Document:

Exhibit 4.2

UNLESS THIS  CERTIFICATE  IS PRESENTED BY AN  AUTHORIZED  REPRESENTATIVE  OF THE
DEPOSITORY  TRUST  COMPANY,  A NEW YORK  CORPORATION  ("DTC"),  TO PINNACLE WEST
CAPITAL  CORPORATION OR ITS AGENT FOR  REGISTRATION  OF TRANSFER,  EXCHANGE,  OR
PAYMENT,  AND ANY CERTIFICATE  ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED  REPRESENTATIVE  OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER  ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR  OTHERWISE BY OR TO ANY PERSON IS WRONGFUL  INASMUCH AS THE  REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                        PINNACLE WEST CAPITAL CORPORATION

                           6.40% Senior Note due 2006

No. 1                                                               $300,000,000
                                                             CUSIP No. 723484AB7

     Pinnacle  West  Capital  Corporation,  a  corporation  duly  organized  and
existing  under the laws of Arizona  (herein  called the  "Company",  which term
includes any successor Person under the Indenture  hereinafter referred to), for
value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal  sum of Three  Hundred  Million  Dollars on April 1, 2006,  and to pay
interest  thereon from March 27, 2001 or from the most recent  Interest  Payment
Date to which  interest has been paid or duly  provided  for,  semi-annually  in
arrears on April 1 and October 1 in each year,  commencing  October 1, 2001,  at
the rate of 6.40%,  until the  principal  hereof is paid or made  available  for
payment.

     The interest so payable,  and punctually  paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the Person
in  whose  name  this  Security  (or  one or  more  Predecessor  Securities)  is
registered  at the  close  of  business  on the  Regular  Record  Date  for such
interest,  which  shall  be  March  15 or  September  15,  as the  case  may be,
immediately preceding the Interest Payment Date (whether or not a Business Day).
Any such  interest not so punctually  paid or duly  provided for will  forthwith
cease to be payable to the Holder on such Regular Record Date and may be paid to
the Person in whose name this Security (or one or more  Predecessor  Securities)
is registered at the close of business on a Special  Record Date for the payment
of such Defaulted  Interest to be fixed by the Trustee,  notice whereof shall be
given to Holders of  Securities  of this  series not less than ten days prior to
such Special  Record Date, or be paid at any time in any other lawful manner not
inconsistent  with the  requirements  of any  securities  exchange  on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.

     Payment of the principal of (and premium,  if any) and any interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in The City of New York,  in such coin or currency of the United  States
of America as at
<PAGE>
the time of payment is legal  tender for  payment of public and  private  debts;
provided,  however, that at the option of the Company payment of interest may be
made by check  mailed to the  address  of the  Person  entitled  thereto as such
address shall appear in the Security Register.

     Reference  is hereby made to the further  provisions  of this  Security set
forth on the reverse  hereof,  which further  provisions  shall for all purposes
have the same effect as if set forth at this place.

     Unless the  certificate of  authentication  hereon has been executed by the
Trustee  referred to on the reverse  hereof by manual  signature,  this Security
shall  not be  entitled  to any  benefit  under  the  Indenture  or be  valid or
obligatory for any purpose.

     IN WITNESS  WHEREOF,  the  Company has caused  this  instrument  to be duly
executed under its corporate seal.

                                        PINNACLE WEST CAPITAL CORPORATION

                                        By Nancy C. Loftin
                                           -------------------------------------
                                           Vice President

Attest:

Betsy A. Pregulman
------------------------------
Associate Secretary

                                        2
<PAGE>
     This  Security  is one of a duly  authorized  issue  of  securities  of the
Company (herein called the "Securities"), issued and to be issued in one or more
series  under an  Indenture,  dated as of  December 1, 2000  (herein  called the
"Indenture",  which  term  shall  have  the  meaning  assigned  to  it  in  such
instrument),  between the Company and The Bank of New York,  as Trustee  (herein
called the  "Trustee",  which term  includes  any  successor  trustee  under the
Indenture), and reference is hereby made to the Indenture for a statement of the
respective rights,  limitations of rights,  duties and immunities  thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the  Securities  are, and are to be,  authenticated  and  delivered.  This
Security  is  one of the  series  designated  on the  face  hereof,  limited  in
aggregate  principal amount to $300,000,000,  subject to increase as provided in
Section 101 of the First  Supplemental  Indenture,  dated as of March 15,  2001,
providing for such series of the Securities.

