Document:

Exhibit 10.1

OPTION AGREEMENT

This
Option Agreement is made this 6th day of August, 2007, and is executed by and
between MAUI LAND & PINEAPPLE COMPANY,
INC. (“MLP”) and ROBERT I. WEBBER (“Optionee”).

RECITALS

MLP is the owner in fee simple of certain property
at 300 Inu Road, bearing TMK (2) 2-2-013:31 and described as Royal Patent 2204,
Land Commission Award 8654, Apana 1 to Kapaole, situated at Waiakoa, Kula,
Maui, Hawaii, consisting of 3.367 acres, more or less  (the “Optioned Property”). MLP desires to grant
to the Optionee an option to purchase the Optioned Property, on all of the
terms and conditions hereof.

AGREEMENT

For
valuable consideration, receipt of which by each party is hereby acknowledged,
the parties hereby agree as follows:

1              Grant of Option. MLP hereby grants to Optionee
the exclusive option to purchase the Optioned Property from the MLP, upon and
subject to all of the terms and conditions set forth in this agreement.

2              Option Consideration. As mutual consideration
for the grant of this option, MLP has made and Optionee has accepted an offer
of employment.

3              Option Term. The term of this Option shall begin
on the date hereof and shall terminate upon the earlier of (a) July 30, 2010 or
(b) the termination of Optionee’s employment by MLP or by a subsidiary of MLP.

4              Option Exercise. This Option may be exercised at
any time before the termination of the Option Term (time being of the essence)
by Optionee giving written notice to MLP at its address set forth at the
beginning of this agreement, pursuant to the notice procedure set forth in
Section 6 below. If Optionee shall fail to timely exercise this Option in
accordance with this Section, then this Option shall expire and thereafter
Optionee shall have no further option, right or interest of any kind with
respect to the Optioned Property or the acquisition thereof.

5              Terms and Conditions. In the event this Option
is exercised as required above, the parties agree that MLP shall sell to
Optionee and Optionee shall purchase from MLP the Optioned Property in
accordance with all the terms and conditions contained in this Option
Agreement:

(a) Purchase Price.
The purchase price shall be the fair market value of the Optioned Property at
the date of exercise of the Option in its then-current condition and use, less
the discounts described below, payable in cash at closing. The fair market
value of the Optioned

Property shall be determined by appraisal. Upon
exercise of the Option, the parties shall agree on and shall hire an appraiser
to determine the fair market value of the Optioned Property.

If the parties cannot
agree upon an appraiser, either party can petition the Circuit Court of the
Second Circuit, State of Hawaii, for an order appointing a neutral appraiser.
The determination of fair market value by the appraiser shall be final, and the
expenses of the appraiser shall be split equally between the parties.

The purchase price shall
be the fair market value of the Optioned Property less the following:

i.                  Three Percent
(3%) of the fair market value;

ii.               The total amount of
rent payments for the Optioned Property made by Optionee during the period
August 1, 2007 to Closing; and

iii.            The total amount paid
by Optionee to improve the Optioned Property (such as adding a heating system
for the swimming pool), provided that Optioner has granted prior written
approval allowing Optionee to make such improvement.

Optionee acknowledges
that the reduction in sales price for rental lease payments will become taxable
income to the Optionee as an employee of the company if this Option is
exercised.  No real estate broker’s
commissions shall be paid for the sale to Optionee.

(b) Closing. The
closing shall occur not earlier than the 30th day following Optionee’s exercise of this
Option as provided in Section 4 above and not later than the 90th day following such exercise.  Closing shall be handled by First American
Title Company, Kahului Branch (“Escrow”).

(c) Title. At
closing, MLP shall transfer to Optionee, by warranty deed, fee simple
marketable title to the Optioned Property together with all appurtenances,
easements and improvements, subject to no liens, encumbrances or other matters
except as referred to on Exhibit A hereto.

(d) Property sold “AS
IS” and Without Representation. The conveyance of the Optioned Property
shall be “AS IS” and with all faults. It is Optionee’s sole responsibility to
exercise due diligence review of the Optioned Property prior to exercising this
Option.

