Document:

Ethan Frome

Exhibit
10.1          

SECOND AMENDMENT TO CREDIT AGREEMENT

SECOND AMENDMENT, dated as of March 4, 2002 (this
“Amendment”), to the Credit Agreement, dated as
of March 1, 2001 (as amended, supplemented or otherwise modified
from time to time, the “Credit Agreement”),
among PG&E Corporation, a California corporation (the
“Borrower”), the lenders party thereto (the
“Lenders”), General Electric Capital
Corporation, a New York corporation, as Co-Arranger (in such
capacity, the “Co-Arranger”), Lehman Commercial
Paper Inc., a New York corporation, as Administrative Agent (in
such capacity, the “Administrative Agent”), and
Lehman Brothers Inc., a Delaware corporation, as Lead Arranger and
Book Manager (in such capacity, the “Lead
Arranger”).

W I T N E S S E T H:

WHEREAS, the Borrower, the Lenders, the Co-Arranger, the
Administrative Agent and the Lead Arranger are parties to the
Credit Agreement;

WHEREAS, the Borrower has requested that the Administrative
Agent and the Lenders amend certain provisions of the Credit
Agreement; and

WHEREAS, the Administrative Agent, the Lenders and the other
parties hereto are willing to agree to the requested amendments on
the terms and conditions contained herein;

NOW THEREFORE, in consideration of the premises herein contained
and for other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto hereby agree as
follows:

1.  Defined Terms.  Unless otherwise defined
herein, capitalized terms used herein which are defined in the
Credit Agreement are used herein as therein defined.

2.  Amendments to the Credit Agreement.  (a)
Appendix A to the Credit Agreement is hereby amended by deleting
therefrom the definition of “Financing Documents” and
by substituting, in lieu thereof, the following:

           
“Financing Documents” shall mean, collectively,
the Credit Agreement, the Notes, the Fee Letter, the Lehman Fee
Letter, the Additional Fee Letter, the Second Additional Fee
Letter, the Escrow Agreement, the Security Documents and the Option
Agreement.”

(b) Appendix A to the Credit Agreement is hereby amended by
adding thereto the following new definition in its proper
alphabetical order:

“Second Additional Fee Letter” shall mean the
fee letter, dated March 4, 2002, among the Borrower, the
Administrative Agent and the Lenders.

(c) Section 2.9(b) of the Credit Agreement is hereby amended by
deleting the date, “March 3, 2002”, set forth in clause
(ii)(x) of the proviso in such section and by substituting, in lieu
thereof the date, “June 3, 2002”.

(d) Section 3.7 of the Credit Agreement is hereby amended by
adding the following new paragraph (c) at the end thereof:

“(c) Notwithstanding the provisions of paragraphs (a) and
(b) of this Section 3.7, during the period between March 2, 2002
and March 2, 2003, the Borrower may make payments to the Tranche B
Lenders in respect of the Tranche B Loan and that portion of the
Tranche A Loan held by the Tranche B Lenders, pro
rata based upon the respective amounts of the Tranche B Loan
or the Tranche A Loan, as applicable, held by each Tranche B
Lender, without concurrently making payments to the Tranche A
Lenders in respect of the Tranche A Loan.”

3.   Effectiveness.  This Amendment shall
become effective as of the date hereof when (i) each Lender shall
have received counterparts hereof duly executed by the Borrower,
the Administrative Agent and the Lenders, (ii) the Administrative
Agent shall have received all of the fees required by the Second
Additional Fee Letter to be paid on March 4, 2002, (iii) each
Lender shall have received acknowledgements and consents from the
Borrower, LLC and NEG, Inc. to this Amendment, (iv) the Second
Amendment to Option Agreement, dated as of the date hereof, shall
have been duly executed and delivered by the parties thereto and
consented to by each Person specified therein and (v) each Lender
shall have received a favorable opinion of counsel to the Borrower
covering such matters with respect to this Agreement and the
transactions contemplated hereby as the Lenders shall reasonably
request.

4.   Representations and Warranties.  The
Borrower hereby represents and warrants that each of the
representations and warranties of the Borrower and its Subsidiaries
contained in Sections 5.1, 5.2, 5.3, 5.4, 5.5 and 5.26 of the
Credit Agreement shall be, after giving effect to this Amendment,
true and correct in all material respects, as if made on and as of
the date hereof except for any representations and warranties made
as of a specific date, which shall be true and correct in all
material respects as of such date.

5.   Reference to Credit Agreement.  Upon
the effectiveness of this Amendment, each reference in the Credit
Agreement to “this Agreement,” “hereunder,”
or words of like or similar import shall mean and be reference to
the Credit Agreement as affected and amended by this Amendment.

6.   Continuing Effect of Credit
Agreement.  This Amendment shall not be construed as a
waiver or consent to any further or future action on the part of
the Borrower or any of its Subsidiaries that would require a waiver
or consent of the Administrative Agent and/or the Lenders. 
Except as amended hereby, the provisions of the Credit Agreement
and the other Financing Documents are and shall remain in full
force and effect.