     The Securities of this series are subject to redemption  upon not less than
30 days' notice by mail at the option of the Company,  in whole or in part, from
time to time at a  Redemption  Price equal to the  greater of (1) the  principal
amount  being  redeemed  or (2) the sum of the present  values of the  remaining
scheduled  payments  of  principal  and  interest  on the Notes  due 2006  being
redeemed,  discounted to the redemption date on a semi-annual  basis (assuming a
360-day year  consisting of twelve 30-day  months) at the Treasury Yield plus 30
basis points, plus in each case accrued interest to the redemption date.

     If notice has been given as  provided  in the  Indenture  and funds for the
redemption of any  Securities  (or any portion  thereof)  called for  redemption
shall  have been made  available  on the  Redemption  Date  referred  to in such
notice,  such Securities (or any portion thereof) will cease to bear interest on
the date fixed for such  redemption  specified in such notice and the only right
of the Holders of such  Securities  will be to receive payment of the Redemption
Price.

     Notice of any  optional  redemption  of  Securities  of this series (or any
portion  thereof) will be given to Holders at their  addresses,  as shown in the
Security  Register for such  Securities,  not more than 60 nor less than 30 days
prior to the date fixed for  redemption.  The notice of redemption will specify,
among other items,  the  Redemption  Price or, if not then known,  the manner of
calculation  thereof,  and the principal amount of the Securities of this series
held by such Holder to be redeemed.

     The Company may redeem the Notes due 2006 at any time, in whole or in part,
at a  redemption  price equal to the greater of (1) the  principal  amount being
redeemed  or (2)  the  sum of the  present  values  of the  remaining  scheduled
payments  of  principal  and  interest  on the  Notes due 2006  being  redeemed,
discounted to the  redemption  date on a semi-annual  basis  (assuming a 360-day
year  consisting  of twelve 30-day  months) at the Treasury  Yield plus 30 basis
points, plus in each case accrued interest to the redemption date.

     "Treasury  Yield" means,  for any redemption date, the rate per annum equal
to the  semi-annual  equivalent  yield to  maturity of the  Comparable  Treasury
Issue,  assuming  a price for the  Comparable  Treasury  Issue  (expressed  as a
percentage of its principal  amount) equal to the  Comparable  Treasury Price of
the redemption date.

                                        3
<PAGE>
     "Comparable  Treasury  Issue"  means the United  States  Treasury  security
selected by an Independent  Investment Banker as having a maturity comparable to
the remaining term of the Notes due 2006 that would be utilized,  at the time of
selection and in accordance with customary  financial  practice,  in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the Notes due 2006.

     "Independent  Investment  Banker"  means  Salomon  Smith Barney Inc. or its
successor  or, if Salomon  Smith  Barney Inc. or its  successor  is unwilling or
unable to select the Comparable  Treasury Issue, one of the remaining  Reference
Treasury Dealers appointed by the Trustee after consultation with the Company.

     "Comparable Treasury Price" means, for any redemption date, (1) the average
of the bid and asked prices for the Comparable Treasury Issue (expressed in each
case  as a  percentage  of its  principal  amount)  on the  third  business  day
preceding the redemption date, as set forth in the daily statistical release (or
any  successor  release)  published by the Federal  Reserve Bank of New York and
designated  "Composite 3:30 p.m. Quotations for U.S.  Government  Securities" or
(2) if that  release (or any  successor  release) is not  published  or does not
contain  those prices on that  business  day,  (A) the average of the  Reference
Treasury Dealer  Quotations for the redemption date, after excluding the highest
and lowest Reference  Treasury Dealer Quotations for the redemption date, or (B)
if we obtain fewer than four Reference Treasury Dealer  Quotations,  the average
of all of the Quotations.

     "Reference  Treasury Dealer  Quotations" means, for each Reference Treasury
Dealer and any redemption  date, the average,  as determined by the Trustee,  of
the bid and asked prices for the Comparable  Treasury  Issue  (expressed in each
case as a percentage of its principal  amount)  quoted in writing to the Trustee
by the  Reference  Treasury  Dealer  at 5:00  p.m.  on the  third  business  day
preceding the redemption date.