(e) Prorations and
Closing Costs. At closing, Escrow shall prorate real property taxes and
rents as of the closing date. If taxes for the current period are not yet
known, the proration shall be made upon a reasonable estimate and at the
request of either party, a cash adjustment shall be made between the parties at
such later date as the taxes shall become known.  At closing, Optionee shall pay 50% of Escrow’s
fees, all recording fees (except for documents to clear MLP’s title), Optionee’s
own attorney’s fees, all costs associated with Optionee’s financing (if any),
40% of the premium for “Hawaii standard” title insurance policy, and all of the
cost of ALTA and extended coverage endorsements for Optionee’s owner’s title
insurance policy, as may be requested by Optionee. MLP shall pay 50% of Escrow’s
fees, all of the cost of preparing the deed, the Hawaii conveyance tax, the
recording fees for documents to clear MLP’s title, the amount of any tax
withholding (FIRPTA and HARPTA), if any, and 60% of the cost of a “Hawaii
standard” policy of owner’s title insurance in favor of Optionee.

 2
 

All
other closing costs shall be allocated in the customary manner for Hawaii real
estate transactions. No brokerage commissions are payable in connection with
this transaction, and each party agrees to hold the other harmless from and
against any claim for commission or other similar compensation arising by
reason of services alleged to have been rendered to, or at the request of, such
party.

(f) 1031 Exchange. Optionee acknowledges
that MLP may sell the Optioned Property by a 1031 Exchange, and Optionee agrees
to cooperate with and take such steps as may be required to effectuate MLP’s
1031 Exchange, at no cost to Optionee.

(g) Notifications.
All offers, acceptances, and notices (including Optionee’s notice of exercise
of this Option) which are required or permitted to be given or served hereunder
shall be in writing and shall be sent by first class, registered or certified
mail, postage prepaid or by hand delivery or by facsimile telecopier
transmission (with a copy to be sent by first class mail), addressed as provided
at the beginning of this agreement. Any such address or fax number may be
changed from time to time by serving notice to all other parties as above
provided. Any offer, acceptance or notice shall be deemed to have been given or
served as of the date and time of actual delivery or actual completion of
facsimile telecopier transmission (evidenced by the confirmation memo appearing
on the confirmation copy produced by the sending parties telecopier) or at the
expiration of the second full day after the date of mailing.

6              No Assignment. Optionee shall have no right to
assign this Agreement to any other person or entity.

7              Time Is Of The Essence.
Time is of the essence hereof.

8              Eminent Domain. If any of the lands subject to
this agreement shall be condemned by paramount authority prior to Optionee’s
exercise of this option or prior to closing, such condemnation shall not affect
or terminate this Agreement, but in such event upon the Optionee’s exercise of
this option, all proceeds on account of such condemnation received by MLP shall
be credited against the total purchase price or if said proceeds shall not have
been received prior to closing, MLP shall assign, to Optionee at closing all
rights and claims with respect to said proceeds.

9              Survival of Warranties and Covenants. Where
appropriate and applicable, all covenants, conditions and agreements of the
parties hereto shall survive the closing of Optionee’s purchase of the Optioned
Property.

10            Governing Law. This option shall be governed by
and construed in accordance with the laws of the State of Hawaii.

11            Modification and Amendment.
This option may not be modified or amended in any way whatsoever except by
written instrument executed by MLP and Optionee or their duly authorized agents
or attorneys-in-fact.  No oral
modification, extension, waiver, or amendment shall be valid or effective. Any
waiver shall not be construed as further or continuing waiver.

 3
 

12            Entire Agreement. This option supersedes any and
all oral or written agreements or understandings now exiting with respect to
the subject matter hereof.

13            Attorney’s Fees. The party prevailing in any cause
of action brought before a court of law or equity to enforce the covenants and
agreements herein contained shall be entitled to collect, as a part of the
judgment or decision entered in its favor, all of its costs and expenses
incurred in connection with such action, including, without limiting the
generality of the foregoing, reasonable attorneys’ fees.

14            Successors. The terms and conditions of this option
shall apply to and bind the successors and assigns of MLP and Optionee.

15            Headings. All headings used in this Agreement are
for convenience only and are not to be construed as limiting in any manner the
content of any paragraph or particular provision.

16            Miscellaneous.

(a) All periods of time referred to in this
agreement shall include all Saturdays, Sundays and state or national holidays;
provided that if the date of the last day to perform any act or give any offer,
acceptance or notice with respect to this agreement shall fall on a Saturday,
Sunday or state or national holiday, such act or notice may be timely performed
or given on the next succeeding day which is not a Saturday, Sunday or state or
national holiday.

(b) No party shall be
deemed to be the drafter of this agreement; and in the event this agreement is
ever construed by a court of law, the court shall not construe this agreement
or any provision against any party as the drafter.