7.   Counterparts.  This Amendment may be
executed in counterparts, and by the several parties hereto on
separate counterparts, and all of the said counterparts taken
together shall be deemed to constitute one and the same
instrument.  This Amendment may be validly executed and
delivered by facsimile or other electronic transmission.

8.   GOVERNING LAW,
ETC.  THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK.

9.   Expenses.  The Borrower agrees to pay
or reimburse the Administrative Agent and each Lender for all of
its out-of-pocket costs and expenses incurred in connection with
the preparation, negotiation and execution of this Amendment,
including, without limitation, the fees and disbursements of
counsel to the Administrative Agent and counsel to General Electric
Capital Corporation, as a Lender.

[The remainder of this page is intentionally left
blank.]

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered by their duly authorized
officers as of the date first written above.

		
PG&E CORPORATION

By:  /s/ Leroy T. Barnes,
Jr.                         

        Name:  Leroy
T. Barnes, Jr.

        Title:    Vice
President and Treasurer

		
GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender and
Co-Arranger

By  /s/ J. Alex Urquhart,
Jr..                         

        Name:  J.
Alex Urquhart, Jr.

        Title:    Vice
President of GECC

		
LEHMAN COMMERCIAL PAPER INC., as a Lender and Administrative
Agent

By  /s/ Jeff
Goodwin                         

       Name:  Jeff
Goodwin

       Title:    Authorized
Signatory

		
WILMINGTON TRUST COMPANY, as a Lender

By:  /s/ Bruce L.
Bisson                         

        Name:  Bruce
L. Bisson

        Title:    Vice
President

Each of the undersigned does hereby consent and agree to the
foregoing Amendment and acknowledge and agree that (i) all
obligations of the Borrower under the Credit Agreement, as amended
by the foregoing Amendment, are Secured Obligations (as defined in
the relevant Security Document) which are secured by the Security
Documents to which it is a party, (ii) all references to the Credit
Agreement in the Security Documents refer to the Credit Agreement,
as amended from time to time (including pursuant to the foregoing
Amendment), and (iii) all references to Loans in the Security
Documents refer to the Loans under the Credit Agreement.

		
PG&E CORPORATION

By:  /s/ Leroy T. Barnes,
Jr.                         

        Name:  Leroy
T. Barnes, Jr.

        Title:     Vice
President and Treasurer

		
PG&E NATIONAL ENERGY GROUP, LLC

By:  /s/ Thomas G.
Boren                         

        Name:  Thomas G.
Boren

        Title: 
   President and CEO

		
PG&E NATIONAL ENERGY GROUP, INC.

By:  /s/ Thomas G.
Boren                         

        Name:  Thomas G.
Boren

        Title: 
   President and CEOOfficer Severance Plan

Exhibit
10.2         

PG&E CORPORATION

OFFICER SEVERANCE POLICY

(As Amended Effective as of December 19, 2001)

1.         Purpose

This is the controlling and definitive statement of the Officer
Severance Policy of PG&E Corporation ("Policy").  Since
Officers are employed at the will of PG&E Corporation and its
subsidiaries ("Corporation"), their employment with the Corporation
may be terminated at any time, with or without cause.  The
Policy, which was first adopted effective November 1, 1998,
provides Officers of the Corporation in Officer Compensation Bands
I through V ("Officers") with severance benefits if their
employment is terminated.1/   Severance benefits
for officers not covered by this Policy will be provided under
policies or programs developed by the appropriate lines of business
in consultation with and the approval by the Senior Human Resources
Officer of the Corporation.

The purpose of the Policy is to attract and retain senior
management by defining terms and conditions for severance benefits,
to provide severance benefits that are part of a competitive total
compensation package, to provide consistent treatment for all
terminated officers, and to minimize potential litigation costs
associated with Officer termination of employment. 

2.         Termination
of Employment Not Following a Change in Control or Potential Change
in Control

(a)    Corporation’s
Obligations.  If the Corporation exercises its right to
terminate an Officer’s employment without cause and such
termination does not entitle Officer to payments under Section 3,
the Corporation shall give the Officer thirty (30) days’
advance written notice or pay in lieu thereof.  Except as
provided in Section 2(b) below, in consideration of the Officer's
agreement to the obligations described in Section 2(c) below and to
the arbitration provisions described in Section 12 below,
Corporation shall also provide the following payments and benefits
to Officer:2/

(1)    The Corporation shall pay Officer a
lump sum severance payment equal to:  1/12 (the sum of the
Officer’s annual base compensation and the Officer’s
Short-Term Incentive Plan target award at the time of his or
her

____________________

1/     Severance benefits for
Officers who are currently covered by an employment agreement

        will continue to be
provided solely under such agreements until their expiration at
which

        time this Policy
will become effective for such Officers.

