Document:

ADDENDUM TO EMPLOYMENT AGREEMENT

         This Addendum (the  "Addendum") is made effective as of the 15th day of
December,  2000 and is intended  to amend a certain  Employment  Agreement  (the
"Agreement")  by and between  Erie  Indemnity  Company  and  Douglas F.  Ziegler
effective as of December 15, 1999.

         WHEREAS,  the Company has determined that it is in the best interest of
the Company  and its  Shareholders  to secure the  continued  employment  of the
Executive in accordance with the terms of the Agreement; and

         WHEREAS,  the Board of  Directors  of the  Company  at its  meeting  of
December  12, 2000 has again  agreed to extend the term of the  Agreement  for a
period of one (1) additional year as contained herein; and

         WHEREAS, the Executive is agreeable to the extension of the Agreement.

         NOW, THEREFORE, intending to be legally bound hereby, the parties agree
         as follows:

         1.  Paragraph 1 of the Agreement with respect to the Term is hereby
amended by extending the Term to expire on December 15, 2002.

         2.  All other terms and conditions of the Agreement remain in full
force and effect.

ATTEST:                                              ERIE INDEMNITY COMPANY

/s/ Jan R. Van Gorder                         By:  /s/ F. William Hirt
    Jan R. Van Gorder                                  F. William Hirt
    Secretary                                          Chairman of the Board

WITNESS:

/s/ Charlotte F. Drobniewski                       /s/ Douglas F. Ziegler
    Charlotte F. Drobniewski                           Douglas F. Ziegler
    Executive Secretary                                378 Ridgeview Drive
                                                       Erie, PA 16505

                                       37Exhibit 10.9

                              PUBLIC STORAGE, INC.

                      1996 STOCK OPTION AND INCENTIVE PLAN

         Public Storage,  Inc., a California  corporation (the "Company"),  sets
forth herein the terms of its 1996 Stock Option and Incentive  Plan (the "Plan")
as follows:

         1.       PURPOSE

         The Plan is intended to enhance  the  Company's  ability to attract and
retain highly qualified officers,  key employees,  outside directors,  and other
persons to advance the  interests of the Company by providing  such persons with
stronger  incentives  to continue to serve the  Company and its  affiliates  (as
defined herein) and to expend maximum effort to improve the business results and
earnings of the Company.  The Plan is intended to accomplish  this  objective by
providing  to eligible  persons an  opportunity  to acquire or increase a direct
proprietary  interest in the operations  and future  success of the Company.  To
this end, the Plan provides for the grant of stock options, restricted stock and
restricted  stock  units in  accordance  with the terms  hereof.  Stock  options
granted under the Plan may be  non-qualified  stock  options or incentive  stock
options,  as  provided  herein,  except  that stock  options  granted to outside
directors shall in all cases be non-qualified stock options.

         2.       DEFINITIONS

         For purposes of interpreting the Plan and related documents  (including
Award Agreements), the following definitions shall apply:

         2.1  "affiliate"  of, or person  "affiliated"  with, a person means any
company or other trade or business that  controls,  is controlled by or is under
common  control with such person  within the meaning of Rule 405 of Regulation C
under the 1933 Act (as defined herein).

         2.2 "Award  Agreement"  means the stock  option  agreement,  restricted
stock  agreement,  restricted  stock unit  agreement or other written  agreement
between  the  Company and a Grantee  that  evidences  and sets out the terms and
conditions of a Grant.

         2.3 "Benefit  Arrangement"  shall have the meaning set forth in Section
14 hereof.

         2.4 "Board" means the Board of Directors of the Company.

         2.5 "Code" means the Internal Revenue Code of 1986, as now in effect or
as hereafter amended.

         2.6  "Committee"  means  one  or  more  committees  of  the  Board,  as
designated  from time to time by  resolution  of the Board,  each of which shall
have all powers,  privileges and obligations vested by the Plan in the Committee
to the extent specified in such resolution.  At least one committee of the Board
that is  designated  by the Board as a Committee  shall consist of no fewer than
two  members  of the Board,  none of whom shall be an officer or other  salaried
employee of the Company or any affiliate,  and each of whom shall qualify in all
respects as a "non-employee director" within the meaning of Rule 16b-3 under the
Exchange Act or any successor  rule or regulation  and as an "outside  director"
within the meaning of Section  162(m) of the Code.  Until such time as the Board
shall  determine  otherwise,  the Audit  Committee  of the  Board  shall be such
Committee,  and the  Equity  Awards  Committee  of the  Board  also  shall  be a
Committee.

         2.7 "Company" means Public Storage, Inc.

         2.8 "Effective  Date" means August 13, 1996, the date on which the Plan
was adopted by the Board.

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         2.9 "Exchange Act" means the Securities Exchange Act of 1934, as now in
effect or as hereafter amended.

         2.10  "Fair  Market  Value"  means  the  value  of a  share  of  Stock,
determined  as  follows:  if on the Grant Date or other  determination  date the
Stock is listed on an  established  national  or  regional  stock  exchange,  is
admitted to quotation on the Nasdaq National Market, or is publicly traded on an
established  securities  market, the Fair Market Value of a share of Stock shall
be the  closing  price of the  Stock on such  exchange  or in such  market  (the
highest such closing price if there is more than one such exchange or market) on
the Grant Date or such other determination date (or if there is no such reported
closing  price,  the Fair Market Value shall be the mean between the highest bid
and lowest  asked prices or between the high and low sale prices on such trading
day) or,  if no sale of Stock is  reported  for such  trading  day,  on the next
preceding  day on which any sale shall have been  reported.  If the Stock is not
listed on such an  exchange,  quoted on such  system or traded on such a market,
Fair Market Value shall be the value of the Stock as determined by the Committee
in good faith.

         2.11  "Grant"  means  an  award  of  an  Option,  Restricted  Stock  or
Restricted Stock Units under the Plan.

         2.12  "Grant  Date"  means (a) for Grants  other than Grants to Outside
Directors,  the later of (i) the date as of which  the  Committee  approves  the
Grant or (ii) the  date as of which  the  Grantee  and the  Company  or  Service
Provider  enter  into  the  relationship  resulting  in the  Grantee's  becoming
eligible to receive a Grant, and (b) for Grants to Outside  Directors,  the date
on which such Grant is made in accordance with Section 7 hereof.

         2.13  "Grantee"  means a  person  who  receives  or  holds  an  Option,
Restricted Stock or Restricted Stock Units under the Plan.

         2.14 "Incentive  Stock Option" means an "incentive stock option" within
the meaning of Section 422 of the Code,  or the  corresponding  provision of any
subsequently enacted tax statute, as amended from time to time.

         2.15  "Option"  means an option to purchase one or more shares of Stock
pursuant to the Plan.

         2.16  "Option  Period"  means the period  during  which  Options may be
exercised as set forth in Section 11 hereof.

         2.17 "Option  Price"  means the purchase  price for each share of Stock
subject to an Option.

         2.18 "Other  Agreement"  shall have the meaning set forth in Section 14
hereof.

         2.19  "Outside  Director"  means a member  of the  Board  who is not an
officer or employee of the Company.