(c) The execution of
this agreement or the exercise of any rights hereunder is not intended and
shall not be construed as creating a partnership or joint venture between MLP
and Optionee.

MAUI LAND & PINEAPPLE COMPANY, INC.

	
  By 

  	
  /S/ FRED W.
  RICKERT

  	
   

  
	
   

  	
  Its   Vice President/ Treasurer

  	
   

  
	
   

  	
   

  	
   

  
	
  By 

  	
  /S/ RANDALL H.
  ENDO

  	
   

  
	
   

  	
  Its   Vice President/Community Dev.

  	
   

  
	
   

  	
   

  	
   

  
	
  “MLP”

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /S/ ROBERT I. WEBBER

  	
   

  	
   

  
	
  ROBERT
  I. WEBBER

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “Optionee”

  	
   

  	
   

  
					

 

 4Exhibit
10.6.1

APPROVAL
OF SECTION 6, AS AMENDED, TO 1998 STOCK INCENTIVE PLAN

The
Board of Directors, subject to approval of the Company’s stockholders, has
adopted an amendment to Section 6 of the Company’s 1998 Stock Incentive
Plan (the “Plan”) to

·    Add
Commercial Business Loans, Trade Finance Loans, Demand Deposits, and Expenses
as goals

·    Delete
Efficiency Ratio as a goal

Section 6
of the Plan provides for the issuance of restricted stock with vesting subject
to meeting certain performance goals determined by the shareholders and set
each year by the Compensation Committee of the Board of Directors. Shares of
performance restricted stock were awarded in 2006 and 2007 to the CEO of the
Company. The Compensation Committee would like the flexibility to be able to
continue to make grants of performance restricted stock to the CEO and possibly
other officers of the Company.

The
Board of Directors has determined that it is in the best interests of the
Company to submit the Section 6 of the Plan, as amended, to the Company’s
stockholders for approval so that any performance restricted stock that may be
issued under the Plan generally will qualify as “performance-based compensation”
under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the “Code.”). Code Section 162(m) places a limit of $1 million on
the amount of compensation that may be deducted by the Company in any taxable
year with respect to each “covered employee” within the meaning of
Section 162(m). However, “performance-based compensation” within the
meaning of Section 162(m) is not subject to the deduction limit.
Section 6 of the Plan is designed to generally provide “performance-based
compensation” to each participant. Because restricted stock awarded under the
Plan vests only if the Company’s financial or other results meet or exceed
certain quantifiable performance goals established by the Compensation
Committee, the Company may deduct the expense of such performance restricted
stock for Federal income tax purposes even if the value, together with salary
and bonuses paid to an executive in any one year may exceed $1 million.

The
amended Section 6 of the Plan is being submitted to the Company’s
stockholders for approval so that generally performance restricted stock
awarded to employees is fully deductible for federal income tax purposes. The
Company’s stockholders must approve Section 6, as amended, if future
awards of performance restricted stock are to be deductible.  If
Section 6, as amended, is not approved, the Company may not be able to
deduct this part of the expense of the annual compensation that may be paid to
Company executives under other plans or arrangements that may exist or may be
implemented.

Section 6
of the Plan was last approved by the Company’s stockholders in 2002 but, under
Code Section 162(m), must be re-approved at least every 5 years in order
that grants of performance restricted stock be fully deductible for federal tax
purposes. In addition, as discussed above, the Board of Directors desires to
amend the performance goals under the plan by adding demand deposits,
commercial business loans, trade finance loans, and expenses as goals and by
deleting efficiency ratio as a goal.

Since
its adoption in 1998, the Plan has been used primarily for the Company’s stock
option incentive programs and restricted stock program. All full-time employees
of the Company have received annual grants of stock options or restricted stock
under the Company’s Spirit of Ownership Program. In addition, most officers of
the Company have received additional grants from time to time in connection
with their performance reviews. Performance restricted stock under
Section 6 has been awarded to the CEO and may in the future be awarded to
other officers as well.

The
Board of Directors believes that the 1998 Stock Incentive Plan and the ability
to issue performance restricted stock helps the Company compete for, motivate
and retain high-caliber employees and more closely links the interests of the
employees and the stockholders of the Company by encouraging employees to focus
on long-range objectives.

The
Board believes that the existing Stock Incentive Plan and the grants under the
Plan have contributed substantially to the success of the Company since its
listing as a public company in 1999.

