability
of the Participating Company Group, by aligning their interests with interests
of the Company’s shareholders, and by rewarding such persons for their services
by tying a significant portion of their total compensation package to the
success of the Company.  The Plan seeks to achieve this purpose by
providing for Awards in the form of Options, Stock Appreciation Rights,
Restricted Stock Awards, Performance Shares, Performance Units, Restricted Stock
Units, Deferred Compensation Awards and other Stock-Based Awards as described
below.

       

      1.3           Term of Plan.  The
Plan shall continue in effect until the earlier of its termination by the Board
or the date on which all of the shares of Stock available for issuance under the
Plan have been issued and all restrictions on such shares under the terms of the
Plan and the agreements evidencing Awards granted under the Plan have
lapsed.  However, all Awards shall be granted, if at all, within ten
(10) years from the Effective Date.  Moreover, Incentive Stock Options
shall not be granted later than ten (10) years from the date of shareholder
approval of the Plan.

       

      2.           Definitions
and Construction.

       

      2.1           Definitions. Whenever used
herein, the following terms shall have their respective meanings set forth
below:

       

      (a)           “Affiliate” means (i) an entity,
other than a Parent Corporation, that directly, or indirectly through one or
more intermediary entities, controls the Company or (ii) an entity, other
than a Subsidiary Corporation, that is controlled by the Company directly, or
indirectly through one or more intermediary entities.  For this
purpose, the term “control” (including the term “controlled by”) means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of the relevant entity, whether through the
ownership of voting securities, by contract or otherwise; or shall have such
other meaning assigned such term for the purposes of registration on
Form S-8 under the Securities Act.

       


      
        
           


        

        
          1

          
            

          

        

        
           


        

      


      (b)           “Award” means any Option, SAR,
Restricted Stock Award, Performance Share, Performance Unit, Restricted Stock
Unit or Deferred Compensation Award or other Stock-Based Award granted under the
Plan.

       

      (c)           “Award
Agreement” means
a written agreement between the Company and a Participant setting forth the
terms, conditions and restrictions of the Award granted to the
Participant.

       

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

       

      (e)           “Change in
Control” means,
unless otherwise defined by the Participant’s Award Agreement or contract of
employment or service, the occurrence of any of the following:

       

      (i)           any
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act, but excluding any benefit plan for Employees or any trustee, agent or other
fiduciary for any such plan acting in such person’s capacity as such fiduciary),
directly or indirectly, becomes the “beneficial owner” (as defined in
Rule 13d-3 promulgated under the Exchange Act), of stock of the Company
representing twenty percent (20%) or more of the combined voting power of the
Company’s then outstanding voting stock; or

       

      (ii)           during
any two consecutive years, individuals who at the beginning of such period
constitute the Board cease for  any reason to constitute at least a
majority of the Board, unless the election, or the nomination for election by
the shareholders of the Company, of each new Director was approved by a vote of
at least two-thirds (2/3) of the Directors then still in office who were
Directors at the beginning of the period; or

       

      (iii)           the
consummation of any consolidation or merger of the Company other than a merger
or consolidation which would result in the voting stock of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting stock of the surviving
entity or any parent of such surviving entity) at least seventy percent (70%) of
the Combined Voting Power of the Company, such surviving entity or the parent of
such surviving entity outstanding immediately after the merger or consolidation;
or

       

      (iv)           the
approval of the Shareholders of the Company of any (1) sale, lease, exchange or
other transfer (in one or a series of related transactions) of all or
substantially all of the assets of the Company, or (2) any plan or proposal for
the liquidation or dissolution of the Company.

       

      For
purposes of paragraph (iii), the term “Combined Voting
Power” shall mean the combined voting power of the Company’s or other
relevant entity’s then outstanding voting stock.

       

      (f)           “Code” means the Internal Revenue
Code of 1986, as amended, and any applicable regulations promulgated
thereunder.

       

      (g)           “Committee” means the Compensation
Committee or other committee of the Board duly appointed to administer the Plan
and having such powers as shall be specified by

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      the
Board.  If no committee of the Board has been appointed to administer
the Plan, the Board shall exercise all of the powers of the Committee granted
herein, and, in any event, the Board may in its discretion exercise any or all
of such powers.

       

      (h)           “Company” means PG&E Corporation,
a California corporation, or any successor corporation thereto.

       

      (i)           “Consultant” means a person engaged to
provide consulting or advisory services (other than as an Employee or a member
of the Board) to a Participating Company, provided that the identity of such
person, the nature of such services or the entity to which such services are
provided would not preclude the Company from offering or selling securities to
such person pursuant to the Plan in reliance on registration on a Form S-8
Registration Statement under the Securities Act.

       

      (j)           “Deferred
Compensation Award” means an award of Stock
Units granted to a Participant pursuant to Section 12 of the Plan.

       

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

       

      (l)           “Disability” means the permanent and
total disability of the Participant, within the meaning of Section 22(e)(3)
of the Code, except as otherwise set forth in the Plan or an Award
Agreement.

       

      (m)           “Dividend
Equivalent”
means a credit, made at the discretion of the Committee or as otherwise provided
by the Plan, to the account of a Participant in an amount equal to the cash
dividends paid on one share of Stock for each share of Stock represented by an
Award held by such Participant.

       

      (n)           “Employee” means any person treated as
an employee (including an Officer or a member of the Board who is also treated
as an employee) in the records of a Participating Company and, with respect to
any Incentive Stock Option granted to such person, who is an employee for
purposes of Section 422 of the Code; provided, however, that neither
service as a member of the Board nor payment of a director’s fee shall be
sufficient to constitute employment for purposes of the Plan.  The
Company shall determine in good faith and in the exercise of its discretion
whether an individual has become or has ceased to be an Employee and the
effective date of such individual’s employment or termination of employment, as
the case may be.  For purposes of an individual’s rights, if any,
under the Plan as of the time of the Company’s determination, all such
determinations by the Company shall be final, binding and conclusive,
notwithstanding that the Company or any court of law or governmental agency
subsequently makes a contrary determination.

       

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

       

      (p)           “Fair Market
Value” means, as
of any date, the value of a share of Stock or other property as determined by
the Committee, in its discretion, or by the Company, in its discretion, if such
determination is expressly allocated to the Company herein, subject to the
following:

       


      
        
           


        

        
          3

          
            

          

        

        
           


        

      


      (i)           Except
as otherwise determined by the Committee, if, on such date, the Stock is listed
on a national or regional securities exchange or market system, the Fair Market
Value of a share of Stock shall be the closing price of a share of Stock as
quoted on the New York Stock Exchange or such other national or regional
securities exchange or market system constituting the primary market for the
Stock, as reported in The Wall
Street Journal or such other source as the Company deems
reliable.  If the relevant date does not fall on a day on which the
Stock has traded on such securities exchange or market system, the date on which
the Fair Market Value shall be established shall be the last day on which the
Stock was so traded prior to the relevant date, or such other appropriate day as
shall be determined by the Committee, in its discretion.

       

      (ii)           Notwithstanding
the foregoing, the Committee may, in its discretion, determine the Fair Market
Value on the basis of the opening, closing, high, low or average sale price of a
share of Stock or the actual sale price of a share of Stock received by a
Participant, on such date, the preceding trading day, the next succeeding
trading day or an average determined over a period of trading
days.  The Committee may vary its method of determination of the Fair
Market Value as provided in this Section for different purposes under the
Plan.

       

      (iii)           If,
on such date, the Stock is not listed on a national or regional securities
exchange or market system, the Fair Market Value of a share of Stock shall be as
determined by the Committee in good faith without regard to any restriction
other than a restriction which, by its terms, will never lapse.

       

      (q)           “Incentive Stock
Option” means an
Option intended to be (as set forth in the Award Agreement) and which qualifies
as an incentive stock option within the meaning of Section 422(b) of the
Code.

       

      (r)           “Insider” means an Officer, a
Director or any other person whose transactions in Stock are subject to
Section 16 of the Exchange Act.

       

      (s)           “Mandatory
Retirement” means retirement as a Director at age 70 or at such other age
as may be specified in the retirement policy for the Board in effect at the time
of a Nonemployee Director’s termination of Service as a Director.

       

      (t)           “Net-Exercise”
means a procedure by which the Participant will be issued a number of shares of
Stock determined in accordance with the following formula:

       

      X = Y(A-B)/A, where

      X = the number of shares of Stock to
be issued to the Participant upon exercise of the Option;

      Y = the total number of shares with
respect to which the Participant has elected to exercise the
Option;

      A = the Fair Market Value of one (1)
share of Stock;

      B = the exercise price per share (as
defined in the Participant’s Award Agreement).


      
        
           


        

        
          4

          
            

          

        

        
           


        

      


                             
(u)            “Nonemployee
Director” means
a Director who is not an Employee.

       

      (v)           “Nonemployee
Director Award”
means an Award granted to a Nonemployee Director pursuant to Section 7 of the Plan.

       

      (w)           “Nonstatutory
Stock Option”
means an Option not intended to be (as set forth in the Award Agreement) an
incentive stock option within the meaning of Section 422(b) of the
Code.

       

      (x)           “Officer” means any person designated
by the Board as an officer of the Company.

       

      (y)           “Option” means the right to purchase
Stock at a stated price for a specified period of time granted to a Participant
pursuant to Section 6 or Section 7 of the Plan.  An Option may be either an
Incentive Stock Option or a Nonstatutory Stock Option.

       

      (z)           “Option
Expiration Date” means the date of expiration of the Option’s term as set
forth in the Award Agreement.

       

      (aa)           “Parent
Corporation”
means any present or future “parent corporation” of the Company, as defined in
Section 424(e) of the Code.

       

      (bb)           “Participant” means any eligible person
who has been granted one or more Awards.

       

      (cc)           “Participating
Company” means
the Company or any Parent Corporation, Subsidiary Corporation or
Affiliate.

       

      (dd)           “Participating
Company Group”
means, at any point in time, all entities collectively which are then
Participating Companies.

       

      (ee)           “Performance
Award” means an
Award of Performance Shares or Performance Units.

       

      (ff)           “Performance Award
Formula” means,
for any Performance Award, a formula or table established by the Committee
pursuant to Section 10.3 of the Plan which
provides the basis for computing the value of a Performance Award at one or more
threshold levels of attainment of the applicable Performance Goal(s) measured as
of the end of the applicable Performance Period.

       

      (gg)           “Performance
Goal” means a
performance goal established by the Committee pursuant to Section 10.3 of the Plan.

       

      (hh)           “Performance
Period” means a
period established by the Committee pursuant to Section 10.3 of the Plan at the end of which one or more
Performance Goals are to be measured.