         2.20  "Plan"  means the Public  Storage,  Inc.  1996  Stock  Option and
Incentive Plan.

         2.21 "Reporting  Person" means a person who is required to file reports
under Section 16(a) of the Exchange Act.

         2.22 "Restricted Period" means the period during which Restricted Stock
or Restricted Stock Units are subject to restrictions or conditions  pursuant to
Section 13.2 hereof.

         2.23  "Restricted  Stock" means  shares of Stock,  awarded to a Grantee
pursuant to Section 13 hereof, that are subject to restrictions and to a risk of
forfeiture.

         2.24 "Restricted Stock Unit" means a unit awarded to a Grantee pursuant
to Section 13 hereof, which represents a conditional right to receive a share of
Stock in the  future,  and which is  subject  to  restrictions  and to a risk of
forfeiture.

         2.25  "Securities  Act"  means the  Securities  Act of 1933,  as now in
effect or as hereafter amended.

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         2.26 "Service Provider" means a consultant or adviser to the Company, a
manager  of the  Company's  properties  or  affairs,  or other  similar  service
provider or  affiliate  of the Company,  or any  corporation  or other entity in
which the Company owns at least a ninety  percent (90%) economic  interest,  and
employees of any of the foregoing,  as such persons may be designated  from time
to time by the Committee pursuant to Section 6 hereof.

         2.27 "Stock" means the common stock,  par value $0.10 per share, of the
Company.

         2.28  "Subsidiary"  means any  "subsidiary  corporation" of the Company
within the meaning of Section 425(f) of the Code.

         2.29  "Termination  Date" shall be the date upon which an Option  shall
terminate or expire, as set forth in SECTION 11.2 hereof.

         3.       ADMINISTRATION OF THE PLAN

         3.1  GENERAL.  Subject  to  Section  3.2  hereof,  the  Plan  shall  be
administered by the Committee.  The Board may remove members,  add members,  and
fill vacancies on the Committee  from time to time,  all in accordance  with the
Company's articles of incorporation and by-laws and applicable law.

         3.2 PLENARY AUTHORITY OF THE COMMITTEE.  Subject to Section 3.4 hereof,
the  Committee   shall  have  such  powers  and   authorities   related  to  the
administration  of the Plan as are  consistent  with the  Company's  articles of
incorporation  and by-laws and  applicable  law. The  Committee  shall have full
power and authority to take all actions and to make all determinations  required
or  provided  for under the Plan,  subject  to any  limitations  imposed  by the
resolutions of the Board  designating and empowering  such Committee,  and shall
have full power and  authority to take all such other  actions and make all such
other  determinations not inconsistent with the specific terms and provisions of
the Plan  that  the  Committee  deems  to be  necessary  or  appropriate  to the
administration of the Plan. In the event,  however, that more than one committee
of the Board is  authorized  to act as the  Committee,  (i) each such  committee
shall  have the power and  authority  to take  actions  and make  determinations
required or provided for under an outstanding  Grant or Award  Agreement only if
such Grant or Award Agreement was initially  authorized by such  committee,  and
(ii) only a committee  comprised solely of "non-employee  directors"  within the
meaning of Rule 16b-3 under the Exchange Act and "outside  directors" within the
meaning of Section  162(m) of the Code  shall  have the  authority  to approve a
Grant to any  officer  who is then a  Reporting  Person.  All such  actions  and
determinations  shall be by the affirmative vote of a majority of the members of
the  Committee  present at a meeting or by  unanimous  consent of the  Committee
executed in writing in accordance with the Company's  articles of  incorporation
and by-laws and  applicable  law. The  interpretation  and  construction  by the
Committee of any provision of the Plan, any Grant or any Award  Agreement  shall
be final and conclusive.

         3.3  DISCRETIONARY  GRANTS.  Subject to  Section  3.4 hereof and to the
other terms and conditions of the Plan, the Committee  shall have full and final
authority to designate Grantees,  (i) to determine the type or types of Grant to
be made to a  Grantee,  (ii) to  determine  the  number of shares of Stock to be
subject to a Grant,  (iii) to establish  the terms and  conditions of each Grant
(including, but not limited to, the exercise price of any Option, the nature and
duration of any  restriction  or  condition  (or  provision  for lapse  thereof)
relating to the vesting,  exercise,  transfer,  or  forfeiture of a Grant or the
shares  of  Stock  subject  thereto,  and any  terms or  conditions  that may be
necessary to qualify Options as Incentive Stock Options),  (iv) to prescribe the
form of each Award Agreement  evidencing a Grant, and (v) to amend,  modify,  or
supplement  the terms of any  outstanding  Grant;  provided,  however,  that the
Committee  shall not have the  authority  to reduce  the  exercise  price of any
outstanding  Option  other than  pursuant to Section 17 hereof.  Such  authority
specifically includes the authority,  in order to effectuate the purposes of the
Plan but without amending the Plan, to modify Grants to eligible individuals who
are foreign  nationals or are  individuals  who are employed  outside the United
States to  recognize  differences  in local law,  tax  policy,  or custom.  As a
condition to any subsequent  Grant,  the Committee  shall have the right, at its
discretion,  to require  Grantees  to return to the  Company  Grants  previously
awarded under the Plan.  Subject to the terms and  conditions  of the Plan,  any
such new Grant shall be upon such terms and  conditions  as are specified by the
Committee at the time the new Grant is made.

         3.4 GRANTS TO OUTSIDE  DIRECTORS.  With respect to Grants of Options to
Outside Directors pursuant to Section 7 hereof, the Committee's responsibilities
under the Plan  shall be  limited  to  taking  all legal  actions  necessary  to

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document the Options so granted,  to interpret the Award  Agreements  evidencing
such  Options,  to  maintain  appropriate  records and  reports  regarding  such
Options,  and to take all acts  authorized by this Plan or otherwise  reasonably
necessary to effect the purposes hereof.

         3.5 NO LIABILITY.  No member of the Board or of the Committee  shall be
liable for any action or  determination  made in good faith with  respect to the
Plan or any Grant or Award Agreement.

         3.6 APPLICABILITY OF RULE 16B-3. Those provisions of the Plan that make
express  reference  to Rule 16b-3  under the  Exchange  Act shall  apply only to
Reporting Persons.

         4.       STOCK SUBJECT TO THE PLAN

         Subject to adjustment  as provided in Section 17 hereof,  the number of
shares of Stock available for issuance under the Plan shall be 3,850,000.  Stock
issued or to be issued under the Plan shall be authorized  but unissued  shares.
If any shares  covered by a Grant are not  purchased or are  forfeited,  or if a
Grant otherwise  terminates without delivery of any Stock subject thereto,  then
the number of shares of Stock  counted  against the  aggregate  number of shares
available  under the Plan with respect to such Grant shall, to the extent of any
such forfeiture or  termination,  again be available for making Grants under the
Plan.