·    The
Company’s stock has risen from $4.813, the closing price when it was first
listed on the NASDAQ Global Select Market (“NASDAQ”) on February 8, 1999 to
$38.15 as of February 8, 2007. The compound annual rate of growth during this
period has been 30%.

·    The
aggregate market value of the Company’s stock has risen from approximately $229
million when it was first listed on NASDAQ on February 8, 1999 to $2.34
billion as of February 8, 2007.  The compound annual rate of growth
during this period has been 34%.

·    Fully
diluted earnings per share have risen from $0.13 for the quarter ended
December 31, 1998 to $0.63 for the quarter ended December 31, 2006.
The compound annual rate of growth during this period has been 22%.

·    Net
income has risen from $6.5 million for the quarter ended December 31, 1998
to $39.1 million for the quarter ended December 31, 2006. The compound
annual rate of growth during this period has been 25%.

·    Core
non-CD deposits, have risen from $441 million as of December 31, 1998 to
$3.46 billion as of December 31, 2006. The compound annual rate of growth
during this period has been 29%.

·    Loans
have risen from $1.10 billion as of December 31, 1998 to $8.18 billion as
of December 31, 2006. The compound annual rate of growth during this
period has been 29%.

·    Non-performing
assets have been reduced from 0.99% of total assets as of December 31,
1998 to 0.18% of total assets as of December 31, 2006.

The
Board believes that approval of Section 6, as amended, to the Plan would,
among other things, enhance the long-term stockholder value of the Company by
offering opportunities to the Company’s employees, officers, consultants,
agents, and advisors to acquire, subject to performance criteria, proprietary
interest in the Company and to link their interests and efforts to the
long-term interests of the Company’s stockholders.

The
Board believes in structuring the compensation of employees to increase focus
on long-term improvements in stockholder returns. For senior executives, it is
desired that a material portion of their prospective compensation be in the “at-risk”
category and dependent on stockholder returns.

Set
forth below is a summary of certain important features of the amended Plan,
which summary is qualified in its entirety by reference to the full text of the
Plan, as amended, which is published in the proxy statement as Exhibit B.
Changes in the Plan are indicated in italics.

Description
of the Plan

GENERAL.  
Under the 1998 Employee Stock Incentive Plan, officers, directors, employees
and consultants of the Company and its subsidiaries are eligible to receive
shares of Company common stock or other securities or benefits with a value
derived from the value of Company common stock.

The
purpose of the Plan is to enable the Company to attract, retain and motivate
officers, directors, employees and consultants by providing for or increasing
their proprietary interests in the Company and, in the case of non-employee
directors, to attract such directors and further align their interests with
those of the Company’s stockholders by providing or increasing their
proprietary interests in the Company.

ADMINISTRATION.  
The Stock Incentive Plan is administered by a committee of two or more
non-employee directors appointed by the Board, each of whom is intended to
qualify as an “outside director” within the meaning of
Section 162(m) and a “non-employee director” under SEC
Rule 16b-3.

The Board of
Directors may act in lieu of the Committee. The Compensation Committee has a
wide degree of flexibility in determining the terms and conditions of awards
and the number of shares to be issued pursuant thereto, including conditioning
the receipt or vesting of awards upon the achievement by the Company of
specified performance criteria. The expenses of administering the Plan are
borne by the Company.

The
Committee decides whether and to what extent awards will be structured to
conform with Code Section 162(m) requirements applicable to
performance-based compensation. The Committee may determine that any award of
restricted stock or performance units will be granted or will vest on the basis
of the achievement of performance goals. In order for such awards to be fully
deductible without regard to the limitations of Code Section 162(m), such
performance goals must be objective and will be based solely upon one or more
of the following performance measures :
return on stockholder equity; return on assets; ratio of non-performing assets
to total assets; earnings per share; deposits; demand deposits, loans;
commercial business loans; trade finance loans; non-interest income; expenses;
and stock price  (“Performance
Criteria”). Performance measures may relate to the Company and/or one or more
of its subsidiaries, one or more of its divisions or units or any combination
of the foregoing, on a consolidated or nonconsolidated basis, and may be
applied on an absolute basis, in comparison to past performance, or be relative
to one or more peer group companies or indices, or any combination thereof, all
as the Committee determines.

In
order for such a performance-based award to be fully deductible without regard
to the limitations of Code Section 162(m), the Committee must establish
the performance goals no later than 90 days after the beginning of the period
for which such performance goal relates (or such later date as may be permitted
under applicable Code Section 162(m) tax regulations) and the
Committee may for any reason reduce (but not increase) any award,
notwithstanding the achievement of a specified goal. Any payment of an award granted
with performance goals will be conditioned on the written certification of the
Committee in each case that the performance goals and any other material
conditions were satisfied.