       


      
        
           


        

        
          5

          
            

          

        

        
           


        

      


      (ii)           “Performance
Share” means a
bookkeeping entry representing a right granted to a Participant pursuant to
Section 10 of the Plan to receive a payment
equal to the value of a Performance Share, as determined by the Committee, based
on performance.

       

      (jj)           “Performance
Unit” means a
bookkeeping entry representing a right granted to a Participant pursuant to
Section 10 of the Plan to receive a payment
equal to the value of a Performance Unit, as determined by the Committee, based
upon performance.

       

      (kk)           “Restricted Stock
Award” means an
Award of Restricted Stock.

       

      (ll)           “Restricted Stock
Unit” or “Stock
Unit” means a
bookkeeping entry representing a right granted to a Participant pursuant to
Section 11 or Section 12 of the Plan, respectively, to receive a share of
Stock on a date determined in accordance with the provisions of Section 11 or Section 12, as
applicable, and the Participant’s Award Agreement.

       

      (mm)                      “Restriction
Period” means
the period established in accordance with Section 9.4 of the Plan during which shares subject to a
Restricted Stock Award are subject to Vesting Conditions.

       

      (nn)           “Retirement”
means termination as an Employee of a Participating Company at age 55 or older,
provided that the Participant was an Employee for at least five consecutive
years prior to the date of such termination.

       

      (oo)           “Rule
16b-3” means
Rule 16b-3 under the Exchange Act, as amended from time to time, or any
successor rule or regulation.

       

      (pp)           “SAR” or “Stock
Appreciation Right” means a bookkeeping entry
representing, for each share of Stock subject to such SAR, a right granted to a
Participant pursuant to Section 8 of the Plan
to receive payment in any combination of shares of Stock or cash of an amount
equal to the excess, if any, of the Fair Market Value of a share of Stock on the
date of exercise of the SAR over the exercise price.

       

      (qq)           “Section 162(m)” means Section 162(m)
of the Code.

       

      (rr)           “Section 409A
Change in Control” means a “change in the
ownership or effective control of the corporation, or in the ownership of a
substantial portion of the assets of the corporation,” within the meaning of
Section 409A of the Code, as such definition applies to the
Company.

       

      (ss)           “Securities
Act” means the
Securities Act of 1933, as amended.

       

      (tt)           “Separation from
Service” means a
Participant’s “separation from service,” within the meaning of Section 409A of
the Internal Revenue Code.

       

      (uu)           “Service” means a Participant’s
employment or service with the Participating Company Group, whether in the
capacity of an Employee, a Director or a Consultant.  A Participant’s
Service shall not be deemed to have terminated merely because of a change in the
capacity in which the Participant renders such Service or a change in
the

       

      
        
          
          

        

        
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      Participating
Company for which the Participant renders such Service, provided that there is
no interruption or termination of the Participant’s
Service.  Furthermore, a Participant’s Service shall not be deemed to
have terminated if the Participant takes any military leave, sick leave, or
other bona fide leave of absence approved by the Company.  However, if
any such leave taken by a Participant exceeds ninety (90) days, then on the one
hundred eighty-first (181st) day following the commencement of such leave any
Incentive Stock Option held by the Participant shall cease to be treated as an
Incentive Stock Option and instead shall be treated thereafter as a Nonstatutory
Stock Option, unless the Participant’s right to return to Service with the
Participating Company Group is guaranteed by statute or
contract.  Notwithstanding the foregoing, unless otherwise designated
by the Company or required by law, a leave of absence shall not be treated as
Service for purposes of determining vesting under the Participant’s Award
Agreement.  A Participant’s Service shall be deemed to have terminated
either upon an actual termination of Service or upon the entity for which the
Participant performs Service ceasing to be a Participating
Company.  Subject to the foregoing, the Company, in its discretion,
shall determine whether the Participant’s Service has terminated and the
effective date of such termination.

       

      (vv)           “Stock” means the common stock of
the Company, as adjusted from time to time in accordance with Section 4.2 of the Plan.

       

      (ww)          “Stock-Based
Awards” means
any award that is valued in whole or in part by reference to, or is otherwise
based on, the Stock, including dividends on the Stock, but not limited to those
Awards described in Sections 6 through 12 of the Plan.

       

      (xx)           “Subsidiary
Corporation”
means any present or future “subsidiary corporation” of the Company, as defined
in Section 424(f) of the Code.

       

      (yy)           “Ten Percent
Owner” means a
Participant who, at the time an Option is granted to the Participant, owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of a Participating Company (other than an Affiliate) within the
meaning of Section 422(b)(6) of the Code.

       

      (zz)           “Vesting
Conditions” mean
those conditions established in accordance with Section 9.4 or Section 11.2 of
the Plan prior to the satisfaction of which shares subject to a Restricted Stock
Award or Restricted Stock Unit Award, respectively, remain subject to forfeiture
or a repurchase option in favor of the Company upon the Participant’s
termination of Service.

       

      2.2           Construction.  Captions
and titles contained herein are for convenience only and shall not affect the
meaning or interpretation of any provision of the Plan.  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.

       

      3.           Administration.

       

      3.1           Administration by the
Committee.  The Plan shall be administered by the
Committee.  All questions of interpretation of the Plan or of any
Award shall be determined by

       

      
        
          
          

        

        
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      the
Committee, and such determinations shall be final and binding upon all persons
having an interest in the Plan or such Award.

       

      3.2           Authority of
Officers.  Any Officer shall have the authority to act on
behalf of the Company with respect to any matter, right, obligation,
determination 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, determination or election.  In
addition, to the extent specified in a resolution adopted by the Board, the
Chief Executive Officer of the Company shall have the authority to grant Awards
to an Employee who is not an Insider and who is receiving a salary below the
level which requires approval by the Committee; provided that the terms of such
Awards conform to guidelines established by the Committee and provided further
that at the time of making such Awards the Chief Executive Officer also is a
Director.

       

      3.3           Administration with Respect to
Insiders.  With respect to participation by Insiders in the
Plan, at any time that any class of equity security of the Company is registered
pursuant to Section 12 of the Exchange Act, the Plan shall be administered
in compliance with the requirements, if any, of Rule 16b-3.

       

      3.4           Committee Complying with
Section 162(m).  While the Company is a “publicly held
corporation” within the meaning of Section 162(m), the Board may establish
a Committee of “outside directors” within the meaning of Section 162(m) to
approve the grant of any Award which might reasonably be anticipated to result
in the payment of employee remuneration that would otherwise exceed the limit on
employee remuneration deductible for income tax purposes pursuant to
Section 162(m).

       

      3.5           Powers of the Committee.  In
addition to any other powers set forth in the Plan and subject to the provisions
of the Plan, the Committee shall have the full and final power and authority, in
its discretion:

       

      (a)           to
determine the persons to whom, and the time or times at which, Awards shall be
granted and the number of shares of Stock or units to be subject to each Award
based on the recommendation of the Chief Executive Officer of the Company
(except that Awards to the Chief Executive Officer shall be based on the
recommendation of the independent members of the Board in compliance with
applicable stock exchange rules and Awards to Nonemployee Directors shall be
granted automatically pursuant to Section 7 of the Plan);

       

      (b)           to
determine the type of Award granted and to designate Options as Incentive Stock
Options or Nonstatutory Stock Options;

       

      (c)           to
determine the Fair Market Value of shares of Stock or other
property;

       

      (d)           to
determine the terms, conditions and restrictions applicable to each Award (which
need not be identical) and any shares acquired pursuant thereto, including,
without limitation, (i) the exercise or purchase price of shares purchased
pursuant to any Award, (ii) the method of payment for shares purchased
pursuant to any Award, (iii) the method for satisfaction of any tax
withholding obligation arising in connection with Award, including by the
withholding or delivery of shares of Stock, (iv) the timing, terms and
conditions of the exercisability or vesting of any Award or any shares acquired
pursuant thereto, (v) the 

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

         

        Performance
Award Formula and Performance Goals applicable to any Award and the extent to
which such Performance Goals have been attained, (vi) the time of the
expiration of any Award, (vii) the effect of the Participant’s termination
of Service on any of the foregoing, and (viii) all other terms, conditions
and restrictions applicable to any Award or shares acquired pursuant thereto not
inconsistent with the terms of the Plan;

      

       

      (e)           to
determine whether an Award will be settled in shares of Stock, cash, or in any
combination thereof;

       

      (f)           to
approve one or more forms of Award Agreement;

       

      (g)           to
amend, modify, extend, cancel or renew any Award or to waive any restrictions or
conditions applicable to any Award or any shares acquired pursuant
thereto;

       

      (h)           to
accelerate, continue, extend or defer the exercisability or vesting of any Award
or any shares acquired pursuant thereto, including with respect to the period
following a Participant’s termination of Service;

       

      (i)           without
the consent of the affected Participant and notwithstanding the provisions of
any Award Agreement to the contrary, to unilaterally substitute at any time a
Stock Appreciation Right providing for settlement solely in shares of Stock in
place of any outstanding Option, provided that such Stock Appreciation Right
covers the same number of shares of Stock and provides for the same exercise
price (subject in each case to adjustment in accordance with Section 4.2) as the replaced Option and otherwise provides
substantially equivalent terms and conditions as the replaced Option, as
determined by the Committee;

       

      (j)           to
prescribe, amend or rescind rules, guidelines and policies relating to the Plan,
or to adopt sub-plans or supplements to, or alternative versions of, the Plan,
including, without limitation, as the Committee deems necessary or desirable to
comply with the laws or regulations of or to accommodate the tax policy,
accounting principles or custom of, foreign jurisdictions whose citizens may be
granted Awards;

       

      (k)           to
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award Agreement and to make all other determinations and take such
other actions with respect to the Plan or any Award as the Committee may deem
advisable to the extent not inconsistent with the provisions of the Plan or
applicable law; and

       

      (l)           to
delegate to the Chief Executive Officer or the Senior Vice President of Human
Resources the authority with respect to ministerial matters regarding the Plan
and Awards made under the Plan.

       

      3.6           Option or SAR Repricing.
Without the affirmative vote of holders of a majority of the shares of
Stock cast in person or by proxy at a meeting of the shareholders of the Company
at which a quorum representing a majority of all outstanding shares of Stock is
present or represented by proxy, the Board shall not approve a program providing
for either (a) the cancellation of outstanding Options or SARs and the
grant in substitution therefore of new Options or SARs having a lower exercise
price or (b) the amendment of outstanding Options or SARs to reduce the
exercise price thereof.  This paragraph shall not be construed to
apply to

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

         

        “issuing
or assuming a stock option in a transaction to which section 424(a) applies,”
within the meaning of Section 424 of the Code.

      

       

      3.7           Indemnification.  In
addition to such other rights of indemnification as they may have as members of
the Board or the Committee or as officers or employees of the Participating
Company Group, members of the Board or the Committee and any officers or
employees of the Participating Company Group to whom authority to act for the
Board, the Committee or the Company is delegated shall be indemnified by the
Company against all reasonable expenses, including attorneys’ fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.