         5.       EFFECTIVE DATE AND TERM OF THE PLAN

         5.1  EFFECTIVE  DATE.  The Plan shall be effective as of the  Effective
Date,  subject to approval of the Plan within one year of the Effective Date, by
a majority  of the votes  cast on the  proposal  at a meeting  of  shareholders,
provided that the total votes cast  represent a majority of all shares  entitled
to vote.  Upon  approval of the Plan by the  shareholders  of the Company as set
forth above, all Grants made under the Plan on or after the Effective Date shall
be fully  effective as if the  shareholders of the Company had approved the Plan
on the Effective Date. If the  shareholders  fail to approve the Plan within one
year after the Effective  Date, any Grants made hereunder shall be null and void
and of no effect.

         5.2 TERM. The Plan has no termination date; however, no Incentive Stock
Option may be granted on or after the tenth anniversary of the Effective Date.

         6.       DISCRETIONARY GRANTS

         6.1  COMPANY  OR  SUBSIDIARY  EMPLOYEES.  Grants  (including  Grants of
Incentive  Stock  Options)  may be made  under the Plan to any  employee  of the
Company or of any  Subsidiary,  including any such employee who is an officer or
director of the Company or of any  Subsidiary,  as the Committee shall determine
and designate from time to time.

         6.2 SERVICE PROVIDERS. Grants may be made under the Plan to any Service
Provider whose participation in the Plan is determined by the Committee to be in
the  best  interests  of the  Company  and is so  designated  by the  Committee;
provided, however, that Grants to Service Providers who are not employees of the
Company or of any Subsidiary shall not be Incentive Stock Options.

         6.3  SUCCESSIVE  GRANTS.  An eligible  person may receive more than one
Grant, subject to such restrictions as are provided herein.

         7.       GRANTS TO OUTSIDE DIRECTORS

         7.1 INITIAL GRANTS OF OPTIONS.  Each Outside  Director who is initially
elected to the Board on or after the Effective Date shall,  upon the date of his
or her  initial  election  by the  Board  or the  shareholders  of the  Company,
automatically  be awarded a Grant of an Option,  which shall not be an Incentive
Stock Option,  to purchase 15,000 shares of Stock (which amount shall be subject
to adjustment as provided in Section 17 hereof).

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<PAGE>

         7.2  SUBSEQUENT  GRANTS OF OPTIONS.  Immediately  following each Annual
Meeting of  Shareholders  of the Company  held after the  Effective  Date,  each
Outside  Director then duly elected and serving (other than an Outside  Director
initially  elected to the Board at such Annual  Meeting of  Shareholders)  shall
automatically  be awarded a Grant of an Option,  which shall not be an Incentive
Stock Option,  to purchase  2,500 shares of Stock (which amount shall be subject
to  adjustment  as provided in Section 17 hereof);  provided,  however,  that no
Outside  Director  shall be  eligible  to receive a Grant of Options  under this
Section 7.2 unless such person  attended,  in person or by  telephone,  at least
seventy-five  percent  of the  meetings  held by the  Board or, if a member of a
committee of the Board,  held by both the Board and all  committees of the Board
on which such person served,  during the immediately preceding calendar year (or
such portion  thereof during which the Outside  Director served on the Board and
any such committees).

         7.3 VESTING.  Options granted to Outside Directors pursuant to Sections
7.1 and 7.2 shall vest in three equal annual installments in accordance with the
schedule set forth in the first sentence of Section 11.1 hereof.

         8.       LIMITATIONS ON GRANTS

         8.1 LIMITATION ON SHARES OF STOCK SUBJECT TO GRANTS. The maximum number
of shares of Stock  subject to Options that can be awarded under the Plan to any
person eligible for a Grant under Section 6 hereof is 2,500,000 during the first
ten years after the Effective Date and 250,000 per year thereafter.  The maximum
number  of  shares  of  Restricted  Stock  that can be  awarded  under  the Plan
(including for this purpose any shares of Stock  represented by Restricted Stock
Units) to any person  eligible for a Grant under Section 6 hereof is 250,000 per
year.

         8.2 LIMITATIONS ON INCENTIVE STOCK OPTIONS.  An Option shall constitute
an Incentive  Stock Option only (i) if the Grantee of such Option is an employee
of the Company or any Subsidiary of the Company; (ii) to the extent specifically
provided  in the  related  Award  Agreement;  and (iii) to the  extent  that the
aggregate  Fair Market Value  (determined  at the time the Option is granted) of
the shares of Stock with respect to which all  Incentive  Stock  Options held by
such Grantee  become  exercisable  for the first time during any  calendar  year
(under  the  Plan  and  all  other  plans  of the  Grantee's  employer  and  its
affiliates) does not exceed $100,000. This limitation shall be applied by taking
Options into account in the order in which they were granted.

         9.       AWARD AGREEMENT

         Each  Grant  pursuant  to the  Plan  shall  be  evidenced  by an  Award
Agreement,  to be executed by the  Company and by the  Grantee,  in such form or
forms as the  Committee  shall  from time to time  determine.  Award  Agreements
granted  from  time  to  time or at the  same  time  need  not  contain  similar
provisions  but  shall be  consistent  with the terms of the  Plan.  Each  Award
Agreement  evidencing a Grant of Options shall specify  whether such Options are
intended to be non-qualified stock options or Incentive Stock Options.

         10.      OPTION PRICE

         The Option  Price of each Option  shall be fixed by the  Committee  and
stated in the Award Agreement  evidencing such Option. The Option Price shall be
the aggregate Fair Market Value on the Grant Date of the shares of Stock subject
to the  Option;  PROVIDED,  HOWEVER,  that in the  event  that a  Grantee  would
otherwise be  ineligible  to receive an Incentive  Stock Option by reason of the
provisions of Sections  422(b)(6) and 424(d) of the Code  (relating to ownership
of more than ten percent of the Company's  outstanding  Stock), the Option Price
of an Option  granted to such Grantee that is intended to be an Incentive  Stock
Option  shall be not less than the  greater of the par value of a share of Stock
or 110 percent of the Fair  Market  Value of a share of Stock on the Grant Date.
In no case shall the Option  Price of any Option be less than the par value of a
share of Stock.

         11.      VESTING, TERM AND EXERCISE OF OPTIONS

         11.1 VESTING AND OPTION PERIOD.  Unless otherwise  provided in an Award
Agreement  evidencing the Grant of an Option, each Option granted under the Plan
shall become exercisable in accordance with the following schedule: (i) prior to
the first  anniversary of the Grant Date,  the Option shall not be  exercisable;
(ii) on the first  anniversary  of the  Grant  Date,  the  Option  shall  become
exercisable  with respect to  one-third  of the shares of Stock  subject to such

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Option;  (iii) on the second  anniversary  of the Grant Date,  the Option  shall
become  exercisable  with  respect to an  additional  one-third of the shares of
Stock  subject  to such  Option and (iv) on the third  anniversary  of the Grant
Date, the Option shall become  exercisable  with respect to the remaining shares
of Stock subject to such Option and shall remain  exercisable in full up to (but
not including)  the  Termination  Date (as defined in Section 11.2 hereof).  For
purposes of this Section 11.1,  fractional numbers of shares of Stock subject to
an Option  shall be rounded down to the next nearest  whole  number.  The period
during which any Option shall be  exercisable  in accordance  with the foregoing
schedule shall constitute the "Option Period" with respect to such Option.