     "Reference Treasury Dealer" means (1) each of Salomon Smith Barney Inc. and
any other primary U.S. Government Securities dealer in New York City (a "Primary
Treasury Dealer")  designated by, and not affiliated with,  Salomon Smith Barney
Inc. and their respective successors,  provided,  however, that if Salomon Smith
Barney Inc. or any of its designees ceases to be a Primary  Treasury Dealer,  we
will appoint another  Primary  Treasury Dealer as a substitute and (2) any other
Primary Treasury Dealer selected by the Company.

     If the  Company  elects to  redeem  less than all of Notes due 2006 and the
Notes  due 2006  are at the time  represented  by a  global  security,  then the
Depository  will select by lot the  particular  interest to be redeemed.  If the
Company  elects to redeem less than all of the Notes due 2006, and the Notes due
2006 are not represented by a global security,  then the Trustee will select the
particular  Notes due 2006 to be redeemed in a manner it deems  appropriate  and
fair.

     The Securities of this series will not be subject to any sinking fund.

                                        4
<PAGE>
     In the event of redemption of this Security in part only, a new Security or
Securities of this series and of like tenor for the  unredeemed  portion  hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.

     The Indenture contains  provisions for defeasance at any time of the entire
indebtedness  of the  Security or certain  restrictive  covenants  and Events of
Default with respect to this Security, in each case upon compliance with certain
conditions set forth in the Indenture.

     If an Event of Default  with  respect to  Securities  of this series  shall
occur and be  continuing,  the principal of the Securities of this series may be
declared  due and  payable in the manner  and with the  effect  provided  in the
Indenture.

     The Indenture  permits,  with certain  exceptions as therein provided,  the
amendment  thereof and the  modification  of the rights and  obligations  of the
Company  and the rights of the  Holders of the  Securities  of each series to be
affected under the Indenture at any time by the Company and the Trustee  without
the consent of such Holders in certain limited circumstances or with the consent
of the  Holders of 66-2/3% in  principal  amount of the  Securities  at the time
Outstanding  of  each  series  to  be  affected.  The  Indenture  also  contains
provisions  permitting the Holders of specified  percentages in principal amount
of the  Securities  of each  series  at the time  Outstanding,  on behalf of the
Holders of all  Securities  of such series,  to waive  compliance by the Company
with certain  provisions of the  Indenture  and certain past defaults  under the
Indenture  and their  consequences.  Any such consent or waiver by the Holder of
this  Security  shall be  conclusive  and binding  upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer  hereof or in  exchange  herefor or in lieu  hereof,  whether or not
notation of such consent or waiver is made upon this Security.

     As provided in and subject to the provisions of the  Indenture,  the Holder
of this  Security  shall not have the right to  institute  any  proceeding  with
respect to the Indenture or for the  appointment of a receiver or trustee or for
any other remedy thereunder,  unless such Holder shall have previously given the
Trustee  written  notice of a  continuing  Event of Default  with respect to the
Securities of this series,  the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the  Trustee  to  institute  proceedings  in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have  received  from the Holders of a majority in principal  amount of
Securities of this series at the time Outstanding a direction  inconsistent with
such  request,  and shall have failed to institute any such  proceeding,  for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit  instituted  by the Holder of this  Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.

     No reference  herein to the  Indenture and no provision of this Security or
of the Indenture  shall alter or impair the obligation of the Company,  which is
absolute and unconditional, to pay the principal of and any premium and interest
on this  Security  at the times,  place and rate,  and in the coin or  currency,
herein prescribed.

                                        5
<PAGE>
     As provided in the Indenture and subject to certain limitations therein set
forth,  the transfer of this Security is registrable  in the Security  Register,
upon  surrender of this Security for  registration  of transfer at the office or
agency of the  Company in any place where the  principal  of and any premium and
interest on this  Security are payable,  duly endorsed by, or  accompanied  by a
written  instrument  of  transfer  in form  satisfactory  to the Company and the
Security  Registrar  duly  executed by, the Holder  hereof or his attorney  duly
authorized in writing,  and thereupon one or more new  Securities of this series
and of like  tenor,  of  authorized  denominations  and for the  same  aggregate
principal amount, will be issued to the designated transferee or transferees.

     The Securities of this series are issuable only in registered  form without
coupons  in  denominations  of $1,000  and any  integral  multiple  thereof.  As
provided in the Indenture and subject to certain  limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of  Securities  of this  series  and of like  tenor  of a  different  authorized
denomination, as requested by the Holder surrendering the same.