       

      4.           Shares
Subject to Plan.

       

      4.1           Maximum Number of Shares
Issuable.  Subject to adjustment as provided in
Section 4.2 and subject to Section 409A of the Code, the maximum aggregate
number of shares of Stock that may be issued under the Plan shall be twelve
million (12,000,000) and shall consist of authorized but unissued or reacquired
shares of Stock or any combination thereof.  If an outstanding Award
for any reason expires or is terminated or canceled without having been
exercised or settled in full, or if shares of Stock acquired pursuant to an
Award subject to forfeiture or repurchase are forfeited or repurchased by the
Company, the shares of Stock allocable to the terminated portion of such Award
or such forfeited or repurchased shares of Stock shall again be available for
issuance under the Plan.  Shares of Stock shall not be deemed to have
been issued pursuant to the Plan (a) with respect to any portion of an
Award that is settled in cash or (b) to the extent such shares are withheld
or reacquired by the Company in satisfaction of tax withholding obligations
pursuant to Section 16.2.  Upon
payment in shares of Stock pursuant to the exercise of an SAR, the number of
shares available for issuance under the Plan shall be reduced only by the number
of shares actually issued in such payment.  If the exercise price of
an Option is paid by tender to the Company, or attestation to the ownership, of
shares of Stock owned by the Participant, or by means of a Net-Exercise, the
number of shares available for issuance under the Plan shall be reduced only by
the net number of shares for which the Option is exercised.

       

      4.2           Adjustments for Changes in Capital
Structure.  Subject
to any required action by the shareholders of the Company, 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

       

      
        
          
          

        

        
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        shareholders
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 and kind of shares subject to the Plan
and to any outstanding Awards, in the Award limits set forth in Section 5.4, in
the Nonemployee Director Awards to be granted automatically pursuant to Section
7, and in the exercise or purchase price per share under any outstanding
Award in order to prevent dilution or enlargement of Participants’ rights under
the Plan.  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 4.2 shall be rounded down to the nearest whole
number.  The Committee in its sole discretion, may also make such
adjustments in the terms of any Award to reflect, or related to, such changes in
the capital structure of the Company or distributions as it deems appropriate,
including modification of Performance Goals, Performance Award Formulas and
Performance Periods.  The adjustments determined by the Committee
pursuant to this Section 4.2 shall be final,
binding and conclusive.

      

       

      5.           Eligibility
and Award Limitations.

       

      5.1           Persons Eligible for
Awards.  Awards may be granted only to Employees, Consultants
and Directors.  For purposes of the foregoing sentence, “Employees,”
“Consultants”and “Directors” shall include prospective Employees, prospective
Consultants and prospective Directors to whom Awards are granted in connection
with written offers of an employment or other service relationship with the
Participating Company Group; provided, however, that no Stock subject to any
such Award shall vest, become exercisable or be issued prior to the date on
which such person commences Service.  A Nonemployee Director Award may
be granted only to a person who, at the time of grant, is a Nonemployee
Director.

       

      5.2           Participation.  Awards
other than Nonemployee Director
Awards are granted solely at the discretion of the
Committee.  Eligible persons may be granted more than one
Award.  However,
excepting Nonemployee Director Awards, eligibility in accordance with
this Section shall not entitle any person to be granted an Award, or, having
been granted an Award, to be granted an additional Award.

       

      5.3           Incentive Stock Option
Limitations.

       

      (a)           Persons
Eligible.  An Incentive Stock Option may be granted only to a
person who, on the effective date of grant, is an Employee of the Company, a
Parent Corporation or a Subsidiary Corporation (each being an “ISO-Qualifying
Corporation”).  Any person who
is not an Employee of an ISO-Qualifying Corporation on the effective date of the
grant of an Option to such person may be granted only a Nonstatutory Stock
Option.  An Incentive Stock Option granted to a prospective Employee
upon the condition that such person become an Employee of an ISO-Qualifying
Corporation shall be deemed granted effective on the date such person commences
Service with an ISO-Qualifying Corporation, with an exercise price determined as
of such date in accordance with Section 6.1.

       

      (b)           Fair Market Value
Limitation.  To the extent that options designated as Incentive
Stock Options (granted under all stock option plans of the Participating Company
Group, including the Plan) become exercisable by a Participant for the first
time during any

      
 

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

         

        calendar
year for stock having a Fair Market Value greater than One Hundred Thousand
Dollars ($100,000), the portion of such options which exceeds such amount shall
be treated as Nonstatutory Stock Options.  For purposes of this
Section, options designated as Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
stock shall be determined as of the time the option with respect to such stock
is granted.  If the Code is amended to provide for a limitation
different from that set forth in this Section, such different limitation shall
be deemed incorporated herein effective as of the date and with respect to such
Options as required or permitted by such amendment to the Code.  If an
Option is treated as an Incentive Stock Option in part and as a Nonstatutory
Stock Option in part by reason of the limitation set forth in this Section, the
Participant may designate which portion of such Option the Participant is
exercising.  In the absence of such designation, the Participant shall
be deemed to have exercised the Incentive Stock Option portion of the Option
first.  Upon exercise, shares issued pursuant to each such portion
shall be separately identified.

      

       

      5.4           Award Limits.

       

      (a)           Maximum Number of
Shares Issuable Pursuant to Incentive Stock Options.  Subject
to adjustment as provided in Section 4.2, the
maximum aggregate number of shares of Stock that may be issued under the Plan
pursuant to the exercise of Incentive Stock Options shall not exceed twelve
million (12,000,000) shares.  The maximum aggregate number of shares
of Stock that may be issued under the Plan pursuant to all Awards other than
Incentive Stock Options shall be the number of shares determined in accordance
with Section 4.1, subject to adjustment as
provided in Section 4.2 and further subject to
the limitation set forth in Section 5.4(b)
below.

       

      (b)           Aggregate Limit
on Full Value Awards.  Subject to adjustment as provided in
Section 4.2, in no event shall more than twelve
million (12,000,000) shares in the aggregate be issued under the Plan pursuant
to the exercise or settlement of Restricted Stock Awards, Restricted Stock Unit
Awards and Performance Awards (“Full Value Awards”).  Except with
respect to a maximum of five percent (5%) of the shares of Stock authorized in
this Section 5.4(b), any Full Value Awards which vest on the basis of the
Participant’s continued Service shall not provide for vesting which is any more
rapid than annual pro rata vesting over a three (3) year period and any Full
Value Awards which vest upon the attainment of Performance Goals shall provide
for a Performance Period of at least twelve (12) months.

       

      (c)           Section 162(m)
Award Limits.  The following limits shall apply to the grant of
any Award if, at the time of grant, the Company is a “publicly held corporation”
within the meaning of Section 162(m).

       

      (i)           Options and
SARs.  Subject to adjustment as provided in Section 4.2, no Employee shall be granted within any fiscal
year of the Company one or more Options or Freestanding SARs which in the
aggregate are for more than 400,000 shares of Stock reserved for issuance under
the Plan.

       

      (ii)           Restricted Stock and Restricted Stock
Unit Awards.  Subject to adjustment as provided in
Section 4.2, no Employee shall be granted
within any fiscal year of the Company one or more Restricted Stock Awards or
Restricted Stock Unit Awards, subject to

       

      
        
          
          

        

        
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      Vesting
Conditions based on the attainment of Performance Goals, for more than 400,000
shares of Stock reserved for issuance under the Plan.

       

      (iii)           Performance
Awards.  Subject to adjustment as provided in Section 4.2, no Employee shall be granted (1) Performance
Shares which could result in such Employee receiving more than 400,000 shares of
Stock reserved for issuance under the Plan for each full fiscal year of the
Company contained in the Performance Period for such Award, or
(2) Performance Units which could result in such Employee receiving more
than two million dollars ($2 million) for each full fiscal year of the Company
contained in the Performance Period for such Award.  No Participant
may be granted more than one Performance Award for the same Performance
Period.

       

      6.           Terms
and Conditions of Options.

       

      Options
shall be evidenced by Award Agreements specifying the number of shares of Stock
covered thereby, in such form as the Committee shall from time to time
establish.  No Option or purported Option shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Award
Agreement.  Award Agreements evidencing Options may incorporate all or
any of the terms of the Plan by reference and, except as otherwise set forth in
Section 7 with respect to Nonemployee Director
Options, shall comply with and be subject to the following terms and
conditions:

       

      6.1           Exercise Price.  The
exercise price for each Option shall be established in the discretion of the
Committee; provided, however, that (a) the exercise price per share shall be not
less than the Fair Market Value of a share of Stock on the effective date of
grant of the Option and (b) no Incentive Stock Option granted to a Ten
Percent Owner shall have an exercise price per share less than one hundred ten
percent (110%) of the Fair Market Value of a share of Stock on the effective
date of grant of the Option.  Notwithstanding the foregoing, an Option
(whether an Incentive Stock Option or a Nonstatutory Stock Option) may be
granted with an exercise price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption or substitution for
another option in a manner qualifying under the provisions of
Section 424(a) of the Code.

       

      6.2           Exercisability and Term of
Options.  Options
shall be exercisable at such time or times, or upon such event or events, and
subject to such terms, conditions, performance criteria and restrictions as
shall be determined by the Committee and set forth in the Award Agreement
evidencing such Option; provided, however, that (a) no Option shall be
exercisable after the expiration of ten (10) years after the effective date of
grant of such Option, (b) no Incentive Stock Option granted to a Ten
Percent Owner shall be exercisable after the expiration of five (5) years after
the effective date of grant of such Option, and (c) no Option granted to a
prospective Employee, prospective Consultant or prospective Director may become
exercisable prior to the date on which such person commences
Service.  Subject to the foregoing, unless otherwise specified by the
Committee in the grant of an Option, any Option granted hereunder shall
terminate ten (10) years after the effective date of grant of the Option, unless
earlier terminated in accordance with its provisions.

       


      
        
           


        

        
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      6.3           Payment of Exercise Price.

       

      (a)           Forms of
Consideration Authorized.  Except as otherwise provided below,
payment of the exercise price for the number of shares of Stock being purchased
pursuant to any Option shall be made (i) in cash, by check or in cash
equivalent, (ii) by tender to the Company, or attestation to the ownership,
of shares of Stock owned by the Participant having a Fair Market Value not less
than the exercise price, (iii) by delivery of a properly executed notice of
exercise together with irrevocable instructions to a broker providing for the
assignment to the Company of the proceeds of a sale or loan with respect to some
or all of the shares being acquired upon the exercise of the Option (including,
without limitation, through an exercise complying with the provisions of
Regulation T as promulgated from time to time by the Board of Governors of
the Federal Reserve System) (a “Cashless
Exercise”), (iv)
by delivery of a properly executed notice of exercise electing a Net-Exercise,
(v) by such other consideration as may be approved by the Committee from
time to time to the extent permitted by applicable law, or (vi) by any
combination thereof.  The Committee may at any time or from time to
time grant Options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price or which otherwise
restrict one or more forms of consideration.

