
      NORTHROP GRUMMAN 2001 LONG-TERM INCENTIVE STOCK PLAN

1.   PURPOSE

     The purpose of the Northrop Grumman 2001 Long-Term Incentive
Stock Plan (the "Plan") is to promote the long-term success of
Northrop Grumman Corporation (the "Company") and to increase
stockholder value by providing its officers and selected
employees with incentives to create excellent performance and to
continue service with the Company, its subsidiaries and
affiliates.  Both by encouraging such officers and employees to
become owners of the common stock of the Company and by providing
actual ownership through Plan awards, it is intended that Plan
participants will view the Company from an ownership perspective.

2.   TERM

     The Plan shall become effective upon the approval by the
stockholders of the Company (the "Effective Time").  Unless
previously terminated by the Company's Board of Directors (the
"Board"), the Plan shall terminate at the close of business on
the day before the tenth anniversary of the Board's approval of
the Plan.  After termination of the Plan, no future awards may be
granted but previously granted awards (and the Committee's (as
such term is defined in Section 3) authority with respect
thereto) shall remain outstanding in accordance with their
applicable terms and conditions and the terms and conditions of
the Plan.

3.   PLAN ADMINISTRATION

     (a)  The Plan shall be administered by the Compensation and
Management Development Committee (or its successor) of the Board.
Subject to the following provisions of this Section 3(a), the
Compensation and Management Development Committee (or its
successor) may delegate different levels of authority to make
grants under the Plan to different committees, provided that each
such committee consists of one or more members of the Board.
With respect to awards intended to satisfy the requirements for
performance-based compensation under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), the Plan
shall be administered by a committee consisting of two or more
outside directors (as this requirement is applied under Section
162(m) of the Code).  Transactions in or involving awards
intended to be exempt under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), must be duly
and timely authorized by the Board or a committee of non-employee
directors (as this term is used in or under Rule 16b-3).  (The
appropriate acting body, be it the Compensation and Management
Development Committee or another duly authorized committee of
directors, is referred to as "Committee".)

     (b)  The Committee shall have full and exclusive power to
interpret the Plan and to adopt such rules, regulations and
guidelines for carrying out the Plan as it may deem necessary or
proper, all of which power shall be executed in the best
interests of the Company and in keeping with the objectives of
the Plan.  This power includes, but is not limited to, selecting
award recipients, establishing all award terms and conditions and
adopting modifications, amendments and procedures, including
subplans and the like as may be necessary to comply with
provisions of the laws and applicable regulatory rulings of
countries in which the Company (or its subsidiaries or
affiliates, as applicable) operates in order to assure the
viability of awards


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granted under the Plan and to enable participants employed in
such countries to receive advantages and benefits under the Plan
and such laws and rulings.  In no event other than as contemplated
by Section 6, however, shall the Committee or its designee have
the right to cancel or amend outstanding stock options for
the purpose of repricing, replacing or regranting such options
with a purchase price that is less than the purchase price of
the original option.

     (c)  In making any determination or in taking or not taking any
action under the Plan, the Committee may obtain and may rely on
the advice of experts, including employees of and professional
advisors to the Company.  Any action taken by, or inaction of,
the Committee relating to or pursuant to the Plan shall be within
the absolute discretion of that entity or body and shall be
conclusive and binding on all persons.

4.   ELIGIBILITY

     Any key employee of the Company shall be eligible to receive
one or more awards under the Plan.  "Key Employee" shall also
include any former key employee of the Company eligible to
receive an assumed or replacement award as contemplated in
Sections 5 and 8.  For purposes of this Section 4, "Company"
includes any entity that is directly or indirectly controlled by
the Company or any entity in which the Company has a significant
equity interest, as determined by the Committee.

5.   SHARES OF COMMON STOCK SUBJECT TO THE PLAN AND GRANT LIMITS

     (a)  Subject to Section 6 of the Plan, the aggregate number of
additional shares of common stock of the Company ("Common Stock")
which may be issued or transferred pursuant to awards under the
Plan shall not exceed the sum of: (i) 8,000,000 shares; plus (ii)
any shares of Common Stock which as of the Effective Time are
available or become available for issuance under the Company's
1993 Long-Term Incentive Plan (the "Prior Plan") and which are
not thereafter issued; plus (iii) any shares of Common Stock
which the Company repurchases with proceeds received from option
exercises.  For purposes of the Plan, (x) any shares of Common
Stock which are forfeited back to the Company under the Plan or
the Prior Plan (including, without limitation, any shares
reserved but not actually issued with respect to restricted
performance stock rights granted under the Prior Plan), and (y)
any shares which have been exchanged by a participant as full or
partial payment to the Company in connection with any award under
the Plan or the Prior Plan, as well as any shares exchanged by a
Participant or withheld by the Company to satisfy the tax
withholding obligations related to an award under the Plan or the
Prior Plan, shall be available for issuance under the Plan in
subsequent periods.