TERMS
OF AWARDS; PER-PERSON LIMITS.   The Plan authorizes the Company to
enter into any type of arrangement with an eligible recipient that, by its
terms, involves or might involve the issuance of Company common stock or any
other security or benefit with a value derived from the value of Company common
stock. Awards are not restricted to any specified form or structure and may
include, without limitation, sales or bonuses of stock, restricted stock, stock
options, reload stock options, stock purchase warrants, other rights to acquire
stock, securities convertible into or redeemable for stock, stock appreciation
rights, phantom stock, dividend equivalents, performance units or performance
shares. An award may consist of one such security or benefit or two or more of
them in tandem or in the alternative. Awards to any one person during any
calendar year may cover no more than 1,902,000 shares of Company common stock.
If an award is denominated in cash but paid out in shares, so that the maximum
number of shares issuable cannot be determined at the date of the grant, the
award will count against the share limit at the date of grant based on the
number of shares having a market value equal to the maximum cash amount
earnable under the award, regardless of the number of shares paid out.

An
award granted under the Plan may include a provision accelerating the receipt
of benefits upon the occurrence of specified events, such as a change of
control of the Company or a dissolution, liquidation, merger, reclassification,
sale of substantially all of the property and assets of the Company or other
significant corporate transactions. The Company may grant options that either
are intended to be incentive stock options or non-qualified stock options.
Awards to consultants and non-employee directors may only be non-qualified
stock options. The Committee shall have the right to accelerate the vesting of
all Awards.

AMENDMENT
OR TERMINATION.   Subject to limitations imposed by law, the Board of
Directors may amend or terminate the Plan at any time and in any manner.
However, no such amendment or termination may deprive the recipient of an award
previously granted under the Plan of any rights thereunder without his consent.

Federal
Income Tax Consequences of the Plan

The
following discussion is only a summary of the principal federal income tax consequences
of the Awards to be granted under the Plan, and is based on existing federal
law (including administrative regulations and rulings) which is subject to
change, in some cases retroactively. This discussion is also qualified by the
particular circumstances of individual participants, which may substantially
alter or modify the federal income tax consequences herein discussed. Because
of the wide range of Awards that may be made under the Plan, the following
discussion is confined to the most common forms of Awards likely to be made. In
addition, the following discussion does not address state, local or foreign
income taxes or any taxes other than income taxes.

INCENTIVE
STOCK OPTIONS.   Generally under present law, when an option
qualifies as an incentive stock option under Section 422 of the Code:
(i) an optionee will not recognize taxable income either upon the grant or
the exercise of the option, (ii) any gain or loss upon a qualifying
disposition of the shares acquired by the exercise of the option will be
treated as capital gain or loss, and (iii) no deduction will be allowed to
the Company for federal income tax purposes in connection with the grant or
exercise of an incentive stock option or a qualifying disposition of the
shares. A disposition by an optionee of stock acquired upon exercise of an
incentive stock option will constitute a qualifying disposition if it occurs
more than two years after the grant of the option, and more than one year after
the transfer of the shares to the optionee. If such stock is disposed of by the
optionee before the expiration of those time limits, the transfer may be a “disqualifying
disposition,” in which case the optionee will recognize ordinary income equal
to the lesser of (i) the aggregate fair market value of the shares as of
the date of exercise less the option price, or (ii) the amount realized on
the disqualifying disposition less the option price. The Company would become
entitled to a corresponding deduction, subject to satisfaction of any applicable
withholding or reporting obligations, in the amount of the optionee’s ordinary
income. Ordinary income from a disqualifying disposition will constitute
ordinary compensation income. Any gain in addition to the amount reportable as
ordinary income on a “disqualifying disposition” generally will be capital
gain. The Company is not entitled to a deduction for any gain on disposition of
the shares that is capital gain.

Upon
the exercise of an incentive stock option, the difference between the fair
market value of the stock subject to the exercised option on the date of
exercise and the option exercise price is treated as an adjustment to taxable
income in that taxable year for alternative minimum tax purposes, as are a
number of other items specified by the Code. Such adjustments (along with tax
preference items) form the basis for the alternative minimum tax (presently at
graduated rates for individuals), which may apply depending on the amount of
the computed “regular tax” of the employee for that year. Under certain
circumstances the amount of alternative minimum tax is allowed as a
carryforward credit against regular tax liability in subsequent years. The
Company does not obtain a deduction due to an optionee’s incurrence of the
alternative minimum tax.