       

      (b)           Limitations on
Forms of Consideration.

       

      (i)           Tender of
Stock.  Notwithstanding the foregoing, an Option may not be
exercised by tender to the Company, or attestation to the ownership, of shares
of Stock to the extent such tender or attestation would constitute a violation
of the provisions of any law, regulation or agreement restricting the redemption
of the Company’s stock.

       

      (ii)           Cashless
Exercise.  The Company reserves, at any and all times, the
right, in the Company’s sole and absolute discretion, to establish, decline to
approve or terminate any program or procedures for the exercise of Options by
means of a Cashless Exercise, including with respect to one or more Participants
specified by the Company notwithstanding that such program or procedures may be
available to other Participants.

       

      6.4           Effect of Termination of
Service.

       

      (a)           Option
Exercisability.  Subject to
earlier termination of the Option as otherwise provided herein and unless
otherwise provided by the Committee, an Option shall be exercisable after a
Participant’s termination of Service only during the applicable time periods
provided in the Award Agreement.

       

      (b)           Extension if
Exercise Prevented by Law.  Notwithstanding
the foregoing, unless the Committee provides otherwise in the Award Agreement,
if the exercise of an Option within the applicable time periods is prevented by
the provisions of Section 14.1 below, the
Option shall remain exercisable until three (3) months (or such longer period of
time as determined by the Committee, in its discretion) after the date the
Participant is notified by the Company that the Option is exercisable, but in
any event no later than the Option Expiration Date.

       

      (c)           Extension if
Participant Subject to Section 16(b).  Notwithstanding
the foregoing, if a sale within the applicable time periods of shares acquired
upon the exercise of the

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

         

        Option
would subject the Participant to suit under Section 16(b) of the Exchange
Act, the Option shall remain exercisable until the earliest to occur of
(i) the tenth (10th) day following the date on which a sale of such shares
by the Participant would no longer be subject to such suit, (ii) the one
hundred and ninetieth (190th) day after the Participant’s termination of
Service, or (iii) the Option Expiration Date.

      

       

      6.5           Transferability of
Options.  During the lifetime of the Participant, an Option
shall be exercisable only by the Participant or the Participant’s guardian or
legal representative.  Prior to the issuance of shares of Stock upon
the exercise of an Option, the Option shall not 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.  Notwithstanding the foregoing, to the extent permitted
by the Committee, in its discretion, and set forth in the Award Agreement
evidencing such Option, a Nonstatutory Stock Option shall be assignable or
transferable subject to the applicable limitations, if any, described in the
General Instructions to Form S-8 Registration Statement under the
Securities Act.  

       

      7.           Terms
and Conditions of Nonemployee Director Awards.

       

      Nonemployee
Director Awards shall be evidenced by Award Agreements in such form as the Board
shall from time to time establish.  Such Award Agreements may
incorporate all or any of the terms of the Plan by reference, shall be automatic
and non-discretionary and shall comply with and be subject to the terms and
conditions set forth in this Section 7.

       

      For
purposes of this Section 7, Nonemployee Director awards for any given calendar
year shall be granted on the first business day of March in that calendar year,
except that awards made in the year 2009 shall be granted on March 9, 2009 (the
“Grant Date”).

       

      7.1           Automatic Grant of Restricted
Stock.

       

      (a)           Timing and Amount
of Grant.  For each calendar year, each person who is a
Nonemployee Director on the Grant Date shall be granted a Restricted Stock Award
to purchase a number of shares of Stock determined by dividing forty-five
thousand dollars ($45,000) by the Fair Market Value of the Stock on the Grant
Date, and rounding down to the nearest whole number, except that for awards
granted in 2009 the number of shares shall be determined by dividing $45,000 by
the average Fair Market Value of the Stock for the first five trading days of
March 2009.

       

      (b)           Vesting.  The
shares subject to the Restricted Stock Award granted pursuant to
Section 7.1(a) shall vest in equal annual installments of twenty percent
(20%) on each anniversary of the Grant Date, with one hundred percent (100%) of
the shares vested on the fifth anniversary of the Grant Date.

       

      7.2           Annual Election to Receive
Nonstatutory Stock Option and Restricted Stock Units.  On a
date no later than December 31 of each calendar year during the term of the
Plan, each person who is then a Nonemployee Director shall deliver to the Board
a written election to receive either Nonstatutory Stock Options or Restricted
Stock Units, or both, with an aggregate value of $45,000, on the Grant Date for
the following calendar year, provided the person

       

      
        
          
          

        

        
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        continues
to be a Nonemployee Director on the Grant Date.  A Nonemployee
Director may allocate between Nonstatutory Stock Options and Restricted Stock
Units in minimum increments with a value equal to $5,000, as determined in
accordance with Sections 7.3 and 7.4.  All awards of Nonstatutory
Stock Options and Restricted Stock Units made to Nonemployee Directors shall
comply with the provisions of Sections 7.3 and 7.4, respectively.  A
Nonemployee Director who fails to make a timely election or who first becomes a
Nonemployee Director after December 31 but before the Grant Date for the
following calendar year shall be awarded Nonstatutory Stock Options and
Restricted Stock Units each with a value of $22,500, as determined in accordance
with Sections 7.3 and 7.4, provided the Nonemployee Director continues to be a
Nonemployee Director on the Grant Date.

      

       

      7.3           Grant of Nonstatutory Stock
Option.

       

      (a)           Timing and Amount
of Grant.  For each calendar year, unless a Nonemployee
Director made an election to decline the award of a Nonstatutory Stock Option in
accordance with Section 7.7, each person who is a Nonemployee Director on the
Grant Date  shall receive a grant of a Nonstatutory Stock Option with
an aggregate value equal to $5,000, $10,000, $15,000, $20,000, $25,000 $30,000,
$35,000, $40,000, or $45,000 as previously elected by the Nonemployee Director
(or $22,500 in the case of a Nonemployee Director who failed to make a timely
election or who became a Nonemployee Director before the Grant Date for a
particular year but after December 31 of the previous year) (the “Elected Option
Value”).

       

      The
number of shares subject to the Nonstatutory Stock Option shall be determined by
dividing the Elected Option Value by the value of a Nonstatutory Stock Option to
purchase a single share of Stock as of the Grant Date.  The per share
option value shall be calculated in accordance with the Black-Scholes stock
option valuation method using the average closing price of Stock during the
preceding months of November, December, and January, and reducing the per option
value by twenty percent (20%).  The resulting number of shares subject
to the Nonstatutory Stock Option shall be rounded down to the nearest whole
share.  No person shall receive more than one grant of Nonstatutory
Stock Options pursuant to this Section 7.3(a) during any calendar
year.

       

      (b)           Exercise Price
and Payment.  The exercise price of each Nonstatutory Stock
Option granted pursuant to Section 7.3(a) shall be the Fair Market Value of
the Stock on the Grant Date.  The payment of the exercise price for
the number of shares of Stock being purchased pursuant to the Nonstatutory Stock
Option shall be made in accordance with the provisions of Section
6.3.

       

      (c)           Vesting and
Exercisability.  The Nonstatutory Stock Option granted in
accordance with this Section shall become vested and exercisable as to one third
(1/3) of the shares subject to the Nonstatutory Stock Option on the second,
third and fourth anniversaries of the Grant Date, respectively.  The
Nonstatutory Stock Option shall terminate ten (10) years after the Grant Date,
unless earlier terminated in accordance with its provisions.

       

      7.4           Grant of Restricted Stock
Unit.

       

      (a)           Timing and Amount
of Grant.  For each calendar year, unless a Nonemployee
Director made an election to decline the award of a Restricted Stock Unit
in

       

      
        
          
          

        

        
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        accordance
with Section 7.7, on the Grant Date each person who is a Nonemployee Director on
the Grant Date shall receive a grant of a Restricted Stock Unit Award with an
aggregate value (as determined by the Fair Market Value of the Stock on the
Grant Date) equal to $5,000, $10,000, $15,000, $20,000, $25,000, $30,000,
$35,000, $40,000, or $45,000, as previously elected by the Nonemployee Director
(or $22,500 in the case of a Nonemployee Director who failed to make a timely
election or who became a Nonemployee Director after December 31 but before the
Grant Date) (the “Elected Stock
Unit Value”).  The number of shares subject to the Restricted
Stock Unit Award shall be determined by dividing the Elected Stock Unit Value by
the Fair Market Value of the Stock as of the Grant Date (including fractions
computed to three decimal places), except that for awards in 2009, the number of
shares subject to the Restricted Stock Unit Awards shall be determined by
dividing the Elected Stock Unit value by the average Fair Market Value of the
Stock for the first five trading days of March 2009 (including fractions
computed to three decimal places).  The Restricted Stock Units awarded
to a Nonemployee Director shall be credited to the director’s Restricted Stock
Unit account.  Each Restricted Stock Unit awarded to a Nonemployee
Director in accordance with this Section 7.4(a) shall be deemed to be equal
to one (1) (or fraction thereof) share of Stock on the Grant Date, and shall
thereafter fluctuate in value in accordance with the Fair Market Value of the
Stock.  No person shall receive more than one grant of Restricted
Stock Units pursuant to this Section 7.4(a) during any calendar
year.

      

       

      (b)           Dividend
Rights.  Each Nonemployee Director’s Restricted Stock Unit
account shall be credited quarterly on each dividend payment date with
additional shares of Restricted Stock Units (including fractions computed to
three decimal places) determined by dividing (1) the amount of cash dividends
paid on such date with respect to the number of shares of Stock represented by
the Restricted Stock Units previously credited to the account by (2) the Fair
Market Value per share of Stock on such date.  Such additional
Restricted Stock Units shall be subject to the same terms and conditions and
shall be settled in the same manner and at the same time as the Restricted Stock
Units originally subject to the Restricted Stock Unit Award.