     No service  charge shall be made for any such  registration  of transfer or
exchange,  but the Company may require  payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

     Prior to due presentment of this Security for registration of transfer, the
Company,  the  Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this  Security is  registered  as the owner  hereof for all
purposes,  whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

     All terms used in this Security  which are defined in the  Indenture  shall
have the meanings assigned to them in the Indenture.

     This Security shall be governed by and construed in accordance with the law
of the  State of New  York,  without  regard  to  conflicts  of laws  principles
thereof.

                          CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated  therein referred to
in the within-mentioned Indenture.

Dated: March 27, 2001                   THE BANK OF NEW YORK
                                        AS TRUSTEE

                                        By Walter N. Gitlin
                                           -------------------------------------
                                           AUTHORIZED SIGNATORY

                                        6<PAGE>   1

                                                              EXHIBIT 10(iii).10

                     THE 2001 AMENDED AND RESTATED OPERATING
                             PERFORMANCE BONUS PLAN
                     FOR EXECUTIVE OFFICERS OF SAFEWAY INC.

     Safeway Inc., a Delaware corporation (the "Company"), previously adopted
The Operating Performance Bonus Plan for Executive Officers of Safeway Inc. (the
"Plan"). The objectives of the Plan are to motivate and reward executives to
produce results that increase stockholder value and to encourage individual and
team behavior that helps the Company achieve both short and long-term corporate
objectives.

     Under the terms of the Plan, the Board of Directors of the Company (the
"Board") reserved the right to amend the Plan. The Board of Directors of the
Company has adopted this amendment and restatement of the Plan, effective with
respect to bonuses for fiscal years beginning on or after December 31, 2000,
subject to approval of this amendment and restatement of the Plan by the
stockholders of the Company.

ARTICLE I.

                                   DEFINITIONS

     Section 1.1 - Base Compensation. "Base Compensation" shall mean the
Participant's regular weekly base salary rate, excluding moving expenses, bonus
pay and other payments which are not considered part of regular weekly salary
rate, multiplied by the number of weeks the Participant is eligible, including
up to six weeks of Paid Leave of Absence. Any changes in the Participant's
regular weekly base salary rate effected during the fiscal year of the Company
shall be taken into account, on a proportionate basis, in computing any bonus
award for the fiscal year.

     Section 1.2 - Paid Leave of Absence. "Paid Leave of Absence" shall mean a
period of time during which a Participant performs no duties due to an illness,
incapacity (including disability), layoff, jury duty, military duty or a leave
of absence for which the Participant is so paid or so entitled to payment by the
Company, whether direct or indirect, but excluding vacation time.

     Section 1.3 - Participant. "Participant" shall mean the Company's Chief
Executive Officer ("CEO") and any other Executive Officer (including the Senior
Vice President - Supply). "Executive Officer" shall mean any officer of the
Company subject to Section 16(a) of the Securities Exchange Act of 1934, as
amended..

                                  ARTICLE II.

                                  BONUS AWARDS

     Section 2.1 - CEO. The CEO is eligible for a bonus award under this Section
2.1. For each fiscal year of the Company, the Section 162(m) Committee of the
Board (the "Committee") shall establish an objectively determinable performance
target under this Section 2.1, which shall include one or more of the following
components of overall Company
<PAGE>   2

performance: (i) identical store sales, (ii) operating profit, and (iii)
working capital, in each case as determined in accordance with the Company's
accounting practices, as in effect on the first day of such fiscal year, and
which may also provide for adjustments in accordance with Section 2.4.
Achievement of specified levels above the performance target will result in a
bonus award to the CEO not to exceed a percentage of Base Compensation
determined by the Committee, up to a maximum bonus award of $3.0 million, paid
in accordance with Article III. The Committee shall establish such specified
levels above the performance target and the bonus award to be paid at each such
specified level. Prior to the payment of a bonus award, the Committee shall
certify in writing the level of performance attained by the Company for the
fiscal year to which such bonus award relates.

     Section 2.2 - Executive Officers. Each Executive Officer (including the
Senior Vice President - Supply, but excluding the CEO) is eligible for a bonus
award under this Section 2.2. Achievement of specified levels above the
performance target described under Section 2.1 will result in a bonus award to
an Executive Officer not to exceed a percentage of such Executive Officer's Base
Compensation determined by the Committee, up to a maximum bonus award of $1.5
million, paid in accordance with Article III. For each Executive Officer, the
Committee shall establish such specified levels above the performance target and
the bonus award to be paid at each such specified level. At the discretion of
the Committee, however, the Committee may reduce the bonus amount payable to any
Executive Officer. Prior to the payment of a bonus award, the Committee shall
certify in writing the level of performance attained by the Company for the
fiscal year to which such bonus award relates.