2/     Any payments made hereunder
shall be less applicable taxes.

termination) times (the number of months that Officer was employed
by the Corporation ("Severance Multiple")); provided, however, that
the Severance Multiple shall be no less than 6, nor more than 24
for Officers in Officer Bands I, II, III, or more than 18 for
Officers in Officer Bands IV or V.  Annual base compensation
shall mean the Officer's monthly base pay for the month in which
the Officer is given notice of termination, multiplied by 12.

(2)    If Officer is a participant in the
Supplemental Executive Retirement Plan of the Pacific Gas and
Electric Company (SERP), Officer may elect to convert any portion
of the amount described in the preceding Section 2(a)(1) to provide
for additional years of service and/or additional years to
Officer's age for purposes of calculating a benefit under the
SERP.  The value of any amount so converted shall be
calculated using the same actuarial factors used in calculating
benefits under the Retirement Plan for Employees of Pacific Gas and
Electric Company.  Any severance amounts converted to provide
for additional age and/or years of service for calculating an
enhanced benefit under the SERP shall not be eligible for any of
the alternative payment elections described in Section 2.03c. or
Section 2.03d. of the SERP.  

(3)    If Officer is a participant in the
SERP and if the additional age resulting from a conversion under
Section 2(a)(2) does not result in an age of 55 or greater, Officer
may elect to begin receiving an immediately payable SERP
benefit.  If Officer elects to receive an immediately payable
SERP benefit, the Administrator shall use an interest rate and
actuarial factors which the Administrator, in its sole discretion,
has determined are appropriate to reflect the true economic value
to the Corporation of providing an immediately payable SERP
benefit;

(4)    The incentive awards granted to
Officer under the Corporation’s Long-Term Incentive Program
which have not yet vested as of the date of termination will
continue to vest over a period of months equal to the Severance
Multiple after the date of termination as if the Officer had
remained employed for such period.  For vested stock options
as of the date of termination, the Officer shall have the right to
exercise such stock options at any time within their respective
terms or within five years after termination, whichever is
shorter.  For stock options that vest during a period of
months equal to the Severance Multiple, the Officer shall have the
right to exercise such options at any time within five years after
termination.  Awards under the Performance Unit Plan shall
continue to vest and be payable during a period of months equal to
the Severance Multiple.  Any unvested Performance Unit Plan
awards remaining at the end of such period shall be forfeited;

(5)    For Officers in Officer Bands I, II
or III, two thirds of the unvested Company stock units in the
Officer's account in the Corporation's Deferred Compensation Plan
for Officers which were awarded in connection with the Executive
Stock Ownership Program requirements ("SISOPs") shall vest upon the
Officer's termination, and one third shall be forfeited.  For
Officers in Officer Bands IV and V, one third of any unvested
SISOPs shall vest upon the Officer's termination, and two thirds
shall be forfeited.  Unvested stock units attributable to
SISOPs which becomes vested under this provision shall be
distributed to Officer in accordance with the Deferred Compensation
Plan after such stock units vest;

(6)    For a period of 18 months, the
Corporation shall pay the Officer's COBRA premiums;

(7)    If Officer is terminated after
serving consecutively for six months in a fiscal year, Officer
shall be entitled to receive a prorated bonus under the
Corporation's Short-Term Incentive Plan, at the time such bonus
would otherwise be paid, if any;

(8)    To the extent not theretofore paid or
provided, the Corporation shall timely pay or provide to the
Officer any other amounts or benefits required to be paid or
provided or which the Officer is eligible to receive under any
plan, contract or agreement of the Corporation and its affiliated
companies; and

(9)    Such career transition services as
the Corporation's Senior Human Resources Officer shall determine is
appropriate.

(b)    Remedies.  The Executive
Officer shall be entitled to recover damages for late or nonpayment
of amounts which the Corporation is obligated to pay
hereunder.  The Executive Officer shall also be entitled to
seek specific performance of the Corporation’s obligations
and any other applicable equitable or injunctive relief.

(c)    Section 2(a) shall not apply in the
event that the Corporation terminates an Officer’s employment
"for cause."  Except as used in Section 3 of this Policy, "for
cause" means that the Corporation, acting in good faith based upon
information then known to it, determines that the Officer has
engaged in, committed, or is responsible for (1) serious
misconduct, gross negligence, theft, or fraud against the
Corporation; (2) refusal or unwillingness to perform his duties;
(3) inappropriate conduct in violation of Corporation’s equal
employment opportunity policy; (4) conduct which reflects adversely
upon, or making any remarks disparaging of, the Corporation, its
Board of Directors, Officers, or employees, or its affiliates or
subsidiaries; (5) insubordination; (6) any willful act that is
likely to have the effect of injuring the reputation, business, or
business relationship of the Corporation or its subsidiaries or
affiliates; (7) violation of any fiduciary duty; or (8) breach of
any duty of loyalty; or (9) any breach of the restrictive covenants
contained in Subsection 2(c) below.  Upon termination "for
cause," the Corporation shall have no liability to the Officer
other than for accrued salary, vacation benefits, and any vested
rights the Officer may have under the Corporation’s benefit
and compensation plans under the general terms and conditions of
the applicable plan.