       

      (c)           Settlement of
Restricted Stock Unit Award.  Settlement of the shares credited
to a Nonemployee Director’s Restricted Stock Unit account shall be made as to
all shares of Stock covered by the Restricted Stock Unit upon the earliest of
(i) the Nonemployee Director’s Separation from Service due to Mandatory
Retirement, (ii) the Nonemployee Director’s Separation from Service after five
years of continuous service on the Board (“Director Retirement”), (iii) the
Nonemployee Director’s death, (iv) the Nonemployee Directors Disability (within
the meaning of Section 409A of the Code), (v) a Change in Control that also
constitutes a Section 409A Change in Control and (vi) the Nonemployee Director’s
Separation from Service following a Change in Control.  Settlement
shall be made only in the form of shares of Stock equal to the number of
Restricted Stock Units credited to the Nonemployee Director’s account on the
date of distribution, rounded down to the nearest whole share.  In the
event of a distribution pursuant to Section 7(c)(iii) or 7(c)(iv), the
Nonemployee Director shall receive the Stock in a lump sum distribution at the
time of the applicable distribution event.  In the case of Sections
7(c)(i), 7(c)(ii), 7(c)(v) and 7(c)(vi), the Nonemployee Director shall receive
the Stock in a lump sum distribution in January of the year following the year
in which the applicable distribution event occurs; provided, however, that the
Nonemployee Director may elect, no later than December 31 of the calendar year
prior the date of grant of the Restricted Stock Unit (or such later time
permitted by Section 409A), (1) to receive a series of ten or less approximately
equal
annual installments commencing no later than January of the year following the
year in 

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

         

        which the
applicable distribution event occurred (such election to apply to all such
distribution events) or (2) to instead receive a lump sum at the time that the
applicable distribution event occurs (such election to apply to all such
distribution events).

      

       

      7.5           Effect of Termination of Service as a
Nonemployee Director.

       

      (a)           Status of
Award.  Subject to
earlier termination of the Nonemployee Director Award as otherwise provided
herein, the status of a Nonemployee Director Award shall be determined as
follows:

       

      (i)           Death or
Disability.  If the Nonemployee Director’s Service terminates
due to death or Disability (1) all shares subject to the Restricted Stock Award
shall become fully vested, and the Participant (or the Participant’s legal
representative or other person who acquired the rights to the Restricted Stock
by reason of the Participant’s death) shall have the right to resell or transfer
such shares at any time; and (2) all Nonstatutory Stock Options held by the
Participant shall become fully vested and exercisable, and the Participant (or
the Participant’s legal representative or other person who acquired the rights
to the Nonstatutory Stock Option by reason of the Participant’s death) shall
have the right to exercise the Nonstatutory Stock Options until the earlier of
(a) the date that is twelve (12) months after the date on which the
Participant’s Service terminated, or (b) the Option Expiration
Date.  If the Nonemployee Director becomes “disabled,” within the
meaning of Section 409A of the Code or in the event of the Nonemployee
Director’s death, all Restricted Stock Units credited to the Nonemployee
Director’s account shall immediately vest and become payable, in accordance with
Section 7(c), to the Participant (or the Participant’s legal representative or
other person who acquired the rights to the Restricted Stock Units by reason of
the Participant’s death) in the form of a number of shares of Stock equal to the
number of Restricted Stock Units credited to the Restricted Stock Unit account,
rounded down to the nearest whole share.

       

      (ii)           Mandatory
Retirement.  If the Participant’s Service terminates because of
the Mandatory Retirement of the Participant (1) all shares subject to the
Restricted Stock Award shall become fully vested, and the Participant shall have
the right to resell or transfer such shares at any time; and (2) all
Nonstatutory Stock Options held by the Participant shall become fully vested and
exercisable and the Participant shall have the right to exercise the
Nonstatutory Stock Options until the earlier of (a) the date that is five
(5) years after the date on which the Participant’s Service terminated, or
(b) the Option Expiration Date.  If the Nonemployee Director
Separates from Service due to Mandatory Retirement, all Restricted Stock Units
credited to the Nonemployee Director’s account shall immediately vest and become
payable to the Participant in accordance with Section 7.4(c) above.

       

      (iii)           Other Termination of
Service.  If the Participant’s Service terminates for any
reason other than those enumerated in Sections 7.5(a)(i) and 7.5(a)(ii), (1) any
unvested shares of Restricted Stock shall be forfeited to the Company and from
and after the date of such termination, the Participant shall cease to be a
shareholder with respect to such forfeited shares and shall have no dividend,
voting or other rights with respect thereto and (2) the unvested portion of
any Nonstatutory Stock Option shall terminate, and any portion of the
Nonstatutory Stock Option exercisable by the Participant on the date on which
the Participant’s Service terminated
may be exercised until the earlier of (a) the date that is three (3) months
after the date 

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

         

        on which
the Participant’s Service terminated, or (b) the Option Expiration
Date.  If the Nonemployee Director Separates from Service prior to the
occurrence of any of the distribution events set forth in Section 7.4(c),
all Restricted Stock Units credited to the Participant’s account shall be
forfeited on the date of such Separation from Service; provided, however, that
if the Nonemployee Director Separates from Service due to a pending Disability
determination such forfeiture shall not occur until a finding that such
Disability has not occurred.

      

       

      (iv)           Notwithstanding
the provisions of Section 7.5(i) through 7.5(iii) above, the Board, in its sole
discretion, may establish different terms and conditions pertaining to
Nonemployee Director Awards.

       

      (b)           Extension if
Exercise Prevented by Law.  Notwithstanding
the foregoing, if the exercise of a Nonstatutory Stock Option within the
applicable time periods set forth in Section 7.5(a) is prevented by the provisions of
Section 14.1 below, the Nonstatutory Stock
Option shall remain exercisable until three (3) months after the date the
Participant is notified by the Company that the Nonstatutory Stock Option is
exercisable, but in any event no later than the Option Expiration
Date.

       

      (c)           Extension if
Participant Subject to Section 16(b).  Notwithstanding
the foregoing, if a sale within the applicable time periods set forth in
Section 7.5(a) of shares acquired upon the
exercise of the Nonstatutory Stock Option would subject the Participant to suit
under Section 16(b) of the Exchange Act, the Nonstatutory Stock Option
shall remain exercisable until the earliest to occur of (i) the tenth
(10th) day following the date on which a sale of such shares by the Participant
would no longer be subject to such suit, (ii) the one hundred and ninetieth
(190th) day after the Participant’s termination of Service, or (iii) the
Option Expiration Date.

       

      7.6           Effect of Change in Control on
Nonemployee Director Awards.  Upon the occurrence of a Change
in Control, (i) the vesting of all shares of Restricted Stock granted
pursuant to Section 7.1(a) shall be accelerated so that all such shares
become fully vested, (ii) the vesting of Nonstatutory Stock Options granted
pursuant to Section 7.3(a) shall be accelerated and such Nonstatutory Stock
Options shall remain fully exercisable until the Option Expiration Date, and
(iii) all Restricted Stock Units shall immediately vest and be settled in
accordance with Section 7.4(c).  

       

      7.7           Right to Decline Nonemployee Director
Awards.  Notwithstanding the foregoing, any person may elect
not to receive a Nonemployee Director Award by delivering written notice of such
election to the Board no later than the day prior to the date such Nonemployee
Director Award would otherwise be granted.  A person so declining a
Nonemployee Director Award shall receive no payment or other consideration in
lieu of such declined Nonemployee Director Award.  A person who has
declined a Nonemployee Director Award may revoke such election by delivering
written notice of such revocation to the Board no later than the day prior to
the date such Nonemployee Director Award would be granted.

       

      8.           Terms
and Conditions of Stock Appreciation Rights.

       


      
        
           


        

        
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                  Stock Appreciation
Rights shall be evidenced by Award Agreements specifying the number of shares of
Stock subject to the Award, in such form as the Committee shall from time to
time establish.  No SAR or purported SAR shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Award
Agreement.  Award Agreements evidencing SARs may incorporate all or
any of the terms of the Plan by reference and shall comply with and be subject
to the following terms and conditions:

       

      8.1           Types of SARs
Authorized.  SARs may be granted in tandem with all or any
portion of a related Option (a “Tandem
SAR”) or may be
granted independently of any Option (a “Freestanding
SAR”).  A Tandem SAR
may be granted either concurrently with the grant of the related Option or at
any time thereafter prior to the complete exercise, termination, expiration or
cancellation of such related Option.

       

      8.2           Exercise Price.  The
exercise price for each SAR shall be established in the discretion of the
Committee; provided, however, that (a) the exercise price per share subject
to a Tandem SAR shall be the exercise price per share under the related Option
and (b) the exercise price per share subject to a Freestanding SAR shall be
not less than the Fair Market Value of a share of Stock on the effective date of
grant of the SAR.

       

      8.3           Exercisability and Term of
SARs.

       

      (a)           Tandem
SARs.  Tandem SARs shall be exercisable only at the time and to
the extent, and only to the extent, that the related Option is exercisable,
subject to such provisions as the Committee may specify where the Tandem SAR is
granted with respect to less than the full number of shares of Stock subject to
the related Option.

       

      (b)           Freestanding
SARs.  Freestanding SARs shall be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria and restrictions as shall be determined by the Committee
and set forth in the Award Agreement evidencing such SAR; provided, however,
that no Freestanding SAR shall be exercisable after the expiration of ten (10)
years after the effective date of grant of such SAR.

       

      8.4           Deemed Exercise of
SARs.  If, on the date on which an SAR would otherwise
terminate or expire, the SAR by its terms remains exercisable immediately prior
to such termination or expiration and, if so exercised, would result in a
payment to the holder of such SAR, then any portion of such SAR which has not
previously been exercised shall automatically be deemed to be exercised as of
such date with respect to such portion.

       

      8.5           Effect of Termination of
Service.  Subject to earlier termination of the SAR as
otherwise provided herein and unless otherwise provided by the Committee in the
grant of an SAR and set forth in the Award Agreement, an SAR shall be
exercisable after a Participant’s termination of Service only as provided in the
Award Agreement.

       

      8.6           Nontransferability of
SARs.  During the lifetime of the Participant, an SAR shall be
exercisable only by the Participant or the Participant’s guardian or legal
representative.  Prior to the exercise of an SAR, the SAR shall not be
subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the

       

      
        
          
          

        

        
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        Participant
or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution.

      

       

      


       

      9.           Terms
and Conditions of Restricted Stock Awards.

       

      Restricted
Stock Awards shall be evidenced by Award Agreements specifying the number of
shares of Stock subject to the Award, in such form as the Committee shall from
time to time establish.  No Restricted Stock Award or purported
Restricted Stock Award shall be a valid and binding obligation of the Company
unless evidenced by a fully executed Award Agreement.  Award
Agreements evidencing Restricted Stock Awards may incorporate all or any of the
terms of the Plan by reference and shall comply with and be subject to the
following terms and conditions:

       

      9.1           Types of Restricted Stock Awards
Authorized.  Restricted Stock Awards may or may not require the
payment of cash compensation for the stock.  Restricted Stock Awards
may be granted upon such conditions as the Committee shall determine, including,
without limitation, upon the attainment of one or more Performance Goals
described in Section 10.4.  If either
the grant of a Restricted Stock Award or the lapsing of the Restriction Period
is to be contingent upon the attainment of one or more Performance Goals, the
Committee shall follow procedures substantially equivalent to those set forth in
Sections 10.3 through 10.5(a).