     Section 2.3 - Senior Vice President - Supply. The Senior Vice President -
Supply is eligible for a bonus award under this Section 2.3. For each fiscal
year of the Company, the Committee shall establish an objectively determinable
performance target under this Section 2.3, which shall include one or more of
the following components of performance for the Supply Division: (i) Supply
Division operating income, (ii) plant performance, (iii) third party sales
income contribution, (iv) working capital, and (v) identical store sales, in
each case as determined in accordance with the Company's accounting practices,
as in effect on the first day of such fiscal year, and which may also provide
for adjustments in accordance with Section 2.4. Achievement of specified levels
above the performance target will result in a bonus award not to exceed a
percentage of Base Compensation determined by the Committee, up to a maximum
bonus award of $550,000, paid in accordance with Article III. The Committee
shall establish such specified levels above the performance target and the bonus
award to be paid at each such specified level. Prior to the payment of a bonus
award, the Committee shall certify in writing the level of performance attained
by the Supply Division for the fiscal year to which such bonus award relates.

     Section 2.4 - Adjustments to Performance Components. For each fiscal year
of the Company, the Committee may provide for objectively determinable
adjustments, as determined in accordance with generally accepted accounting
principles ("GAAP"), to any of the performance components under Section 2.1, 2.3
or 5.3 for one or more of the items of gain, loss, profit or expense: (i)
determined to be extraordinary or unusual in nature or infrequent in occurrence,
(ii) related to the disposal of a segment of a business, (iii) related to a
change in accounting principle under GAAP, (iv) related to discontinued
operations that do not qualify as a segment of a business under GAAP, and (v)
attributable to the business operations of any entity acquired by the Company
during the fiscal year.

                                       2
<PAGE>   3

                                  ARTICLE III.

                             PAYMENT OF BONUS AWARD

     Section 3.1 - Form of Payment. Each Participant's bonus award may be paid,
at the option of the Participant, in cash or in stock, or in any combination of
cash and stock. Stock bonuses shall be paid in accordance with the provisions of
the 1999 Amended and Restated Equity Participation Plan of Safeway Inc.

     Section 3.2 - Timing of Payment. Unless otherwise directed by the
Committee, each bonus award shall be paid as soon as practicable after the end
of the fiscal year to which such bonus award relates.

                                  ARTICLE IV.

                                 SECTION 162(m)

     Section 4.1 - Qualified Performance Based Compensation. The Committee, in
its discretion, may determine whether a bonus award should qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the
Internal Revenue Code of 1986, as amended (the "Code") and may take such actions
which it may deem necessary to ensure that such bonus award will so qualify.

     Section 4.2 - Performance Goals. With respect to any bonus award which the
Committee determines should qualify as performance-based compensation, any of
the performance targets described in Sections 2.1 and 2.3, if applicable to such
bonus award, shall be established in writing before the first day of the fiscal
year to which such bonus award relates; provided, however, that, to the extent
permitted under Section 162(m)(4)(C) of the Code and the Treasury Regulations
thereunder, such performance targets may be established in writing by the
Committee not later than 90 days after the commencement of the period of service
to which the performance targets relate, provided that the outcome is
substantially uncertain at the time the Committee actually establishes the
performance targets; and, provided, further, that in no event shall the
performance targets be established after 25% of the period of service (as
scheduled in good faith at the time the performance targets are established) has
elapsed.

                                   ARTICLE V.

               TRANSFERS, TERMINATIONS AND NEW EXECUTIVE OFFICERS

     Section 5.1 - Transfers. For a Participant who is transferred from one
Executive Officer position to another during a fiscal year, the bonus award for
the fiscal year will be the sum of the pro-rata bonus awards calculated for each
position.

     Section 5.2 - Terminations. Except as provided in Section 5.1 or as
otherwise provided by the Committee, a Participant who, whether voluntarily or
involuntarily, is terminated, demoted, transferred or otherwise ceases to be an
Executive Officer at any time during a fiscal year shall not be eligible to
receive a partial fiscal year bonus award, except when the reason for leaving
the position is for reason of health or retirement; provided, however, that

                                       3
<PAGE>   4
with respect to a Participant who leaves for reason of health or retirement, the
Committee may determine that such Participant shall not receive a partial fiscal
year bonus award.