     (b)  In no event, however, shall more than 3,000,000 shares of
Common Stock available for issuance pursuant to the Plan be
issued pursuant to stock awards granted under Section 8(c) of the
Plan.  The maximum number of shares of Common Stock that may be
delivered pursuant to stock options qualified as incentive stock
options under Section 422 of the Code ("ISOs") is 4,000,000
shares.

     (c)  In instances where a stock appreciation right ("SAR") or
other award is settled in cash or a form other than shares, the
shares that would have been issued had there been no cash or
other settlement shall not be counted against the shares
available for issuance under the Plan.


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If an SAR or other award that was granted under the Prior Plan
and outstanding at the Effective Time is settled in cash or a form
other than shares, the shares that would have been issued had there
been no cash or other settlement shall, notwithstanding anything to
the contrary in the Prior Plan, not be counted against the shares
available for issuance under the Prior Plan for purposes of
determining the shares available for issuance under the Plan.
The payment of cash dividends and dividend equivalents in
conjunction with outstanding awards shall not be counted
against the shares available for issuance under the Plan.  Any
shares that are issued by the Company, and any awards that are
granted by, or become obligations of, the Company, through the
assumption by the Company or an affiliate of, or in substitution
for, outstanding awards previously granted by an acquired company
(or previously granted by a predecessor employer (or direct or
indirect parent thereof) in the case of persons that become
employed by the Company (or a subsidiary or affiliate) in connection
with a business or asset acquisition or similar transaction) shall not
be counted against the shares available for issuance under the
Plan.

     (d)  Any shares issued under the Plan may consist in whole or in
part of authorized and unissued shares or of treasury shares, and
no fractional shares shall be issued under the Plan.  Cash may be
paid in lieu of any fractional shares in settlements of awards
under the Plan.

     (e)  In no event shall the total number of shares of
Common Stock that may be awarded to any eligible participant
during any three year period pursuant to stock option grants
and SAR grants hereunder exceed 900,000 shares.  In no event shall
"Performance-Based Awards" under Section 8(c)(ii) (other than
stock options or SARs, and without giving effect to any
related dividend equivalents) that are granted to any eligible
participant during any three consecutive years relate to or
provide for payment of more than 300,000 shares of Common Stock.

     (f)  Adjustments to the Plan's aggregate share limit pursuant to
clause (ii), (iii), (x) and/or (y) of Section 5(a), as well as
the provisions of Section 5(c), are subject to any applicable
limitations under Section 162(m) of the Code with respect to
awards intended as performance-based compensation thereunder.
The limits set forth in Sections 5(b) and 5(e) shall apply with
respect to all Plan awards regardless of whether the underlying
shares are attributable to the fixed 8,000,000 shares made
available for Plan award purposes or shares available but not
issued under the Prior Plan.

6.   ADJUSTMENTS AND REORGANIZATIONS

     (a)  In the event of any stock dividend, stock split, combination
or exchange of shares, merger, consolidation, spin-off,
recapitalization or other distribution (other than normal cash
dividends) of Company assets to stockholders, or any other change
affecting shares or share price, the Committee shall make such
proportionate adjustments, if any, as the Committee in its
discretion may deem appropriate to reflect such change with
respect to (i) the aggregate number and type of shares that may
be issued under the Plan; (ii) the grant limits established under
the Plan; (iii) each outstanding award made under the Plan
(including, without limitation, any applicable performance
targets or criteria with respect thereto); and (iv) the exercise
price per share for any outstanding stock options, SARs or
similar awards under the Plan.  Any adjustment affecting an award
intended as performance-based compensation under Section 162(m)
of the Code shall be made consistent with the requirements of
Section 162(m).