       

      9.2           Purchase Price.  The
purchase price, if any, for shares of Stock issuable under each Restricted Stock
Award and the means of payment shall be established by the Committee in its
discretion.  

       

      9.3           Purchase Period.  A
Restricted Stock Award requiring the payment of cash consideration shall be
exercisable within a period established by the Committee; provided, however,
that no Restricted Stock Award granted to a prospective Employee, prospective
Consultant or prospective Director may become exercisable prior to the date on
which such person commences Service.

       

      9.4           Vesting and Restrictions on
Transfer.  Shares issued pursuant to any Restricted Stock Award
may or may not be made subject to Vesting Conditions based upon the satisfaction
of such Service requirements, conditions, restrictions or performance criteria,
including, without limitation, Performance Goals as described in Section 10.4, as shall be established by the Committee and set
forth in the Award Agreement evidencing such Award.  During any
Restriction Period in which shares acquired pursuant to a Restricted Stock Award
remain subject to Vesting Conditions, such shares may not be sold, exchanged,
transferred, pledged, assigned or otherwise disposed of other than as provided
in the Award Agreement or as provided in Section 9.7.  Upon request by the Company, each
Participant shall execute any agreement evidencing such transfer restrictions
prior to the receipt of shares of Stock hereunder and shall promptly present to
the Company any and all certificates representing shares of Stock acquired
hereunder for the placement on such certificates of appropriate legends
evidencing any such transfer restrictions.

       


      
        
           


        

        
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      9.5           Voting Rights, Dividends and
Distributions.  Except as provided in this Section,
Section 9.4 and any Award Agreement, during the
Restriction Period applicable to shares subject to a Restricted Stock Award, the
Participant shall have all of the rights of a shareholder of the Company holding
shares of Stock, including the right to vote such shares and to receive all
dividends and other distributions paid with respect to such
shares.  However, in the event of a dividend or distribution paid in
shares of Stock or any other adjustment made upon a change in the capital
structure of the Company as described in Section 4.2, any and all new, substituted or additional
securities or other property (other than normal cash dividends) to which the
Participant is entitled by reason of the Participant’s Restricted Stock Award
shall be immediately subject to the same Vesting Conditions as the shares
subject to the Restricted Stock Award with respect to which such dividends or
distributions were paid or adjustments were made.

       

      9.6           Effect of Termination of
Service.  Unless otherwise provided by the Committee in the
grant of a Restricted Stock Award and set forth in the Award Agreement, if a
Participant’s Service terminates for any reason, whether voluntary or
involuntary (including the Participant’s death or disability), then the
Participant shall forfeit to the Company any shares acquired by the Participant
pursuant to a Restricted Stock Award which remain subject to Vesting Conditions
as of the date of the Participant’s termination of Service in exchange for the
payment of the purchase price, if any, paid by the Participant.  The
Company shall have the right to assign at any time any repurchase right it may
have, whether or not such right is then exercisable, to one or more persons as
may be selected by the Company.

       

      9.7           Nontransferability of Restricted
Stock Award Rights.  Prior to the issuance of shares of Stock
pursuant to a Restricted Stock Award, rights to acquire such shares shall not 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 the laws of descent
and distribution.  All rights with respect to a Restricted Stock Award
granted to a Participant hereunder shall be exercisable during his or her
lifetime only by such Participant or the Participant’s guardian or legal
representative.

       

      10.           Terms
and Conditions of Performance Awards.

       

      Performance
Awards shall be evidenced by Award Agreements in such form as the Committee
shall from time to time establish.  No Performance Award or purported
Performance Award shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement.  Award Agreements
evidencing Performance Awards may incorporate all or any of the terms of the
Plan by reference and shall comply with and be subject to the following terms
and conditions:

       

      10.1           Types of Performance Awards
Authorized.  Performance Awards may be in the form of either
Performance Shares or Performance Units.  Each Award Agreement
evidencing a Performance Award shall specify the number of Performance Shares or
Performance Units subject thereto, the Performance Award Formula, the
Performance Goal(s) and Performance Period applicable to the Award, and the
other terms, conditions and restrictions of the Award.

       


      
        
           


        

        
          22

          
            

          

        

        
           


        

      


      10.2           Initial Value of Performance Shares
and Performance Units.  Unless otherwise provided by the
Committee in granting a Performance Award, each Performance Share shall have an
initial value equal to the Fair Market Value of one (1) share of Stock, subject
to adjustment as provided in Section 4.2, on
the effective date of grant of the Performance Share.  Each
Performance Unit shall have an initial value determined by the
Committee.  The final value payable to the Participant in settlement
of a Performance Award determined on the basis of the applicable Performance
Award Formula will depend on the extent to which Performance Goals established
by the Committee are attained within the applicable Performance Period
established by the Committee.

       

      10.3           Establishment of Performance Period,
Performance Goals and Performance Award Formula.  In granting
each Performance Award, the Committee shall establish in writing the applicable
Performance Period, Performance Award Formula and one or more Performance Goals
which, when measured at the end of the Performance Period, shall determine on
the basis of the Performance Award Formula the final value of the Performance
Award to be paid to the Participant.  To the extent compliance with
the requirements under Section 162(m) with respect to “performance-based
compensation” is desired, the Committee shall establish the Performance Goal(s)
and Performance Award Formula applicable to each Performance Award no later than
the earlier of (a) the date ninety (90) days after the commencement of the
applicable Performance Period or (b) the date on which 25% of the Performance
Period has elapsed, and, in any event, at a time when the outcome of the
Performance Goals remains substantially uncertain.  Once established,
the Performance Goals and Performance Award Formula shall not be changed during
the Performance Period.  The Company shall notify each Participant
granted a Performance Award of the terms of such Award, including the
Performance Period, Performance Goal(s) and Performance Award
Formula.

       

      10.4           Measurement of Performance
Goals.  Performance Goals shall be established by the Committee
on the basis of targets to be attained (“Performance
Targets”) with
respect to one or more measures of business or financial performance (each, a
“Performance
Measure”),
subject to the following:

       

      (a)           Performance
Measures.  Performance Measures shall have the same meanings as
used in the Company’s financial statements, or, if such terms are not used in
the Company’s financial statements, they shall have the meaning applied pursuant
to generally accepted accounting principles, or as used generally in the
Company’s industry.  Performance Measures shall be calculated with
respect to the Company and each Subsidiary Corporation consolidated therewith
for financial reporting purposes or such division or other business unit as may
be selected by the Committee.  For purposes of the Plan, the
Performance Measures applicable to a Performance Award shall be calculated in
accordance with generally accepted accounting principles, but prior to the
accrual or payment of any Performance Award for the same Performance Period and
excluding the effect (whether positive or negative) of any change in accounting
standards or any extraordinary, unusual or nonrecurring item, as determined by
the Committee, occurring after the establishment of the Performance Goals
applicable to the Performance Award.  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 Performance Measures in order to prevent the
dilution or enlargement of the Participant’s rights with respect to a
Performance Award.  Performance Measures may be one or more of the
following, as

       

      
        
          
          

        

        
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        determined
by the Committee:  (i) sales revenue; (ii) gross margin;
(iii) operating margin; (iv) operating income; (v) pre-tax
profit; (vi) earnings before interest, taxes and depreciation and
amortization; (vii) net income; (viii) expenses; (ix) the market
price of the Stock; (x) earnings per share; (xi) return on shareholder
equity; (xii) return on capital; (xiii) return on net assets;
(xiv) economic value added; and (xv) market share; (xvi) customer
service; (xvii) customer satisfaction; (xviii) safety;
(xix) total shareholder return; or (xx) such other measures as
determined by the Committee consistent with this
Section 10.4(a).

      

       

      (b)           Performance
Targets.  Performance Targets may include a minimum, maximum,
target level and intermediate levels of performance, with the final value of a
Performance Award determined under the applicable Performance Award Formula by
the level attained during the applicable Performance Period.  A
Performance Target may be stated as an absolute value or as a value determined
relative to a standard selected by the Committee.

       

      10.5           Settlement of Performance
Awards.

       

      (a)           Determination of
Final Value.  As soon as practicable, but no later than the
15th day of the third month following the completion of the Performance Period
applicable to a Performance Award, the Committee shall certify in writing the
extent to which the applicable Performance Goals have been attained and the
resulting final value of the Award earned by the Participant and to be paid upon
its settlement in accordance with the applicable Performance Award
Formula.

       

      (b)           Discretionary
Adjustment of Award Formula.  In its discretion, the Committee
may, either at the time it grants a Performance Award or at any time thereafter,
provide for the positive or negative adjustment of the Performance Award Formula
applicable to a Performance Award that is not intended to constitute “qualified
performance based compensation” to a “covered employee” within the meaning of
Section 162(m) (a “Covered
Employee”) to
reflect such Participant’s individual performance in his or her position with
the Company or such other factors as the Committee may
determine.  With respect to a Performance Award intended to constitute
qualified performance-based compensation to a Covered Employee, the Committee
shall have the discretion to reduce some or all of the value of the Performance
Award that would otherwise be paid to the Covered Employee upon its settlement
notwithstanding the attainment of any Performance Goal and the resulting value
of the Performance Award determined in accordance with the Performance Award
Formula.  

       

      (c)           Payment in
Settlement of Performance Awards.  As soon as practicable
following the Committee’s determination and certification in accordance with
Sections 10.5(a)
and (b) but, in any case, no later than the 15th day
of the third month following completion of the Performance Period applicable to
a Performance Award, payment shall be made to each eligible Participant (or such
Participant’s legal representative or other person who acquired the right to
receive such payment by reason of the Participant’s death) of the final value of
the Participant’s Performance Award.  Payment of such amount shall be
made in cash, shares of Stock, or a combination thereof as determined by the
Committee.