NON-QUALIFIED
STOCK OPTIONS.   In the case of stock options which do not qualify as
an incentive stock option (non-qualified stock options), no income generally is
recognized by the optionee at the time of the grant of the option. The optionee
generally will recognize ordinary income at the time the non-qualified stock
option is exercised equal to the aggregate fair market value of the shares
acquired less the option price. Ordinary income from a non-qualified stock
option will constitute compensation for which withholding and reporting may be
required under federal and state law.

Subject
to special rules applicable when an optionee uses stock of the Company to
exercise an option, shares acquired upon exercise of a non-qualified stock
option will have a tax basis equal to their fair market value on the exercise
date or other relevant date on which ordinary income is recognized and the
holding period for the shares generally will begin on the date of exercise or
such other relevant date. Upon subsequent disposition of the shares, the
optionee generally will recognize capital gain or loss. Provided the optionee
holds the shares for more than one-year prior to disposition, such gain or loss
will be long-term capital gain or loss. The maximum individual federal tax rate
on long-term capital gain currently is 15%.

The
Company generally will be entitled to a deduction equal to the ordinary income
(i.e., compensation) recognized by the optionee in connection with the exercise
of a non-qualified stock option provided that the Company complies with any
applicable withholding or reporting requirements of federal and state law. The
Company does not obtain a deduction with respect to any capital gain on
disposition of the shares.

OPTIONS
TO NON-EMPLOYEE DIRECTORS.   These options are non-qualified stock
options for tax purposes, and the tax rules applicable to them are the
same as the rules for non-qualified stock options described above.
However, since the optionees are not employees, income tax withholding would
not be required in order for the Company to qualify for its income tax
deduction.

STOCK
APPRECIATION RIGHTS (SARS).   A recipient of a stock appreciation
right will be taxed (and the Company will receive a corresponding deduction)
when the recipient exercises the stock appreciation right. Income generated by
such exercise will be ordinary compensation income and will be measured by the
amount of cash received or the then-current fair market value of the stock
received upon such event. In the case of an SAR granted to an employee, the
Company will have withholding and reporting obligations.

RESTRICTED
STOCK.   The income and deduction events in the case of restricted
stock grants generally are deferred until the restrictions on the stock lapse.
At that time, the recipient would report as ordinary compensation income the
difference between the then-current fair market value of the stock and the
amount (if any) paid for the stock. Subject to applicable withholding or
reporting obligations, the Company is entitled to a corresponding deduction.
The recipient may elect to report the income with respect to the restricted
stock upon its receipt rather than at the time of the lapse of the
restrictions. In such case, the valuation used for income and deduction
purposes is the value of the restricted stock at the time of receipt,
disregarding any restrictions other than those that will never lapse. Subject
to satisfaction of any applicable withholding or reporting obligations, the
Company’s deduction also would be accelerated in the event of such an election.

PERFORMANCE
SHARES AND PERFORMANCE UNITS.   A recipient of a performance share or
performance unit will be taxed (and the Company will receive a corresponding
deduction) when the recipient receives payout at the end of the performance period
and any additional deferral period. The recipient will have ordinary
compensation income measured by the cash received and/or the then-current fair
market value of the stock received upon such event. In the case of a
performance share or performance unit granted to an employee, the Company will
have withholding and reporting obligations.

RESTRICTION
ON DEDUCTIONS.   Not every amount paid as compensation for services
is currently deductible. For example, two restrictions potentially applicable
to deductions for executive compensation payments are the restriction on
deduction of so-called “excess parachute payments” and the Code
Section 162(m) deduction limit of $1,000,000 per year for certain
executive compensation (discussed earlier herein). Whether any such
restrictions will apply to specific payments of compensation by the Company
cannot be predicted at this time.

Approval
of the amendment to the Plan will require the affirmative vote of a majority of
the outstanding shares of stock present in person or by proxy and entitled to
vote at the meeting. If the stockholders do not approve the amendment to the
Plan, the amendment will not be adopted.

The
Board has unanimously adopted resolutions approving the amendments set forth
above, declaring their advisability and directing that the proposed amendment
be submitted to the stockholders for their approval.

The
Board of Directors recommends that stockholder’s vote FOR this proposal.
Proxies solicited by the Board of Directors will be so voted unless stockholders
specify otherwise in their proxies.

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