(d)    Obligations of Officer

(1)    Release of Claims.  The
Corporation shall have no obligation to commence the payment of the
amounts and benefits described in

Section 2(a) until the latter of (1) the delivery by Officer to the
Corporation a fully executed comprehensive general release of any
and all known or unknown claims that he or she may have against the
Corporation and a covenant not to sue in the form prescribed by the
Administrator, and (2) the expiration of any revocation period
associated with the release to which the Officer may be entitled
under law.

(2)    Covenant Not to Compete. 
(i) During the period of Officer's employment with the Corporation
or its subsidiaries and for a period of months equal to the
Severance Multiple thereafter (the "Restricted Period"), Officer
shall not, in any county within the State of California or in any
city, county or area outside the State of California within the
United States or in the countries of Canada or Mexico, directly or
indirectly, whether as partner, employee, consultant, creditor,
shareholder, or other similar capacity, promote, participate, or
engage in any activity or other business competitive with the
Corporation's business or that of any of its subsidiaries or
affiliates, without the prior written consent of the Corporation's
Chief Executive Officer.  Notwithstanding the foregoing,
Officer may have an interest in any public company engaged in a
competitive business so long as Officer does not own more than 2
percent of any class of securities of such company, Officer is not
employed by and does not consult with, or becomes a director of, or
otherwise engage in any activities for, such competing company.

(ii)  The Corporation and its subsidiaries presently
conduct their businesses within each county in the State of
California and in areas outside California that are located within
the United States, and it is anticipated that the Corporation and
its subsidiaries will also be conducting business within the
countries of Canada and Mexico.  Such covenants are necessary
and reasonable in order to protect the Corporation and its
subsidiaries in the conduct of their businesses.  To the
extent that the foregoing covenant or any provision of this Section
2(c)(2)(ii) shall be deemed illegal or unenforceable by a court or
other tribunal of competent jurisdiction with respect to (i) any
geographic area, (ii) any part of the time period covered by such
covenant, (iii) any activity or capacity covered by such covenant,
or (iv) any other term or

provision of such covenant, such determination shall not affect
such covenant with respect to any other geographic area, time
period, activity or other term or provision covered by or included
in such covenant.

(3)    Soliciting Corporation Customers
and Employees.  During the Restricted Period, Officer
shall not, directly or indirectly, solicit or contact any customer
or any prospective customer of the Corporation for any commercial
pursuit that could be reasonably construed to be in competition
with the Corporation, or induce, or attempt to induce, any
employees, agents or consultants of or to the Corporation or any of
its subsidiaries or affiliates to do anything from which Officer is
restricted by reason of this covenant nor shall Officer, directly
or indirectly, offer or aid to others to offer employment to, or
interfere or attempt to interfere with any employment, consulting
or agency relationship with, any employees, agents or consultants
of the Corporation, its subsidiaries and affiliates, who received
compensation of $75,000 or more during the precedingsix (6) months,
to work for any business competitive with any business of the
Corporation, its subsidiaries or affiliates. 

(4)    Confidentiality.  Officer
shall not at any time (including after termination of employment)
divulge to others, use to the detriment of the Corporation, or use
in any business competitive with any business of the Corporation,
any trade secret, confidential or privileged information obtained
during his employment with the Corporation, without first obtaining
the written consent of the Corporation's Chief Executive
Officer.  This paragraph covers but is not limited to
discoveries, inventions (except as otherwise provided by California
law), improvements, and writings, belonging to or relating to the
affairs of the Corporation or of any of its subsidiaries or
affiliates, or any marketing systems, customer lists or other
marketing data.  Officer shall, upon termination of employment
for any reason, deliver to the Corporation all data, records and
communications, and all drawings, models, prototypes or similar
visual or conceptual presentations of any type, and all copies or
duplicates thereof, relating to all matters contemplated by this
paragraph.

(5)    Assistance in Legal
Proceedings.  During the Restricted Period, Officer shall,
upon reasonable notice from the Corporation, furnish information
and proper assistance (including testimony and document production)
to the Corporation as may be reasonably required by the Corporation
in connection with any legal, administrative or regulatory
proceeding in which it or any of its subsidiaries or affiliates is,
or may become, a party, or in connection with any filing or similar
obligation of the Corporation imposed by any taxing, administrative
or regulatory authority having jurisdiction, provided, however,
that the Corporation shall pay all reasonable expenses incurred by
Officer in complying with this paragraph. 

(6)    Remedies.  Upon Officer's
failure to comply with the provisions of this Section 2(c), the
Corporation shall have the right to immediately terminate any
unpaid amounts or benefits described in Section 2(a) to
Officer.  In the event of such termination, the Corporation
shall have no further obligations under this Policy and shall be
entitled to recover damages.  In the event of an
Officer’s breach or threatened breach of any of the covenants
set forth in this Section 2(c), the Corporation shall also be
entitled to specific performance by Officer of any such covenant
and any other applicable equitable or injunctive relief.