         11.2 TERM. Each Option granted under the Plan shall terminate,  and all
rights to purchase shares of Stock thereunder  shall cease,  upon the expiration
of ten years from the date such Option is granted,  or under such  circumstances
and on such date prior thereto as is set forth in the Plan or as may be fixed by
the  Committee  and stated in the Award  Agreement  relating to such Option (the
"Termination Date"); provided, however, that in the event that the Grantee would
otherwise be  ineligible  to receive an Incentive  Stock Option by reason of the
provisions of Sections  422(b)(6) and 424(d) of the Code  (relating to ownership
of more than ten percent of the  outstanding  Stock),  an Option granted to such
Grantee  that  is  intended  to  be an  Incentive  Stock  Option  shall  not  be
exercisable after the expiration of five years from its Grant Date.

         11.3  ACCELERATION.  Any  limitation  on  the  exercise  of  an  Option
contained in any Award  Agreement  may be  rescinded,  modified or waived by the
Committee,  in its sole discretion,  at any time and from time to time after the
Grant Date of such Option,  so as to accelerate the time at which the Option may
be exercised.  Notwithstanding  any other provision of the Plan, no Option shall
be exercisable in whole or in part prior to the date the Plan is approved by the
shareholders of the Company as provided in Section 5.1 hereof.

         11.4  TERMINATION  OF  EMPLOYMENT  OR  OTHER  RELATIONSHIP.   Upon  the
termination  (i) of the  employment  of a Grantee  with the Company or a Service
Provider,  (ii) of a Service Provider's  relationship with the Company, or (iii)
of an Outside  Director's  service to the  Company,  other than,  in the case of
individuals,  by reason of death or "permanent and total disability" (within the
meaning of Section  22(e)(3) of the Code), any Option or portion thereof held by
such Grantee that has not vested in  accordance  with the  provisions of Section
11.1 hereof shall terminate immediately,  and any Option or portion thereof that
has vested in accordance  with the provisions of Section 11.1 hereof but has not
been  exercised  shall  terminate at the close of business on the  thirtieth day
following  the  Grantee's   termination   of  service,   employment,   or  other
relationship, unless the Committee, in its discretion, extends the period during
which the Option may be exercised  (which period may not be extended  beyond the
original term of the Option).  Upon termination of an Option or portion thereof,
the Grantee shall have no further right to purchase  shares of Stock pursuant to
such Option or portion thereof.  Whether a leave of absence or leave on military
or government  service shall constitute a termination of employment for purposes
of the Plan shall be determined by the Committee,  which  determination shall be
final and  conclusive.  For purposes of the Plan, a termination  of  employment,
service  or other  relationship  shall not be deemed to occur if the  Grantee is
immediately  thereafter employed with the Company or any other Service Provider,
or is  engaged as a Service  Provider  or an Outside  Director  of the  Company.
Whether  a  termination  of  a  Service  Provider's  or  an  Outside  Director's
relationship  with the Company  shall have  occurred  shall be determined by the
Committee, which determination shall be final and conclusive.

         11.5 RIGHTS IN THE EVENT OF DEATH.  If a Grantee dies while employed by
the Company or a Service Provider,  or while serving as a Service Provider or an
Outside  Director,  all Options  granted to such Grantee shall fully vest on the
date of death, and the executors or  administrators  or legatees or distributees
of such Grantee's estate shall have the right, at any time within one year after
the date of such Grantee's death (or such longer period as the Committee, in its
discretion,  may determine prior to the expiration of such one-year  period) and
prior to termination of the Option  pursuant to Section 11.2 above,  to exercise
any Option held by such Grantee at the date of such Grantee's death.

         11.6  RIGHTS  IN THE  EVENT  OF  DISABILITY.  If a  Grantee  terminates
employment  with the  Company  or a Service  Provider,  or (if the  Grantee is a
Service  Provider  who is an  individual  or is an Outside  Director)  ceases to
provide services to the Company,  in either case by reason of the "permanent and
total  disability"  (within the meaning of Section 22(e)(3) of the Code) of such
Grantee, such Grantee's Options shall continue to vest, and shall be exercisable
to the  extent  that  they are  vested,  for a period  of one  year  after  such
termination of employment or service (or such longer period as the Committee, in
its discretion,  may determine prior to the expiration of such one-year period),

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<PAGE>

subject to earlier  termination of the Option as provided in Section 11.2 above.
Whether a termination  of employment or service is to be considered by reason of
"permanent and total disability" for purposes of the Plan shall be determined by
the Committee, which determination shall be final and conclusive.

         11.7  LIMITATIONS  ON  EXERCISE  OF OPTION.  Notwithstanding  any other
provision of the Plan, in no event may any Option be  exercised,  in whole or in
part,  prior to the date the Plan is approved by the shareholders of the Company
as provided herein,  or after ten years following the date upon which the Option
is granted, or after the occurrence of an event referred to in Section 17 hereof
which results in termination of the Option.

         11.8 METHOD OF EXERCISE. An Option that is exercisable may be exercised
by the  Grantee's  delivery to the Company of written  notice of exercise on any
business day, at the Company's  principal office,  addressed to the attention of
the  Committee.  Such  notice  shall  specify the number of shares of Stock with
respect  to which the  Option is being  exercised  and shall be  accompanied  by
payment in full of the Option  Price of the shares for which the Option is being
exercised. The minimum number of shares of Stock with respect to which an Option
may be  exercised,  in whole or in part,  at any time shall be the lesser of (i)
100 shares or such lesser number set forth in the applicable Award Agreement and
(ii) the maximum number of shares available for purchase under the Option at the
time of exercise.  Payment of the Option Price for the shares purchased pursuant
to the exercise of an Option  shall be made (i) in cash or in cash  equivalents;
(ii) through the tender to the Company of shares of Stock, which shares shall be
valued,  for  purposes of  determining  the extent to which the Option Price has
been paid thereby, at their Fair Market Value on the date of exercise;  or (iii)
by a  combination  of the methods  described in (i) and (ii).  The Committee may
provide,  by  inclusion  of  appropriate  language in an Award  Agreement,  that
payment in full of the Option  Price need not  accompany  the written  notice of
exercise  provided that the notice of exercise  directs that the  certificate or
certificates  for the  shares  of Stock for which  the  Option is  exercised  be
delivered to a licensed  broker  acceptable  to the Company as the agent for the
individual   exercising  the  Option  and,  at  the  time  such  certificate  or
certificates  are  delivered,  the broker  tenders to the Company  cash (or cash
equivalents  acceptable to the Company) equal to the Option Price for the shares
of Stock  purchased  pursuant to the  exercise of the Option plus the amount (if
any) of federal  and/or  other taxes which the Company may in its  judgment,  be
required to withhold  with respect to the exercise of the Option.  An attempt to
exercise  any Option  granted  hereunder  other than as set forth above shall be
invalid and of no force and effect.  Unless  otherwise  stated in the applicable
Award Agreement,  an individual  holding or exercising an Option shall have none
of the  rights of a  shareholder  (for  example,  the right to  receive  cash or
dividend  payments or distributions  attributable to the subject shares of Stock
or to direct  the  voting of the  subject  shares of Stock ) until the shares of
Stock  covered  thereby are fully paid and issued to him.  Except as provided in
Section 17 hereof,  no adjustment shall be made for dividends,  distributions or
other rights for which the record date is prior to the date of such issuance.