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     (b)  Notwithstanding anything to the contrary in Section 6(a),
the provisions of this Section 6(b) shall apply to an outstanding
Plan award if a Change in Control (as defined in Section 6(e))
occurs.  If the Company undergoes a Change in Control triggered
by clause (iii) of the definition thereof and the Company is not
the surviving entity and the successor to the Company (if any)
(or a parent thereof) does not agree in writing prior to the
occurrence of the Change in Control to continue and assume the
award following the Change in Control, or if for any other reason
the award would not continue after the Change in Control, then
upon the Change in Control: (i) if the award is a stock option,
it shall vest fully and completely, any and all restrictions on
exercisability or otherwise shall lapse, and it shall be fully
exercisable; (ii) if the award is an SAR, it shall vest fully and
completely, any and all restrictions on such SAR shall lapse, and
such SAR shall be converted completely into cash at a price per
share-unit equal to the higher of (x) the highest price paid for
a share of Common Stock, as reported in the New York Stock
Exchange Composite Transactions, during the 120 days prior to and
including the date of the Change in Control, and (y) the highest
price paid (on a national stock exchange or as quoted in the
NASDAQ National Market Issues) for a share of stock of the
corporation or other entity with which or into which the Company
is merged, or if such corporation or other entity is not publicly
traded, then the highest price paid on an exchange or as quoted
in the NASDAQ National Market Issues for a share of stock of a
publicly traded corporation or other entity that owns 50% or more
(directly or indirectly) of such corporation or other entity on
the date of the Change in Control (subject to adjustment pursuant
to Section 6(a)); and (iii) if such award is an award or grant
under Section 8(c) of the Plan, it shall immediately vest fully
and completely, and all restrictions shall lapse, provided,
however, that if the award is performance-based, the earnout or
payout of the award, as applicable, shall be computed based on
the performance terms of the award and based on actual
performance achieved to the date of the Change in Control.  No
acceleration of vesting, exercisability and/or payment of an
outstanding Plan award shall occur in connection with a Change in
Control if either (i) the Company is the surviving entity, or
(ii) the successor to the Company (if any) (or a parent thereof)
agrees in writing prior to the Change in Control to assume the
award; provided, however, that individual awards may provide for
acceleration under these circumstances as contemplated by Section
6(c) below.  Notwithstanding the foregoing provisions of this
Section 6(b), no acceleration of vesting, exercisability and/or
payment of an outstanding Plan award shall occur in connection
with a Change in Control event that would, but for such
acceleration, be accounted for under generally accepted
accounting principles in effect on the date of such Change in
Control as a pooling of interests transaction to the extent that
such acceleration would render pooling accounting unavailable
with respect to the transaction.  If a stock option or other
award is fully vested or becomes fully vested as provided in this
paragraph (or would have become fully vested but for the pooling
provision set forth in the preceding sentence) but is not
exercised or paid prior to a Change in Control triggered by
clause (iii) of the definition thereof and the Company is not the
surviving entity and the successor to the Company (if any) (or a
parent thereof) does not agree in writing prior to the occurrence
of the Change in Control to continue and assume the award
following the Change in Control, or if for any other reason the
award would not continue after the Change in Control, then the
Committee may provide for the settlement in cash of the award
(such settlement to be calculated as though the award was paid or
exercised simultaneously with the Change in Control and based
upon the then Fair Market Value of a share of Common Stock and
subject, in the case of an SAR or performance-based award, to the
Change in Control payment provisions set forth above).  An option
or other award so settled by the Committee shall automatically
terminate.  If,


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in such circumstances, the Committee does not provide for the
cash settlement of an option or other award, then upon the
Change in Control such option or award shall terminate,
subject to any provision that has been made by the Committee
through a plan of reorganization or otherwise for the survival,
substitution or exchange of such option or right; provided that
the option or award holder shall be given reasonable notice of
such intended termination and, subject to the pooling provision
set forth above, an opportunity to exercise the option or award
(to the extent an award other than an option must be exercised in
order for the participant to realize the intended benefits) prior
to or upon the Change in Control.

     (c)  Notwithstanding the provisions of Section 6(b), awards
issued under the Plan may contain specific provisions regarding
the consequences of a Change in Control and, if contained in an
award, those provisions shall be controlling in the event of any
inconsistency.  (For example, and without limitation, an award
may provide that (i) acceleration of vesting will occur
automatically upon a Change in Control, or (ii) acceleration will
occur in connection with a Change in Control if the participant
is terminated by the Company without cause or the participant
terminates employment for good reason.)  The occurrence of a
particular Change in Control under the Plan shall have no affect
on any award granted under the Plan after the date of that Change
in Control.

     (d)  The Committee may make adjustments pursuant to Section 6(a)
and/or deem an acceleration of vesting of awards pursuant to
Section 6(b) to occur sufficiently prior to an event if necessary
or deemed appropriate to permit the participant to realize the
benefits intended to be conveyed with respect to the shares
underlying the award; provided, however, that, the Committee may
reinstate the original terms of an award if the related event
does not actually occur.