3.        Termination
of Employment Following a Change in Control or Potential Change in
Control

(a)    If an Executive Officer’s
employment by the Corporation or any subsidiary or successor of the
Corporation shall be subject to an Involuntary Termination within
the Covered Period, then the provisions of this Section 3 instead
of Section 2 shall govern the obligations of the Corporation as to
the payments and benefits it shall provide to the Executive
Officer.  In the event that Executive Officer’s
employment with the Corporation or an employing subsidiary is
terminated under circumstances which would not entitle Executive
Officer to payments under this Section 3, Executive Officer shall
only receive such benefits to which he is entitled under Section 2,
if any.  In no event shall Executive Officer be entitled to
receive termination benefits under both this Section 3 and Section
2.

All the terms used in this Section 3 shall have the following
meanings:

(1)    "Affiliate" shall mean any entity
which owns or controls, is owned or is under common ownership or
control with, the Corporation.

(2)    "Cause" shall mean (i) the willful
and continued failure of the Executive Officer to perform
substantially the Executive Officer’s duties with the
Corporation or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered to the
Executive Officer by the Board of Directors or the Chief Executive
Officer of the Corporation which specifically identifies the manner
in which the Board of Directors or Chief Executive Officer believes
that the Executive Officer has not substantially performed the
Executive Officer’s duties; or (ii) the willful engaging by
the Executive Officer in illegal conduct or gross misconduct which
is materially demonstrably injurious to the Corporation.

For purposes of the provision, no act or failure to act, on the
part of the Executive Officer, shall be considered "willful" unless
it is done, or omitted to be done, by the Executive Officer in bad
faith or without reasonable belief that the Executive
Officer’s action or omission was in the best interests of the
Corporation.  Any act, or failure to act, based upon authority
given pursuant to

a resolution duly adopted by the Board of Directors or upon the
instructions of the Chief Executive Officer or a senior officer of
the Corporation or based upon the advice of counsel for the
Corporation shall be conclusively presumed to be done, or omitted
to be done, by the Executive Officer in good faith and in the best
interests of the Corporation.  The cessation of employment of
the Executive Officer shall not be deemed to be for Cause unless
and until there shall have been delivered to the Executive Officer
a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board of
Directors at a meeting of the Board of Directors called and held
for such purpose (after reasonable notice is provided to the
Executive Officer and the Executive Officer is given an
opportunity, together with counsel, to be heard before the Board of
Directors), finding that, in the good faith opinion of the Board of
Directors, the Executive Officer is guilty of the conduct described
in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.

(3)    "Change in Control" shall be deemed
to have occurred if:

a)    any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, but excluding any benefit plan for employees or any trustee,
agent or other fiduciary for any such plan acting in such
person’s capacity as such fiduciary), directly or indirectly,
becomes the beneficial owner of securities of the Corporation
representing 20 percent or more of the combined voting power of the
Corporation's then outstanding securities;

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

c)    the shareholders of the Corporation
shall have approved (i) any consolidation or merger of the
Corporation other than a merger or consolidation which would result
in the voting securities of the Corporation outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent of such surviving entity) at least
70 percent of the Combined Voting Power of the Corporation, such
surviving entity or the parent of such surviving entity outstanding
immediately after such merger or consolidation; (ii) any sale,
lease, exchange or other transfer (in one transaction or a series
of related transactions) of all or substantially all of the assets
of the Corporation; or (iii) any plan or proposal for the
liquidation or dissolution of the Corporation.

(4)    "Change in Control Date" shall mean
the date on which a Change in Control occurs.

(5)    "Combined Voting Power" shall mean
the combined voting power of the Corporation's or other relevant
entity's then outstanding voting securities.

(6)    "Covered Period" shall mean the
period commencing with the Change in Control Date and terminating
two (2) years following said commencement; provided, however, that
if a Change in Control occurs and Executive Officer's employment
with the Corporation or the employing subsidiary is subject to an
Involuntary Termination before the Change in Control Date but on or
after a Potential Change in Control Date, and if it is reasonably
demonstrated by the Executive Officer that such termination (i) was
at the request of a third party who has taken steps reasonably
calculated to effect a Change in Control, or (ii) otherwise arose
in connection with or in anticipation of a Change in Control, then
the Covered Period shall mean, as applied to Executive Officer, the
two-year period beginning on the date immediately before the
Potential Change in Control Date.  In the case of termination
of employment following a Potential Change in Control Date,
references in the definition of "Good Reason" to conditions in
effect immediately prior to a Change in Control shall be deemed to
mean conditions in effect immediately prior to Executive Officer's
termination.

(7)    "Disability" shall mean the absence
of the Executive Officer from the Executive Officer's duties with
the Corporation or the employing subsidiary on a full-time basis
for 180 consecutive business days as a result of incapacity due to
physical or mental illness which is determined to be total and
permanent by a physician selected by the Corporation or its
insurers and acceptable to the Executive Officer or the Executive
Officer's legal representative.

(8)    "Executive Officer" shall mean
officers of the Corporation at the level of Senior Vice President
and above.