         11.9 DELIVERY OF STOCK CERTIFICATES.  Promptly after the exercise of an
Option by a Grantee and the payment in full of the Option  Price,  such  Grantee
shall  be  entitled  to the  issuance  of a stock  certificate  or  certificates
evidencing his or her ownership of the shares of Stock subject to the Option.

         12.      TRANSFERABILITY OF OPTIONS

         Each Option  granted  pursuant  to this Plan shall,  during a Grantee's
lifetime,   be  exercisable  only  by  the  Grantee  or  his  or  her  permitted
transferees,   and  neither  the  Option  nor  any  right  thereunder  shall  be
transferable by the Grantee, by operation of law or otherwise, other than as may
be provided in the Award Agreement  evidencing such Option or as may be provided
by will or the laws of descent  and  distribution.  Except as may be provided in
the Award  Agreement  evidencing  an  Option,  no  Option  shall be  pledged  or
hypothecated  (by  operation  of law or  otherwise)  or  subject  to  execution,
attachment or similar processes.

         13.      RESTRICTED STOCK

         13.1 GRANT OF RESTRICTED STOCK OR RESTRICTED STOCK UNITS. The Committee
may from  time to time  grant  Restricted  Stock or  Restricted  Stock  Units to
persons  eligible  to  receive  such  Grants as set  forth in  SECTION 6 hereof,
subject to such  restrictions,  conditions  and other terms as the Committee may
determine.

         13.2  RESTRICTIONS.  At  the  time  a  Grant  of  Restricted  Stock  or
Restricted  Stock Units is made, the Committee  shall establish a period of time
(the  "Restricted  Period")  applicable to such  Restricted  Stock or Restricted

                                       7

<PAGE>

Stock  Units.  The minimum  Restricted  Period  which may be provided for by the
Committee with respect to Restricted Stock or Restricted Stock Units the vesting
of which is subject  solely to the passage of time and/or  continued  employment
shall be three years,  subject to earlier  expiration of the  Restricted  Period
upon the death,  disability,  retirement or other  termination of service of the
Grantee,  or upon a change in control of the  Company,  in  accordance  with the
provisions of the Plan. Each Grant of Restricted Stock or Restricted Stock Units
may be subject to a different  Restricted Period. The Committee may, in its sole
discretion, at the time a Grant of Restricted Stock or Restricted Stock Units is
made, prescribe  restrictions in addition to or other than the expiration of the
Restricted  Period,  including  the  satisfaction  of  corporate  or  individual
performance  objectives,  which may be  applicable  to all or any portion of the
Restricted Stock or Restricted Stock Units. Such performance objectives shall be
established  in writing by the Committee  prior to the ninetieth day of the year
in which the Grant is made and while the  outcome  is  substantially  uncertain.
Performance  objectives  shall be based on Stock  price,  market  share,  sales,
earnings  per  share,  return on equity or  costs.  Performance  objectives  may
include  positive  results,  maintaining  the  status quo or  limiting  economic
losses.  Subject to the second sentence of this Section 13.2, the Committee also
may, in its sole discretion, shorten or terminate the Restricted Period or waive
any other restrictions applicable to all or a portion of the Restricted Stock or
Restricted Stock Units.  Neither Restricted Stock nor Restricted Stock Units may
be sold, transferred,  assigned,  pledged or otherwise encumbered or disposed of
during  the  Restricted  Period  or  prior  to the  satisfaction  of  any  other
restrictions  prescribed by the Committee with respect to such Restricted  Stock
or Restricted Stock Units.

         13.3  RESTRICTED  STOCK  CERTIFICATES.  The Company shall issue, in the
name  of  each  Grantee  to  whom  Restricted  Stock  has  been  granted,  stock
certificates representing the total number of shares of Restricted Stock granted
to the Grantee,  as soon as  reasonably  practicable  after the Grant Date.  The
Secretary of the Company shall hold such  certificates for the Grantee's benefit
until such time as the  Restricted  Stock is forfeited  to the  Company,  or the
restrictions lapse.

         13.4  RIGHTS OF  HOLDERS OF  RESTRICTED  STOCK.  Unless  the  Committee
otherwise provides in an Award Agreement, holders of Restricted Stock shall have
the right to vote such Stock and the right to receive any dividends  declared or
paid with respect to such Stock.  The  Committee  may provide that any dividends
paid on Restricted Stock must be reinvested in shares of Stock, which may or may
not be subject to the same vesting  conditions  and  restrictions  applicable to
such Restricted  Stock. All  distributions,  if any,  received by a Grantee with
respect to  Restricted  Stock as a result of any stock  split,  stock  dividend,
combination  of shares,  or other  similar  transaction  shall be subject to the
restrictions applicable to the original Grant.

         13.5 RIGHTS OF HOLDERS OF RESTRICTED STOCK UNITS.  Unless the Committee
otherwise  provides in an Award  Agreement,  holders of  Restricted  Stock Units
shall have no rights as stockholders  of the Company.  The Committee may provide
in an Award  Agreement  evidencing  a Grant of  Restricted  Stock Units that the
holder of such  Restricted  Stock Units  shall be entitled to receive,  upon the
Company's  payment of a cash dividend on its  outstanding  Stock, a cash payment
for each Restricted Stock Unit held equal to the per-share  dividend paid on the
Stock.  Such Award  Agreement  may also  provide  that such cash payment will be
deemed reinvested in additional Restricted Stock Units at a price per unit equal
to the Fair Market  Value of a share of Stock on the date that such  dividend is
paid.

         13.6  TERMINATION  OF  EMPLOYMENT  OR  OTHER  RELATIONSHIP.   Upon  the
termination  of the  employment  of a  Grantee  with the  Company  or a  Service
Provider,  or of a Service Provider's  relationship with the Company,  in either
case other than,  in the case of  individuals,  by reason of death or "permanent
and total disability"  (within the meaning of Section 22(e)(3) of the Code), any
Restricted  Stock or  Restricted  Stock Units held by such  Grantee that has not
vested, or with respect to which all applicable restrictions and conditions have
not lapsed, shall immediately be deemed forfeited,  unless the Committee, in its
discretion,  determines  otherwise.  Upon  forfeiture  of  Restricted  Stock  or
Restricted Stock Units, the Grantee shall have no further rights with respect to
such Grant,  including but not limited to any right to vote Restricted  Stock or
any right to receive  dividends  with respect to shares of  Restricted  Stock or
Restricted  Stock  Units.  Whether a leave of  absence or leave on  military  or
government  service shall constitute a termination of employment for purposes of
the Plan shall be  determined by the  Committee,  which  determination  shall be
final and  conclusive.  For purposes of the Plan, a termination  of  employment,
service  or other  relationship  shall not be deemed to occur if the  Grantee is
immediately  thereafter employed with the Company or any other Service Provider,
or is  engaged  as a  Service  Provider.  Whether  a  termination  of a  Service
Provider's relationship with the Company shall have occurred shall be determined
by the Committee, which determination shall be final and conclusive.