       

      10.6           Voting Rights, Dividend Equivalent
Rights and Distributions.  Participants shall have no voting
rights with respect to shares of Stock represented by Performance
Share

       

      
        
          
          

        

        
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        Awards
until the date of the issuance of such shares, if any (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company).  However, the Committee, in its discretion, may
provide in the Award Agreement evidencing any Performance Share Award that the
Participant shall be entitled to receive Dividend Equivalents with respect to
the payment of cash dividends on Stock having a record date prior to the date on
which the Performance Shares are settled or forfeited.  Such Dividend
Equivalents, if any, shall be credited to the Participant in the form of
additional whole Performance Shares as of the date of payment of such cash
dividends on Stock.  The number of additional Performance Shares
(rounded to the nearest whole number) to be so credited shall be determined by
dividing (a) the amount of cash dividends paid on such date with respect to
the number of shares of Stock represented by the Performance Shares previously
credited to the Participant by (b) the Fair Market Value per share of Stock
on such date.  Dividend Equivalents may be paid currently or may be
accumulated and paid to the extent that Performance Shares become
nonforfeitable, as determined by the Committee in accordance with Section 409A
of the Code.  Settlement of Dividend Equivalents may be made in cash,
shares of Stock, or a combination thereof as determined by the Committee, and
may be paid on the same basis as settlement of the related Performance Share as
provided in Section 10.5.  Dividend
Equivalents shall not be paid with respect to Performance Units.  In
the event of a dividend or distribution paid in shares of Stock or any other
adjustment made upon a change in the capital structure of the Company as
described in Section 4.2, appropriate
adjustments shall be made in the Participant’s Performance Share Award so that
it represents the right to receive upon settlement any and all new, substituted
or additional securities or other property (other than normal cash dividends) to
which the Participant would be entitled by reason of the shares of Stock
issuable upon settlement of the Performance Share Award, and all such new,
substituted or additional securities or other property shall be immediately
subject to the same Performance Goals as are applicable to the
Award.

      

       

      10.7           Effect of Termination of
Service.  Unless otherwise provided by the Committee in the
grant of a Performance Award and set forth in the Award Agreement, the effect of
a Participant’s termination of Service on the Performance Award shall be as
follows:

       

      (a)           Death or
Disability.  If the Participant’s Service terminates because of
the death or Disability of the Participant before the completion of the
Performance Period applicable to the Performance Award, the final value of the
Participant’s Performance Award shall be determined by the extent to which the
applicable Performance Goals have been attained with respect to the entire
Performance Period and shall be prorated based on the number of months of the
Participant’s Service during the Performance Period.  Payment shall be
made following the end of the Performance Period in any manner permitted by
Section 10.5.

       

      (b)           Other Termination
of Service.  If the Participant’s Service terminates for any
reason except death or Disability before the completion of the Performance
Period applicable to the Performance Award, such Award shall be forfeited in its
entirety; provided, however, that in the event of an involuntary termination of
the Participant’s Service, the Committee, in its sole discretion, may waive the
automatic forfeiture of all or any portion of any such Award.

       

      
        
          
          

        

        
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            10.8           Nontransferability of Performance
Awards.  Prior to settlement in accordance with the provisions
of the Plan, no Performance 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 a Performance Award granted
to a Participant hereunder shall be exercisable during his or her lifetime only
by such Participant or the Participant’s guardian or legal
representative.

      

       

      11.           Terms
and Conditions of Restricted Stock Unit Awards.

       

      Restricted
Stock Unit Awards shall be evidenced by Award Agreements specifying the number
of Restricted Stock Units subject to the Award, in such form as the Committee
shall from time to time establish.  No Restricted Stock Unit Award or
purported Restricted Stock Unit Award shall be a valid and binding obligation of
the Company unless evidenced by a fully executed Award
Agreement.  Award Agreements evidencing Restricted Stock Units may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:

       

      11.1           Grant of Restricted Stock Unit
Awards.  Restricted Stock Unit Awards may be granted upon such
conditions as the Committee shall determine, including, without limitation, upon
the attainment of one or more Performance Goals described in Section 10.4.  If either the grant of a Restricted
Stock Unit Award or the Vesting Conditions with respect to such Award is to be
contingent upon the attainment of one or more Performance Goals, the Committee
shall follow procedures substantially equivalent to those set forth in
Sections 10.3 through 10.5(a).

       

      11.2           Vesting.  Restricted
Stock Units may or may not be made subject to Vesting Conditions based upon the
satisfaction of such Service requirements, conditions, restrictions or
performance criteria, including, without limitation, Performance Goals as
described in Section 10.4, as shall be
established by the Committee and set forth in the Award Agreement evidencing
such Award.

       

      11.3           Voting Rights, Dividend Equivalent
Rights and Distributions.  Participants shall have no voting
rights with respect to shares of Stock represented by Restricted Stock Units
until the date of the issuance of such shares (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company).  However, the Committee, in its discretion, may provide in
the Award Agreement evidencing any Restricted Stock Unit Award that the
Participant shall be entitled to receive Dividend Equivalents with respect to
the payment of cash dividends on Stock having a record date prior to the date on
which Restricted Stock Units held by such Participant are
settled.  Such Dividend Equivalents, if any, shall be paid by
crediting the Participant with additional whole Restricted Stock Units as of the
date of payment of such cash dividends on Stock.  The number of
additional Restricted Stock Units (rounded to the nearest whole number) to be so
credited shall be determined by dividing (a) the amount of cash dividends paid
on such date with respect to the number of shares of Stock represented by the
Restricted Stock Units previously credited to the Participant by (b) the Fair
Market Value per share of Stock on such date.  Such additional
Restricted Stock Units shall be subject to the same terms and conditions and
shall be settled in the same manner and at the same time as the Restricted Stock
Units originally subject to the Restricted Stock Unit Award,

       

      
        
          
          

        

        
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        provided
that Dividend Equivalents may be settled in cash, shares of Stock, or a
combination thereof as determined by the Committee.  In the event of a
dividend or distribution paid in shares of Stock or any other adjustment made
upon a change in the capital structure of the Company as described in
Section 4.2, appropriate adjustments shall be
made in the Participant’s Restricted Stock Unit Award so that it represents the
right to receive upon settlement any and all new, substituted or additional
securities or other property (other than normal cash dividends) to which the
Participant would be entitled by reason of the shares of Stock issuable upon
settlement of the Award, and all such new, substituted or additional securities
or other property shall be immediately subject to the same Vesting Conditions as
are applicable to the Award.

      

       

      11.4           Effect of Termination of
Service.  Unless otherwise provided by the Committee in the
grant of a Restricted Stock Unit Award and set forth in the Award Agreement, if
a Participant’s Service terminates for any reason, whether voluntary or
involuntary (including the Participant’s death or disability), then the
Participant shall forfeit to the Company any Restricted Stock Units pursuant to
the Award which remain subject to Vesting Conditions as of the date of the
Participant’s termination of Service.

       

      11.5           Settlement of Restricted Stock Unit
Awards.  The Company shall issue to a Participant on the date
on which Restricted Stock Units subject to the Participant’s Restricted Stock
Unit Award vest or on such other date determined by the Committee, in its
discretion, and set forth in the Award Agreement one (1) share of Stock (and/or
any other new, substituted or additional securities or other property pursuant
to an adjustment described in Section 11.3) for
each Restricted Stock Unit then becoming vested or otherwise to be settled on
such date, subject to the withholding of applicable
taxes.  Notwithstanding the foregoing, if permitted by the Committee
and set forth in the Award Agreement, the Participant may elect in accordance
with terms specified in the Award Agreement to defer receipt of all or any
portion of the shares of Stock or other property otherwise issuable to the
Participant pursuant to this Section.

       

      11.6           Nontransferability of Restricted
Stock Unit Awards.  Prior to the issuance of shares of Stock in
settlement of a Restricted Stock Unit Award, the Award shall not 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 a Restricted Stock Unit
Award granted to a Participant hereunder shall be exercisable during his or her
lifetime only by such Participant or the Participant’s guardian or legal
representative.

       

      12.           Deferred
Compensation Awards.

       

      12.1           Establishment of Deferred
Compensation Award Programs.  This Section 12 shall not be effective unless and until the
Committee determines to establish a program pursuant to this
Section.  The Committee, in its discretion and upon such terms and
conditions as it may determine, may establish one or more programs pursuant to
the Plan under which:

       

      (a)           Participants
designated by the Committee who are Insiders or otherwise among a select group
of highly compensated Employees may irrevocably elect, prior to a date specified
by the Committee, to reduce such Participant’s compensation otherwise payable in
cash (subject
to any minimum or maximum reductions imposed by the Committee) and to be granted


       

      
        
          
          

        

        
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        automatically
at such time or times as specified by the Committee one or more Awards of Stock
Units with respect to such numbers of shares of Stock as determined in
accordance with the rules of the program established by the Committee and having
such other terms and conditions as established by the
Committee.

      

       

      (b)           Participants
designated by the Committee who are Insiders or otherwise among a select group
of highly compensated Employees may irrevocably elect, prior to a date specified
by the Committee, to be granted automatically an Award of Stock Units with
respect to such number of shares of Stock and upon such other terms and
conditions as established by the Committee in lieu of cash or shares of Stock
otherwise issuable to such Participant upon the settlement of a Performance
Award or Performance Unit.

       

      12.2           Terms and Conditions of Deferred
Compensation Awards.  Deferred Compensation Awards granted
pursuant to this Section 12 shall be evidenced
by Award Agreements in such form as the Committee shall from time to time
establish.  No such Deferred Compensation Award or purported Deferred
Compensation Award shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement.  Award Agreements
evidencing Deferred Compensation Awards may incorporate all or any of the terms
of the Plan by reference and shall comply with and be subject to the following
terms and conditions:

       

      (a)           Vesting
Conditions.  Deferred Compensation Awards shall not be subject
to any vesting conditions.

       

      (b)           Terms and
Conditions of Stock Units.

       

      (i)           Voting Rights, Dividend Equivalent
Rights and Distributions.  Participants shall have no voting
rights with respect to shares of Stock represented by Stock Units until the date
of the issuance of such shares (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the
Company).  However, a Participant shall be entitled to receive
Dividend Equivalents with respect to the payment of cash dividends on Stock
having a record date prior to the date on which Stock Units held by such
Participant are settled.  Such Dividend Equivalents shall be paid by
crediting the Participant with additional whole and/or fractional Stock Units as
of the date of payment of such cash dividends on Stock.  The method of
determining the number of additional Stock Units to be so credited shall be
specified by the Committee and set forth in the Award Agreement.  Such
additional Stock Units shall be subject to the same terms and conditions and
shall be settled in the same manner and at the same time as the Stock Units
originally subject to the Stock Unit Award.  In the event of a
dividend or distribution paid in shares of Stock or any other adjustment made
upon a change in the capital structure of the Company as described in
Section 4.2, appropriate adjustments shall be
made in the Participant’s Stock Unit Award so that it represents the right to
receive upon settlement any and all new, substituted or additional securities or
other property (other than normal cash dividends) to which the Participant would
be entitled by reason of the shares of Stock issuable upon settlement of the
Award.

       

      
        (ii)           Settlement of Stock Unit
Awards.  A Participant electing to receive an Award of Stock
Units pursuant to this Section 12, shall
specify at the time of such

         

        
          
            
            

          

          
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      election
a settlement date with respect to such Award in accordance with rules
established by the Committee.  The Company shall issue to the
Participant upon the earlier of the settlement date elected by the Participant
or the date of the Participant’s Separation from Service, a number of whole
shares of Stock equal to the number of whole Stock Units subject to the Stock
Unit Award.  Such shares of Stock shall be fully vested, and the
Participant shall not be required to pay any additional consideration (other
than applicable tax withholding) to acquire such shares.  Any
fractional Stock Unit subject to the Stock Unit Award shall be settled by the
Company by payment in cash of an amount equal to the Fair Market Value as of the
payment date of such fractional share.