(9)    "Good Reason" shall mean any one or
more of the following which takes place within the Covered
Period:

a)    An adverse change in Executive
Officer's status or position(s) as in effect immediately before a
Change in Control or Potential Change in Control, including,
without limitation, the assignment to the Executive Officer of any
duties inconsistent in any respect with the Executive
Officer’s position (including status, offices, titles and
reporting requirements, including reporting requirements under
Section 16 of the Securities Exchange Act of 1934), authority,
duties or responsibilities prior to a Change in Control or
Potential Change in Control, or any other action by the Corporation
which results in the diminution in such position, authority, duties
or responsibilities prior to a Change in Control or Potential
Change in Control, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Corporation promptly after receipt of
notice thereof given by the Executive Officer;

b)    Executive Officer's base salary is
reduced from that provided to him immediately before the Change in
Control Date or as the same may be increased from time to time
thereafter, unless such reduction is part of an
across‐the‐board reduction for all similarly situated
executives, including executives of the other party to the
transaction that results in the Change in Control;

c)    Executive Officer's eligibility to
participate in bonus, stock option, incentive award and other
compensation plans which provide opportunities to receive
compensation is diminished from that provided to him immediately
before the Change in Control Date, unless substantially equal
benefits are provided to Executive Officer under comparable
compensation plans, or unless such reduction is part of an
across‐the‐board reduction for all similarly situated
executives, including executives of the other party to the
transaction that results in the Change in Control;

d)    The aggregate projected value of
Executive Officer's employee benefits (including but not limited to
supplemental and excess retirement programs, medical, dental, life
insurance and long‐term disability plans) and perquisites is
diminished from that provided to him immediately before the Change
in Control Date, unless such reduction is part of an
across‐the‐board reduction for all similarly situated
executives, including executives of the other party to the
transaction that results in the Change in Control;

e)    A change in Executive Officer's
principal place of employment by Corporation (including its
subsidiaries) to a location more than thirty-five miles from
Executive Officer's principal place of employment immediately
before the Change in Control Date;

f)    A reasonable determination by the
Board of Directors that, as a result of a Change in Control and a
change in circumstances thereafter significantly affecting his
position, he is unable to exercise the authorities, powers,
function or duties attached to his position immediately before the
Change in Control Date;

g)    The failure of the Corporation to
obtain the assumption of this Policy by any successor contemplated
in Section 7, hereof; or

h)    The material failure of the
Corporation to fulfill its obligations under this Policy, to the
extent not remedied in a reasonable period of time after the
Corporation’s receipt of written notice from Executive
Officer specifying the material failure by the Corporation.

(10)  "Involuntary Termination" shall mean a
termination (i) by the Corporation without Cause, or (ii) by
Executive Officer following Good Reason; provided, however, the
term "Involuntary Termination" shall not include termination of
Executive Officer's employment due to Executive Officer's death,
Disability, or voluntary retirement.

(11)  "Potential Change in Control" shall mean the
earliest to occur of  (i) the date on which the Corporation
executes an agreement or letter of intent, where the consummation
of the transaction described therein would result in the occurrence
of a Change in Control, (ii) the date on which the Board of
Directors approves a transaction or series of transactions, the
consummation of which would result in a Change in Control, or (iii)
the date on which a tender offer for the Corporation's voting stock
is publicly announced, the completion of which would result in a
Change in Control; provided, however, that if such Potential Change
in Control terminates by its terms, such transaction shall no
longer constitute a Potential Change in Control.

(12)  "Potential Change in Control Date" shall mean
the date on which a Potential Change in Control occurs.

(13)  "Reference Salary" shall mean the greater of (i)
the annual rate of Executive Officer's base salary from the
Corporation or the employing subsidiary in effect immediately
before the date of Executive Officer's Involuntary Termination, or
(ii) the annual rate of Executive Officer's base salary from the
Corporation or the employing subsidiary in effect immediately
before the Change in Control Date.

(14)  "Termination Date" shall be the date specified
in the written notice of termination of Executive Officer's
employment given by either party in accordance with Section 3(b) of
this Policy.

(b)  Notice of Termination.  During the
Covered Period, in the event that the Corporation (including an
employing subsidiary) or Executive Officer terminates Executive
Officer’s employment with the Corporation or employing
subsidiary, the party terminating employment shall give written
notice of termination to the other party, specifying the
Termination Date and the specific termination provision in this
Section 3 that is relied upon, if any, and setting forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive Officer’s employment under
the provision so indicated.  The Termination Date shall be
determined as follows:  (i) if Executive Officer's employment
is terminated for Disability, thirty (30) days after a Notice of
Termination is given (provided that Executive Officer shall not
have returned to the full-time performance of Executive Officer's
duties during such 30-day period); (ii) if Executive Officer's
employment is terminated by the Corporation in an Involuntary
Termination, five days after the date the Notice of Termination is
received by Executive Officer; and (iii) (as defined in this
Section 3) if Executive Officer's employment is terminated by the
Corporation for Cause, the date specified in the Notice of
Termination, provided, that the events or circumstances cited by
the Board of Directors as constituting Cause are not cured by
Executive Officer during any cure period that may be offered by the
Board of Directors.  The Date of Termination for a resignation
of employment other than for Good Reason shall be the date set
forth in the applicable notice, which shall be no earlier than ten
(10) days after the date such notice is received by the
Corporation, unless waived by the Corporation.