                                       8

<PAGE>

         13.7 RIGHTS IN THE EVENT OF DEATH.  If a Grantee dies while employed by
the Company or a Service  Provider or while serving as a Service  Provider,  all
Restricted  Stock or Restricted  Stock Units granted to such Grantee shall fully
vest on the date of death, and the shares of Stock represented  thereby shall be
deliverable  in  accordance  with  the  terms  of the  Plan  to  the  executors,
administrators, legatees or distributees of the Grantee's estate.

         13.8  RIGHTS  IN THE  EVENT  OF  DISABILITY.  If a  Grantee  terminates
employment  with the  Company  or a Service  Provider,  or (if the  Grantee is a
Service  Provider  who is an  individual)  ceases  to  provide  services  to the
Company,  in  either  case by  reason of the  "permanent  and total  disability"
(within  the  meaning of Section  22(e)(3)  of the Code) of such  Grantee,  such
Grantee's  Restricted  Stock or Restricted Stock Units shall continue to vest in
accordance  with the applicable  Award  Agreement for a period of one year after
such  termination  of  employment  or  service  (or such  longer  period  as the
Committee,  in its  discretion,  may determine  prior to the  expiration of such
one-year period),  subject to the earlier forfeiture of such Restricted Stock or
Restricted  Stock Units in  accordance  with the terms of the  applicable  Award
Agreement. Whether a termination of employment or service is to be considered by
reason of  "permanent  and total  disability"  for purposes of the Plan shall be
determined by the Committee, which determination shall be final and conclusive.

         13.9 DELIVERY OF STOCK AND PAYMENT  THEREFORE.  Upon the  expiration or
termination  of  the  Restricted  Period  and  the  satisfaction  of  any  other
conditions prescribed by the Committee, the restrictions applicable to shares of
Restricted Stock or Restricted Stock Units shall lapse, and, upon payment by the
Grantee to the Company,  in cash or by check,  of the aggregate par value of the
shares of Stock  represented by such Restricted Stock or Restricted Stock Units,
a stock  certificate  for  such  shares  shall  be  delivered,  free of all such
restrictions, to the Grantee or the Grantee's beneficiary or estate, as the case
may be.

         14.      PARACHUTE LIMITATIONS

         Notwithstanding  any  other  provision  of this  Plan  or of any  other
agreement,  contract, or understanding heretofore or hereafter entered into by a
Grantee with the Company or any Subsidiary,  except an agreement,  contract,  or
understanding  hereafter  entered  into  that  expressly  modifies  or  excludes
application of this paragraph (an "Other  Agreement"),  and  notwithstanding any
formal  or  informal  plan or  other  arrangement  for the  direct  or  indirect
provision  of  compensation  to the  Grantee  (including  groups or  classes  of
participants or beneficiaries of which the Grantee is a member),  whether or not
such compensation is deferred,  is in cash, or is in the form of a benefit to or
for the Grantee (a  "Benefit  Arrangement"),  if the Grantee is a  "disqualified
individual," as defined in Section  280G(c) of the Code, any Option,  Restricted
Stock or Restricted Stock Unit held by that Grantee and any right to receive any
payment or other benefit under this Plan shall not become  exercisable or vested
(i) to the extent that such right to  exercise,  vesting,  payment,  or benefit,
taking  into  account  all other  rights,  payments,  or  benefits to or for the
Grantee under this Plan,  all Other  Agreements,  and all Benefit  Arrangements,
would  cause  any  payment  or  benefit  to the  Grantee  under  this Plan to be
considered a "parachute payment" within the meaning of Section 280G(b)(2) of the
Code as then in  effect  (a  "Parachute  Payment")  and (ii) if,  as a result of
receiving a Parachute Payment,  the aggregate  after-tax amounts received by the
Grantee from the Company under this Plan, all Other Agreements,  and all Benefit
Arrangements  would be less than the  maximum  after-tax  amount  that  could be
received  by the  Grantee  without  causing  any such  payment  or benefit to be
considered a Parachute Payment.  In the event that the receipt of any such right
to exercise,  vesting,  payment, or benefit under this Plan, in conjunction with
all other  rights,  payments,  or benefits to or for the Grantee under any Other
Agreement or any Benefit Arrangement would cause the Grantee to be considered to
have received a Parachute  Payment under this Plan that would have the effect of
decreasing the after-tax  amount  received by the Grantee as described in clause
(ii) of the preceding  sentence,  then the Grantee shall have the right,  in the
Grantee's sole  discretion,  to designate  those rights,  payments,  or benefits
under this Plan, any Other Agreements,  and any Benefit Arrangements that should
be reduced or  eliminated  so as to avoid  having the  payment or benefit to the
Grantee under this Plan be deemed to be a Parachute Payment.

         15.      REQUIREMENTS OF LAW

         15.1  GENERAL.  The Company  shall not be required to sell or issue any
shares of Stock under any Grant if the sale or  issuance  of such  shares  would
constitute  a violation  by the  Grantee,  any other  individual  exercising  an
Option,  or  the  Company  of any  provision  of any  law or  regulation  of any
governmental  authority,  including  without  limitation  any  federal  or state
securities laws or regulations.  If at any time the Company shall determine,  in

                                       9

<PAGE>

its discretion,  that the listing,  registration or  qualification of any shares
subject  to a Grant  upon any  securities  exchange  or under  any  governmental
regulatory  body is necessary or desirable as a condition  of, or in  connection
with,  the issuance or purchase of shares  hereunder,  no shares of Stock may be
issued or sold to the  Grantee  or any  other  individual  exercising  an Option
pursuant to such Grant unless such listing, registration, qualification, consent
or approval  shall have been  effected or obtained  free of any  conditions  not
acceptable to the Company,  and any delay caused  thereby shall in no way affect
the date of  termination  of the Grant.  Specifically,  in  connection  with the
Securities Act, upon the exercise of any Option or the delivery of any shares of
Restricted  Stock  or  Stock  underlying   Restricted  Stock  Units,   unless  a
registration statement under such Act is in effect with respect to the shares of
Stock covered by such Grant,  the Company shall not be required to sell or issue
such shares unless the Committee has received  evidence  satisfactory to it that
the Grantee or any other individual exercising an Option may acquire such shares
pursuant  to an  exemption  from  registration  under the  Securities  Act.  Any
determination in this connection by the Committee shall be final,  binding,  and
conclusive. The Company may, but shall in no event be obligated to, register any
securities  covered hereby pursuant to the Securities Act. The Company shall not
be obligated to take any affirmative action in order to cause the exercise of an
Option or the  issuance  of shares of Stock  pursuant to the Plan to comply with
any law or regulation of any governmental authority. As to any jurisdiction that
expressly  imposes the requirement that an Option shall not be exercisable until
the shares of Stock  covered by such  Option are  registered  or are exempt from
registration, the exercise of such Option (under circumstances in which the laws
of such jurisdiction  apply) shall be deemed  conditioned upon the effectiveness
of such registration or the availability of such an exemption.