       

      (iii)           Nontransferability of Stock Unit
Awards.  Prior to their settlement in accordance with the
provision of the Plan, no Stock Unit 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 a Stock Unit Award granted
to a Participant hereunder shall be exercisable during his or her lifetime only
by such Participant or the Participant’s guardian or legal
representative.

       

      13.           Other
Stock-Based Awards.

       

      In
addition to the Awards set forth in Sections 6 through 12 above, the Committee,
in its sole discretion, may carry out the purpose of this Plan by awarding
Stock-Based Awards as it determines to be in the best interests of the Company
and subject to such other terms and conditions as it deems necessary and
appropriate.

       

      14.           Change
in Control.

       

      14.1           Effect of Change in Control on
Options and SARs.  In
the event of a Change in Control, the surviving, continuing, successor, or
purchasing corporation or other business entity or parent thereof, as the case
may be (the “Acquiror”), may, without the consent
of any Participant, either assume or continue the Company’s rights and
obligations under outstanding Options or SARs or substitute for outstanding
Options or SARs substantially equivalent options or SARs covering the Acquiror’s
stock.  Any Options or SARs which are neither assumed or continued by
the Acquiror in connection with the Change in Control nor exercised as of the
Change in Control shall, contingent on the Change in Control, become fully
vested and exercisable immediately prior to the Change in
Control.  Options and SARs which are assumed or continued in
connection with a Change in Control shall be subject to such additional
accelerated vesting and/or exercisability in connection with the Participant’s
subsequent termination of Service as the Board may determine.

       

      14.2           Effect of Change in Control on Other
Awards.  In
the event of a Change in Control, the Acquiror may, without the consent of any
Participant, either assume or continue the Company’s rights and obligations
under outstanding Awards other than Options or SARs or substitute for such
Awards substantially equivalent Awards covering the Acquiror’s
stock.  Any such Awards which are neither assumed or continued by the
Acquiror in connection with the Change in Control shall, contingent on the
Change in Control, become fully vested.  Awards which are assumed or
continued in connection with a Change in Control shall be subject to such


       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

         

        additional
accelerated vesting or lapse of restrictions in connection with the
Participant’s subsequent termination of Service as the Board may
determine.

      

       

      14.3           Nonemployee Director
Awards.  Notwithstanding the foregoing, Nonemployee Director
Awards shall be subject to the terms of Section 7, and not this Section
14.

       

      15.           Compliance
with Securities Law.

       

      The grant
of Awards and the issuance of shares of Stock pursuant to any Award shall be
subject to compliance with all applicable requirements of federal, state and
foreign law with respect to such securities and the requirements of any stock
exchange or market system upon which the Stock may then be listed.  In
addition, no Award may be exercised or shares issued pursuant to an Award unless
(a) a registration statement under the Securities Act shall at the time of
such exercise or issuance be in effect with respect to the shares issuable
pursuant to the Award or (b) in the opinion of legal counsel to the
Company, the shares issuable pursuant to the Award may be issued in accordance
with the terms of an applicable exemption from the registration requirements of
the Securities Act.  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 and sale of any
shares hereunder shall relieve the Company of any liability in respect of the
failure to issue or sell such shares as to which such requisite authority shall
not have been obtained.  As a condition to issuance of any Stock, 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.

       

      16.           Tax
Withholding.

       

      16.1           Tax Withholding in
General.  The Company shall have the right to deduct from any
and all payments made under the Plan, or to require the Participant, through
payroll withholding, cash payment or otherwise, including by means of a Cashless
Exercise or Net Exercise of an Option, to make adequate provision for, the
federal, state, local and foreign taxes, if any, required by law to be withheld
by the Participating Company Group with respect to an Award or the shares
acquired pursuant thereto.  The Company shall have no obligation to
deliver shares of Stock, to release shares of Stock from an escrow established
pursuant to an Award Agreement, or to make any payment in cash under the Plan
until the Participating Company Group’s tax withholding obligations have been
satisfied by the Participant.

       

      16.2           Withholding in
Shares.  The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable to a Participant upon
the exercise or settlement of an Award, or to accept from the Participant the
tender of, a number of whole shares of Stock having a Fair Market Value, as
determined by the Company, equal to all or any part of the tax withholding
obligations of the Participating Company Group.  The Fair Market Value
of any shares of Stock withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the applicable minimum
statutory withholding rates.

       

      17.           Amendment or Termination of
Plan.


      
        
           


        

        
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      The Board
or the Committee may amend, suspend or terminate the Plan at any
time.  However, without the approval of the Company’s shareholders,
there shall be (a) no increase in the maximum aggregate number of shares of
Stock that may be issued under the Plan (except by operation of the provisions
of Section 4.2), (b) no change in the class of persons eligible to receive
Incentive Stock Options, and (c)  no other amendment of the Plan that would
require approval of the Company’s shareholders under any applicable law,
regulation or rule.  Notwithstanding the foregoing, only the Board may
amend Section 7.  No amendment, suspension or termination of the
Plan shall affect any then outstanding Award unless expressly provided by the
Board or the Committee.  In any event, no amendment, suspension or
termination of the Plan may adversely affect any then outstanding Award without
the consent of the Participant unless necessary to comply with any applicable
law, regulation or rule.

       

      18.           Miscellaneous
Provisions.

       

      18.1           Repurchase Rights.  Shares
issued under the Plan may be subject to one or more repurchase options, or other
conditions and restrictions as determined by the Committee in its discretion at
the time the Award is granted.  The Company shall have the right to
assign at any time any repurchase right it may have, whether or not such right
is then exercisable, to one or more persons as may be selected by the
Company.  Upon request by the Company, each Participant shall execute
any agreement evidencing such transfer restrictions prior to the receipt of
shares of Stock hereunder and shall promptly present to the Company any and all
certificates representing shares of Stock acquired hereunder for the placement
on such certificates of appropriate legends evidencing any such transfer
restrictions.

       

      18.2           Provision of
Information.  Each Participant shall be given access to
information concerning the Company equivalent to that information generally made
available to the Company’s common shareholders.

       

      18.3           Rights as Employee, Consultant or
Director.  No person, even though eligible pursuant to
Section 5, shall have a right to be selected as
a Participant, or, having been so selected, to be selected again as a
Participant.  Nothing in the Plan or any Award granted under the Plan
shall confer on any Participant a right to remain an Employee, Consultant or
Director or interfere with or limit in any way any right of a Participating
Company to terminate the Participant’s Service at any time.  To the
extent that an Employee of a Participating Company other than the Company
receives an Award under the Plan, that Award shall in no event be understood or
interpreted to mean that the Company is the Employee’s employer or that the
Employee has an employment relationship with the Company.

       

      18.4           Rights as a
Shareholder.  A Participant shall have no rights as a
shareholder with respect to any shares covered by an Award until the date of the
issuance of 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 shares are
issued, except as provided in Section 4.2 or
another provision of the Plan.

       

      
        18.5           Fractional
Shares.  The Company shall not be required to issue fractional
shares upon the exercise or settlement of any Award.

      


      
        
           


        

        
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      18.6           Severability.  If
any one or more of the provisions (or any part thereof) of this Plan shall be
held invalid, illegal or unenforceable in any respect, such provision shall be
modified so as to make it valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions (or any part thereof) of
the Plan shall not in any way be affected or impaired thereby.

       

      18.7           Beneficiary
Designation.  Subject to local laws and procedures, each
Participant may file with the Company a written designation of a beneficiary who
is to receive any benefit under the Plan to which the Participant is entitled in
the event of such Participant’s death before he or she receives any or all of
such benefit.  Each designation will revoke all prior designations by
the same Participant, shall be in a form prescribed by the Company, and will be
effective only when filed by the Participant in writing with the Company during
the Participant’s lifetime.  If a married Participant designates a
beneficiary other than the Participant’s spouse, the effectiveness of such
designation may be subject to the consent of the Participant’s
spouse.  If a Participant dies without an effective designation of a
beneficiary who is living at the time of the Participant’s death, the Company
will pay any remaining unpaid benefits to the Participant’s legal
representative.

       

      18.8           Unfunded
Obligation.  Participants shall have the status of general
unsecured creditors of the Company.  Any amounts payable to
Participants pursuant to the Plan shall be unfunded and unsecured obligations
for all purposes, including, without limitation, Title I of the Employee
Retirement Income Security Act of 1974.  No Participating Company
shall 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
any Participating Company and a Participant, or otherwise create any vested or
beneficial interest in any Participant or the Participant’s creditors in any
assets of any Participating Company.  The Participants shall have no
claim against any Participating Company for any changes in the value of any
assets which may be invested or reinvested by the Company with respect to the
Plan.  Each Participating Company shall be responsible for making
benefit payments pursuant to the Plan on behalf of its Participants or for
reimbursing the Company for the cost of such payments, as determined by the
Company in its sole discretion.  In the event the respective
Participating Company fails to make such payment or reimbursement, a
Participant’s (or other individual’s) sole recourse shall be against the
respective Participating Company, and not against the Company.  A
Participant’s acceptance of an Award pursuant to the Plan shall constitute
agreement with this provision.

       

      18.9           Choice of
Law.  Except to the extent governed by applicable federal law,
the validity, interpretation, construction and performance of the Plan and each
Award Agreement shall be governed by the laws of the State of California,
without regard to its conflict of law rules.

       

      18.10         Section 409A of the
Code.  Notwithstanding anything to the contrary in the Plan, to
the extent any Award payable in connection with a Participant's Separation
from Service constitutes deferred compensation subject to (and not
exempt from) Section 409A of the Code 

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

         

        and (ii)
the Participant is deemed at the time of such separation to be a “specified
employee" under Section 409A of the Code and the Treasury regulations
thereunder, then payment shall not be made or commence until the earlier of (i)
six (6)-months after such Separation from Service or (ii) the date of the
Participant’s death following such Separation from Service; provided, however,
that such delay shall only be effected to the extent required to avoid adverse
tax treatment to the Participant, including (without limitation) the additional
twenty percent (20%) tax for which the Participant would otherwise be liable
under Section 409A(a)(1)(B) of the Code in the absence of such delay.  Upon
the expiration of the applicable delay period, any payment which would have
otherwise been paid during that period (whether in a single sum or in
installments) in the absence of this paragraph shall be paid to the Participant
or the Participant’s beneficiary in one lump sum on the first business day
immediately following such delay.

      

       

      


      
        
          
          

        

        
          33