During the Covered Period, a notice of termination given by
Executive Officer for Good Reason shall be given within three (3)
months after occurrence of the event on which Executive Officer
bases his notice of termination and shall provide a Termination
Date not more than sixty (60) days after the notice of termination
is given to the Corporation.

(c)  Corporation’s Obligations.  If
Executive Officer's employment by the Corporation or any subsidiary
or successor of the Corporation shall be subject to an Involuntary
Termination within the Covered Period, then the Corporation shall
provide Executive Officer the following benefits:

(1)   The Corporation shall pay to the Executive
Officer a lump sum in cash within thirty (30) days after the
Termination Date: 

a)    the sum of (1) any earned but unpaid
base salary through the Termination Date at the rate in effect at
the time of the notice of termination to the extent not theretofore
paid; (2) the Executive Officer's target bonus under the Short-Term
Incentive Plan of the Corporation, an Affiliate, or a predecessor,
for the fiscal year in which the Termination Date occurs (the
"Target Bonus"); and (3) any accrued but unpaid vacation pay, in
each case to the extent not theretofore paid; and

b)    the amount equal to the product of (1)
three and (2) the sum of (x) the Reference Salary and (y) the
Target Bonus.

(2)   Remedies.  The Executive
Officer shall be entitled to recover damages for late or nonpayment
of amounts which the Corporation is obligated to pay
hereunder.  The Executive Officer shall also be entitled to
seek specific performance of the Corporation’s obligations
and any other applicable equitable or injunctive relief.

(d)   Adjustment for Excise Taxes. 
If any portion of the payments to the Executive Officer under this
Section 3 or under any other plan, program, or arrangement
maintained by the Corporation (a "Payment") would be subject to the
excise tax levied under Section 4999 of the Internal Revenue Code
("Code"), or any interest or penalties are incurred by Executive
Officer with respect to such excise tax (such excise tax together
with such interest and penalties are referred to herein as the
"Excise Tax"), then the Corporation shall make an additional
payment to Executive Officer (a "Tax Restoration Payment") in an
amount such that after payment by the Executive Officer of all
taxes (including any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Tax Restoration Payment, the Executive Officer
retains an amount of the Tax Restoration Payment equal to the
Excise Tax imposed upon the Payments.  The payment of a Tax
Restoration Payment under this Section 3 shall not be conditioned
upon the Executive Officer's termination of employment.

All determinations and calculations required to be made under
this Section 3(d) shall be made by Deloitte & Touche (the
"Accounting Firm"), which shall provide its determination (the
"Determination"), together with detailed supporting calculations
regarding the amount of any Tax Restoration Payment and any other
relevant matter, both to the Corporation and the Executive Officer
within five (5) days of the termination of the Executive
Officer’s employment, if applicable, or such earlier time as
is requested by the Corporation or the Executive Officer (if the
Executive Officer reasonably believes that any of the Payments may
be subject to Excise Tax).  If the Accounting Firm determines
that no Excise Tax is payable by the Executive Officer, it shall
furnish the Executive Officer with a written statement that such
Accounting Firm has concluded that no Excise Tax is payable
(including the reasons therefor) and that the Executive Officer has
substantial authority not to report any Excise Tax on the Executive
Officer’s federal income tax return.  If a Tax
Restoration Payment is determined to be payable, it shall be paid
to the Executive Officer within five (5) days after the
Determination is delivered to the Corporation or the Executive
Officer.  Any determination by the Accounting Firm shall be
binding upon the Corporation and the Executive Officer, absent
manifest error.

As a result of uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Tax Restoration Payments not
made by the Corporation should have been made ("Underpayment") or
that Tax Restoration Payments will have been made by the
Corporation which should not have been made ("Overpayment"). 
In either such event, the Accounting Firm shall determine the
amount of the Underpayment or Overpayment that has occurred. 
In the case of an Underpayment, the amount of such Underpayment
shall be promptly paid by the Corporation to or for the benefit of
the Executive Officer.  In the case of an Overpayment, the
Executive Officer shall, at the direction and expense of the
Corporation, take such steps as are reasonably necessary (including
the filing of returns and claims for refund), follow reasonable
instructions from, and procedures established by, the Corporation,
and otherwise reasonably cooperate with the Corporation to correct
such Overpayment, provided, however, that (i) the Executive Officer
shall in no event be obligated to return to the Corporation an
amount greater than the net after-tax portion of the Overpayment
that the Executive Officer has retained or has recovered as a
refund from the applicable taxing authorities, and (ii) this
provision shall be interpreted in a manner consistent with the
intent of the Tax Restoration Payment paragraph above, which is to
make the Executive Officer whole, on an after-tax basis, from the
application of Excise Tax, it being understood that the correction
of an Overpayment may result in the Executive Officer’s
repaying to the Corporation an amount that is less than the
Overpayment.