         15.2 RULE 16B-3.  It is the intent of the Company that Grants  pursuant
to the Plan and the exercise of Options  granted  hereunder will qualify for the
exemption  provided by Rule 16b-3 under the Exchange Act. To the extent that any
provision  of the Plan or  action  by the  Committee  does not  comply  with the
requirements  of Rule  16b-3,  it  shall be  deemed  inoperative  to the  extent
permitted by law and deemed advisable by the Committee, and shall not affect the
validity of the Plan.  In the event that Rule 16b-3 is revised or replaced,  the
Board may exercise its  discretion to modify this Plan in any respect  necessary
to satisfy the  requirements  of, or to take  advantage  of any features of, the
revised exemption or its replacement.

         16.      AMENDMENT AND TERMINATION OF THE PLAN

         The Board may, at any time and from time to time,  amend,  suspend,  or
terminate  the Plan as to any shares of Stock as to which  Grants  have not been
made;  PROVIDED,  HOWEVER,  that the Board  shall not,  without  approval of the
Company's  shareholders,  amend the Plan such that it does not  comply  with the
Code.  The  Company  may  retain  the  right  in an Award  Agreement  to cause a
forfeiture  of the gain  realized by a Grantee on account of the Grantee  taking
actions in  "competition  with the Company," as defined in the applicable  Award
Agreement.  Furthermore,  the  Company  may annul a Grant if the  Grantee  is an
employee of the Company or an affiliate and is terminated "for cause" as defined
in the applicable Award Agreement.  Except as permitted under this Section 16 or
Section 17 hereof, no amendment,  suspension,  or termination of the Plan shall,
without the consent of the Grantee,  alter or impair rights or obligations under
any Grant theretofore awarded under the Plan.

         17.      EFFECT OF CHANGES IN CAPITALIZATION

         17.1 CHANGES IN STOCK. If the number of outstanding  shares of Stock is
increased or decreased or the shares of Stock are changed into or exchanged  for
a  different  number or kind of shares or other  securities  of the  Company  on
account of any recapitalization,  reclassification,  stock split, reverse split,
combination of shares,  exchange of shares, stock dividend or other distribution
payable in capital stock,  or other increase or decrease in such shares effected
without receipt of  consideration  by the Company  occurring after the Effective
Date,  the number and kinds of shares for which  Grants of  Options,  Restricted
Stock and  Restricted  Stock  Units may be made under the Plan shall be adjusted
proportionately and accordingly by the Company. In addition, the number and kind
of shares for which Grants are outstanding shall be adjusted proportionately and
accordingly  so that  the  proportionate  interest  of the  Grantee  immediately
following  such  event  shall,  to  the  extent  practicable,  be  the  same  as
immediately before such event. Any such adjustment in outstanding  Options shall
not change the  aggregate  Option Price  payable with respect to shares that are
subject to the unexercised portion of the Option outstanding but shall include a
corresponding   proportionate   adjustment   in  the  Option  Price  per  share.
Notwithstanding  the foregoing,  the Committee shall not be required to make any
adjustment  to any  outstanding  Grant  based on the  Company's  declaration  or

                                       10

<PAGE>

payment of a stock  dividend for which the Company  will claim a dividends  paid
deduction under Section 561 of the Code (or any successor provision).

         17.2 REORGANIZATION IN WHICH THE COMPANY IS THE SURVIVING ENTITY AND IN
WHICH NO CHANGE OF  CONTROL  OCCURS.  Subject  to Section  17.3  hereof,  if the
Company  shall  be the  surviving  entity  in  any  reorganization,  merger,  or
consolidation  of the  Company  with  one or more  other  entities,  any  Option
theretofore  granted  pursuant  to the Plan  shall  pertain  to and apply to the
securities  to which a holder of the  number of shares of Stock  subject to such
Option  would have been  entitled  immediately  following  such  reorganization,
merger, or consolidation,  with a corresponding  proportionate adjustment of the
Option Price per share so that the aggregate  Option Price  thereafter  shall be
the same as the aggregate  Option Price of the shares  remaining  subject to the
Option  immediately  prior to such  reorganization,  merger,  or  consolidation.
Subject to any  contrary  language in an Award  Agreement  evidencing a Grant of
Restricted  Stock,  any  restrictions  applicable to such Restricted Stock shall
apply as well to any  replacement  shares received by the Grantee as a result of
the reorganization, merger or consolidation.

         17.3  REORGANIZATION,  SALE OF ASSETS OR SALE OF STOCK WHICH INVOLVES A
CHANGE OF CONTROL.  Subject to the  exceptions set forth in the last sentence of
this Section 17.3,  (i) upon the occurrence of a "Change of Control" (as defined
below),  all outstanding  shares of Restricted  Stock and Restricted Stock Units
shall be deemed to have vested,  and all restrictions and conditions  applicable
to such shares of Restricted Stock and Restricted Stock Units shall be deemed to
have lapsed  immediately prior to the occurrence of such Change of Control,  and
(ii) fifteen days prior to the  scheduled  consummation  of a Change of Control,
all Options outstanding hereunder shall become immediately exercisable and shall
remain  exercisable  for a period of fifteen  days.  Any  exercise  of an Option
during such fifteen-day period shall be conditioned upon the consummation of the
Change  of  Control  and  shall  be  effective  only   immediately   before  the
consummation  of the  Change of  Control.  Upon  consummation  of any  Change of
Control,  the Plan and all outstanding but unexercised  Options shall terminate.
The Committee  shall send written  notice of an event that will result in such a
termination to all individuals who hold Options not later than the time at which
the Company  gives  notice  thereof to its  shareholders.  For  purposes of this
Section  17.3,  a "Change  of  Control"  shall be  deemed to occur  upon (i) the
dissolution or liquidation  of the Company or upon a merger,  consolidation,  or
reorganization  of the  Company  with one or more  other  entities  in which the
Company is not the surviving  entity,  (ii) a sale of  substantially  all of the
assets of the Company to another  entity,  or (iii) any  transaction  (including
without  limitation  a merger  or  reorganization  in which the  Company  is the
surviving  corporation)  which  results in any person or entity  (other  than B.
Wayne Hughes and members of his family and their affiliates)  owning 50% or more
of the  combined  voting  power of all  classes  of stock of the  Company.  This
Section  17.3 shall not apply to any  Change of  Control to the extent  that (A)
provision is made in writing in  connection  with such Change of Control for the
continuation of the Plan or the assumption of the Options,  Restricted Stock and
Restricted  Stock Units  theretofore  granted,  or for the substitution for such
Options,  Restricted Stock and Restricted Stock Units of new options, restricted
stock and restricted stock units covering the stock of a successor  corporation,
or a parent, subsidiary or affiliate thereof, with appropriate adjustments as to
the number and kind of shares and exercise  prices,  in which event the Plan and
Options,  Restricted Stock and Restricted Stock Units theretofore  granted shall
continue  in the manner and under the terms so provided or (B) a majority of the
full Board determines that such Change of Control shall not trigger  application
of the provisions of this Section 17.3.

         17.4  ADJUSTMENTS.  Adjustments under this Section 17 related to shares
of Stock or  securities  of the Company  shall be made by the  Committee,  whose
determination  in that  respect  shall be  final,  binding  and  conclusive.  No
fractional  shares  or other  securities  shall be issued  pursuant  to any such
adjustment,  and any  fractions  resulting  from  any such  adjustment  shall be
eliminated in each case by rounding downward to the nearest whole share.