     Section 5.3 - New Executive Officers. A Participant who is transferred from
a non-Executive Officer position to an Executive Officer position during a
fiscal year, or who commences employment with the Company in an Executive
Officer position during a fiscal year, shall be eligible for a bonus award for
such fiscal year in accordance with Article II, unless the Committee determines,
on the basis that the performance targets established under Article II are no
longer substantially uncertain or otherwise, that such Participant shall be
eligible for a bonus award for such fiscal year under this Section 5.3. In the
event a Participant is eligible for a bonus award under this Section 5.3, for
such fiscal year, the Committee shall establish an objectively determinable
performance target under this Section 5.3, which shall relate to such
Participant's period of service as an Executive Officer during such fiscal year,
and which shall include one or more of the performance components specified in
Section 2.1 (and, if such a Participant is the Senior Vice President - Supply,
one or more of the performance components under Section 2.3) and may also
provide for adjustments in accordance with Section 2.4. Achievement of specified
levels above the performance target will result in a bonus award to such
Participant not to exceed a percentage of Base Compensation determined by the
Committee, up to a maximum bonus award of $3.0 million (in the case of the CEO)
or $1.5 million (in the case of any Executive Officer other than the CEO), paid
in accordance with Article III. The Committee shall establish such specified
levels above the performance target and the bonus award to be paid at each such
specified level. At the discretion of the Committee, however, the Committee may
reduce the bonus payable to any such Participant (other than the CEO). Prior to
the payment of a bonus award, the Committee shall certify in writing the level
of performance attained by the Company for the fiscal year to which such bonus
award relates. With respect to any bonus award under this Section 5.3 which the
Committee determines should qualify as performance-based compensation, any of
the performance targets described in this Section 5.3, if applicable to such
bonus award, shall be established in writing before the first day of such
Participant's employment in an Executive Officer position during the fiscal year
to which such bonus relates; provided, however, that, to the extent permitted
under Section 162(m)(4)(C) of the Code and the Treasury Regulations thereunder,
such performance targets may be established in writing by the Committee after
the commencement of the period of service to which the performance targets
relate, provided that the outcome is substantially uncertain at the time the
Committee actually establishes the performance targets; and, provided, further,
that in no event shall the performance targets be established after 25% of the
period of service (as scheduled in good faith at the time the performance
targets are established) has been established.

                                  ARTICLE VI.

                                 ADMINISTRATION

     Section 6.1 - Committee

     (a) The Committee shall consist of at least two persons appointed by and
holding office at the pleasure of the Board.

                                       4
<PAGE>   5

     (b) Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee shall be filled by the Board.

     Section 6.2 - Duties and Powers of Committee. It shall be the duty of the
Committee to conduct the general administration of the Plan in accordance with
its provisions. The Committee shall have the power to interpret the Plan, and to
adopt such rules for the administration, interpretation and application of the
Plan as are consistent therewith and to interpret, amend or revoke any such
rules. In its absolute discretion, the Board may at any time and from time to
time exercise any and all rights and duties of the Committee under the Plan
except with respect to matters which under Section 162(m) of the Code are
required to be determined in the sole and absolute discretion of the Committee.

     Section 6.3 - Majority Rule. The Committee shall act by a majority of its
members in office. The Committee may act either by vote at a meeting or by a
memorandum or other written instrument signed by a majority of the Committee.

                                  ARTICLE VII.

                                OTHER PROVISIONS

     Section 7.1 - Amendment, Suspension or Termination of the Plan. This Plan
does not constitute a promise to pay and may be wholly or partially amended or
otherwise modified, suspended or terminated at any time or from time to time by
the Board. However, to the extent required by Section 162(m) with respect to
bonus awards which the Committee determines should qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, no action of the
Board may modify the performance targets described in Sections 2.1 and 2.3 if
applicable to such bonus awards, after the commencement of the year with respect
to which such bonus awards relate.

     Section 7.2 - Approval of Plan by Stockholders. This amendment and
restatement of the Plan shall be submitted for the approval of the Company's
stockholders at the annual meeting of stockholders to be held in 2001. In the
event that this amendment and restatement of the Plan is not so approved, this
amendment and restatement of the Plan shall cease to be effective, and the Plan,
as in effect prior to this amendment and restatement of the Plan, shall continue
in accordance with the terms thereof.

                                       5

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