4.         Administration

The Policy shall be administered by the Senior Human Resources
Officer of the Corporation ("Administrator"), who shall have the
authority to interpret the Policy and make and revise such rules as
may be reasonably necessary to administer the Policy.  The
Administrator shall have the duty and responsibility of maintaining
records, making the requisite calculations, securing Officer
releases, and disbursing payments hereunder.  The
Administrator’s interpretations, determinations, rules, and
calculations shall be final and binding on all persons and parties
concerned.

5.         No
Mitigation

Payment of the amounts and benefits under Section 2(a) and
Section 3 (except as otherwise provided in Section 2(a)(5)) shall
not be subject to offset, counterclaim, recoupment, defense or
other claim, right or action which the Corporation may have and
shall not be subject to a requirement that Officer mitigate or
attempt to mitigate damages resulting from Officer's termination of
employment.

6.         Amendment
and Termination

The Corporation, acting through its Nominating and Compensation
Committee, reserves the right to amend or terminate the Policy at
any time; provided, however, that any amendment which would reduce
the aggregate level of benefits, or terminate the Policy, shall not
become effective prior to the third anniversary of the Corporation
giving notice to Officers of such amendment or
termination. 

7.         Successors

The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business or assets of the Corporation
expressly to assume and to agree to perform its obligations under
this Policy in the same manner and to the same extent that the
Corporation would be required to perform such obligations if no
such succession had taken place; provided, however, that no such
assumption shall relieve the Corporation of its obligations
hereunder.  As used herein, the "Corporation" shall mean the
Corporation as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to
perform its obligations by operation or law or otherwise.

This Policy shall inure to the benefit of and be binding upon
the Officer (and Officer's personal representatives and heirs),
Corporation and its successors and assigns, and any such successor
or assignee shall be deemed substituted for the Corporation under
the terms of this Policy for all purposes.  As used herein,
"successor" and "assignee" shall include any person, firm,
corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires the
stock of the Corporation or to which the Corporation assigns this
Policy by operation of law or otherwise.  If Officer should
die while any amount would still be payable to Officer hereunder if
Officer had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with this Policy to
Officer’s devisee, legatee or other designee, or if there is
no such designee, to Officer's estate.

8.         Nonassignability
of Benefits

The payments under this Policy or the right to receive future
payments under this Policy may not be anticipated, alienated,
pledged, encumbered, or subject to any charge or legal process, and
if any attempt is made to do so, or a person eligible for payments
becomes bankrupt, the payments under the Policy of the person
affected may be terminated by the Administrator who, in his or her
sole discretion, may cause the same to be held if applied for the
benefit of one or more of the dependents of such person or make any
other disposition of such benefits that he or she deems
appropriate.

9.         Nonguarantee
of Employment

Officers covered by the Policy are at-will employees, and
nothing contained in this Policy shall be construed as a contract
of employment between the Officer and the Corporation (or, where
applicable, a subsidiary or affiliate of the Corporation), or as a
right of the Officer to continued employment, or to remain as an
Officer, or as a limitation on the right of the Corporation (or a
subsidiary or affiliate of the Corporation) to discharge Officer at
any time, with or without cause.

10.       Benefits
Unfunded and Unsecured

The payments under this Policy are unfunded, and the interest
under this Policy of any Officer and such Officer’s right to
receive payments under this Policy shall be an unsecured claim
against the general assets of the Corporation.

11.       Applicable
Law

All questions pertaining to the construction, validity, and
effect of the Policy shall be determined in accordance with the
laws of the United States and, to the extent not preempted by such
laws, by the laws of the state of California.

12.
       Arbitration

With the exception of any request for specific performance,
injunctive or other equitable relief, any dispute or controversy of
any kind arising out of or related to this Policy, Officer's
employment with the Corporation (or with the employing subsidiary),
the termination thereof or any claims for benefits shall be
resolved exclusively by final and binding arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association then in effect.  Provided, however, that in making
their determination, the arbitrators shall be limited to accepting
the position of the Officer or the position of the Corporation, as
the case may be.  The only claims not covered by this Section
12 are claims for benefits under workers' compensation or
unemployment insurance laws; such claims will be resolved under
those laws.  The place of arbitration shall be San Francisco,
California.  Parties may be represented by legal counsel at
the arbitration but must bear their own fees for such
representation.  The prevailing party in any dispute or
controversy covered by this Section 12, or with respect to any
request for specific performance, injunctive or other equitable
relief, shall be entitled to recover, in addition to any other
available remedies specified in this Policy, all litigation
expenses and costs, including any arbitrator or administrative or
filing fees and reasonable attorneys' fees.  Both the Officer
and the Corporation specifically waive any right to a jury trial on
any dispute or controversy covered by this Section 12. 
Judgment may be entered on the arbitrators’ award in any
court of competent jurisdiction.

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