         17.5 NO  LIMITATIONS ON COMPANY.  The making of Grants  pursuant to the
Plan shall not  affect or limit in any way the right or power of the  Company to
make adjustments, reclassifications,  reorganizations, or changes of its capital
or business structure or to merge,  consolidate,  dissolve, or liquidate,  or to
sell or transfer all or any part of its business or assets.

         18.      DISCLAIMER OF RIGHTS

         No  provision in the Plan or in any Grant or Award  Agreement  shall be
construed  to confer  upon any  individual  the right to remain in the employ or
service of the Company or any  affiliate,  or to  interfere  in any way with any

                                       11

<PAGE>

contractual  or other right or authority of the Company or any Service  Provider
either to  increase  or  decrease  the  compensation  or other  payments  to any
individual  at any time, or to terminate  any  employment or other  relationship
between any  individual and the Company or a Service  Provider.  No provision in
the Plan or in any Grant awarded or Award Agreement entered into pursuant to the
Plan shall be construed to confer upon any individual the right to remain in the
service of the  Company as a director  (including  as an Outside  Director),  or
shall  interfere  with  or  restrict  in any  way the  rights  of the  Company's
shareholders to remove any director pursuant to the provisions of the California
General   Corporation   Law,  as  from  time  to  time  amended.   In  addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Award Agreement,  no Grant awarded under the Plan shall
be affected by any change of duties or position  of the  Optionee  (including  a
transfer to or from the Company or a Service Provider),  so long as such Grantee
continues  to be a  director,  officer,  consultant,  employee,  or  independent
contractor  (as the case  may be) of the  Company  or a  Service  Provider.  The
obligation  of the  Company to pay any  benefits  pursuant to this Plan shall be
interpreted  as a contractual  obligation  to pay only those  amounts  described
herein, in the manner and under the conditions prescribed herein. The Plan shall
in no way be  interpreted  to require the  Company to transfer  any amounts to a
third party trustee or otherwise hold any amounts in trust or escrow for payment
to any participant or beneficiary  under the terms of the Plan. No Grantee shall
have any of the  rights of a  shareholder  with  respect  to the shares of Stock
subject to an Option  except to the extent the  certificates  for such shares of
Stock shall have been issued upon the exercise of the Option.

         19.      NONEXCLUSIVITY OF THE PLAN

         Neither the adoption of the Plan nor the  submission of the Plan to the
shareholders  of the Company for  approval  shall be  construed  as creating any
limitations  upon the  right and  authority  of the  Board to adopt  such  other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or  specifically  to a particular
individual or particular  individuals) as the Board in its discretion determines
desirable,   including,  without  limitation,  the  granting  of  stock  options
otherwise than under the Plan.

         20.      WITHHOLDING TAXES

         The Company,  a Subsidiary or a Service  Provider,  as the case may be,
shall have the right to deduct  from  payments  of any kind  otherwise  due to a
Grantee any  Federal,  state,  or local taxes of any kind  required by law to be
withheld  with  respect  to  the  vesting  of or  other  lapse  of  restrictions
applicable to Restricted Stock or Restricted Stock Units or upon the issuance of
any shares of Stock upon the exercise of an Option. At the time of such vesting,
lapse, or exercise,  the Grantee shall pay to the Company, the Subsidiary or the
Service  Provider,  as the  case  may be,  any  amount  that  the  Company,  the
Subsidiary or the Service  Provider may reasonably  determine to be necessary to
satisfy  such  withholding  obligation.  Subject  to the prior  approval  of the
Company,  the Subsidiary or the Service  Provider,  which may be withheld by the
Company, the Subsidiary or the Service Provider, as the case may be, in its sole
discretion,  the Grantee may elect to satisfy such  obligations,  in whole or in
part,  (i) by causing the Company,  the  Subsidiary  or the Service  Provider to
withhold shares of Stock otherwise issuable to the Grantee or (ii) by delivering
to the Company,  the Subsidiary or the Service  Provider shares of Stock already
owned by the Grantee. The shares of Stock so delivered or withheld shall have an
aggregate  Fair Market  Value equal to such  withholding  obligations.  The Fair
Market Value of the shares of Stock used to satisfy such withholding  obligation
shall be determined by the Company, the Subsidiary or the Service Provider as of
the date that the amount of tax to be  withheld is to be  determined.  A Grantee
who has made an  election  pursuant  to this  Section 20 may  satisfy his or her
withholding  obligation  only with  shares of Stock that are not  subject to any
repurchase, forfeiture, unfulfilled vesting, or other similar requirements.

         21.      CAPTIONS

         The use of  captions  in this  Plan or any Award  Agreement  is for the
convenience  of reference only and shall not affect the meaning of any provision
of the Plan or such Award Agreement.

         22.      OTHER PROVISIONS

         Each Grant  awarded  under the Plan may  contain  such other  terms and
conditions not inconsistent with the Plan as may be determined by the Committee,
in its sole discretion.

                                       12

<PAGE>

         23.      NUMBER AND GENDER

         With  respect  to words  used in this  Plan,  the  singular  form shall
include the plural form, the masculine gender shall include the feminine gender,
etc., as the context requires.

         24.      SEVERABILITY

         If any provision of the Plan or any Award Agreement shall be determined
to be  illegal or  unenforceable  by any court of law in any  jurisdiction,  the
remaining  provisions  hereof and thereof shall be severable and  enforceable in
accordance with their terms, and all provisions shall remain  enforceable in any
other jurisdiction.

                                       13

<PAGE>

         25.      GOVERNING LAW

         The  validity  and  construction  of  this  Plan  and  the  instruments
evidencing  the Grants  awarded  hereunder  shall be governed by the laws of the
State of California.

                                                        *    *    *

         The Plan was duly adopted and approved by the Board of Directors of the
Company as of the 13th day of August, 1996.

                                                     /S/ SARAH HASS
                                                     ---------------------------
                                                     Sarah Hass
                                                     Secretary of the Company

         The Plan was duly  approved by the  shareholders  of the Company on the
7th day of October, 1996.

                                                     /S/ SARAH HASS
                                                     ---------------------------
                                                     Sarah Hass
                                                     Secretary of the Company

         The Plan was duly  amended by the Board of  Directors of the Company on
the 7th day of October, 1996.

                                                     /S/ SARAH HASS
                                                     ---------------------------
                                                     Sarah Hass
                                                     Secretary of the Company

         The Plan was duly  amended by the Board of  Directors of the Company on
the 11th day of November, 1997.

                                                     /S/ SARAH HASS
                                                     ---------------------------
                                                     Sarah Hass
                                                     Secretary of the Company

         The Plan was duly  amended by the Board of  Directors of the Company on
the 6th day of May, 1999.

                                                     /S/ SARAH HASS
                                                     ---------------------------
                                                     Sarah Hass
                                                     Secretary of the Company

         The Plan was duly  amended by the Board of  Directors of the Company on
the 1st day of May, 2000.

                                                     /S/ SARAH HASS
                                                     ---------------------------
                                                     Sarah Hass
                                                     Secretary of the Company

                                       14

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