     (e)  A "Change in Control" of the Company shall be deemed to
have occurred as of the first day that any one or more of the
following conditions shall have been satisfied:

          (i)  Any Person (other than those Persons in control of the
     Company as of the Effective Time, or other than a trustee or
     other fiduciary holding securities under an employee benefit plan
     of the Company) becomes the Beneficial Owner, directly or
     indirectly, of securities of the Company representing twenty-five
     percent (25%) or more of the combined voting power of the
     Company's then outstanding securities, and for purposes of this
     subsection (i) "Person" or "group" shall not include underwriters
     acquiring newly-issued voting securities (or securities
     convertible into voting securities) directly from the Company
     with a view towards distribution.

          (ii) On any day after the Effective Time (the "Measurement
     Date") Continuing Directors cease for any reason to constitute a
     majority of the Board.  A director is a "Continuing Director" if
     he or she either:

               (1)  was a member of the Board on the applicable
                    Initial Date (an "Initial Director"); or


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               (2)  was elected to the Board, or was nominated
                    for election by the Company's stockholders,
                    by a vote of at least two-thirds (2/3) of the
                    Initial Directors then in office.

     A member of the Board who was not a director on the
     applicable Initial Date shall be deemed to be an Initial
     Director for purposes of clause (2) above if his or her
     election, or nomination for election by the Company's
     stockholders, was approved by a vote of at least two-thirds
     (2/3) of the Initial Directors (including directors elected
     after the applicable Initial Date who are deemed to be
     Initial Directors by application of this provision) then in
     office.  "Initial Date" means the later of (1) the Effective
     Time or (2) the date that is two (2) years before the
     Measurement Date.

          (iii)     The Company is liquidated; all or substantially
     all of the Company's assets are sold in one or a series of related
     transactions; or the Company is merged, consolidated, or
     reorganized with or involving any other corporation, other than a
     merger, consolidation, or reorganization that results in the
     voting securities of the Company outstanding immediately prior
     thereto continuing to represent (either by remaining outstanding
     or by being converted into voting securities of the surviving
     entity) more than sixty percent (60%) of the combined voting
     power of the voting securities of the Company (or such surviving
     entity) outstanding immediately after such merger, consolidation,
     or reorganization.  Notwithstanding the foregoing, an event
     described in this clause (iii) that occurred prior to the
     Effective Time shall not constitute a Change in Control.

"Beneficial Owner" shall have the meaning ascribed to such term
in Rule 13d-3 of the General Rules and Regulations under the 1934
Act.  "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the 1934 Act and used in Sections 13(d) and
14(d) thereof, including a "group" as defined in Section 13(d)
thereof.

7.   FAIR MARKET VALUE

     "Fair Market Value" for all purposes under the Plan shall
mean the closing price of a share of Common Stock as reported on
the composite tape for securities listed on the New York Stock
Exchange (the "Exchange") for the date in question.  If no sales
of Common Stock were made on the Exchange on that date, the
closing price of a share of Common Stock as reported on said
composite tape for the preceding day on which sales of Common
Stock were made on the Exchange shall be substituted.

8.   AWARDS

     The Committee shall determine the type or types of award(s)
to be made to each participant.  Awards may be granted singly, in
combination or in tandem.  Awards also may be made in combination
or in tandem with, in replacement of, as alternatives to, or as
the payment form for grants or rights under any other employee or
compensation plan of the Company, including the plan of any
acquired entity.  The types of awards that may be granted under
the Plan are:


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     (a)  Stock Options-A grant of a right to purchase a specified
number of shares of Common Stock during a specified period as
determined by the Committee.  The purchase price per share for
each option shall be not less than 100% of Fair Market Value on
the date of grant, except that, in the case of a stock option
granted retroactively in tandem with or as a substitution for
another award, the exercise or designated price may be no lower
than the Fair Marked Value of a share on the date such other
award was granted.  A stock option may be in the form of an ISO
which, in addition to being subject to applicable terms,
conditions and limitations established by the Committee, complies
with Section 422 of the Code.  If an ISO is granted, the
aggregate Fair Market Value (determined on the date the option is
granted) of Common Stock subject to an ISO granted to a
participant by the Committee which first becomes exercisable in
any calendar year shall not exceed $100,000.00 (otherwise, the
intended ISO, to the extent of such excess, shall be rendered a
nonqualified stock option).  ISOs may only be granted to key
employees of the Company or a subsidiary.  The maximum term of
each option (ISO or nonqualified) shall be ten (10) years.  The
price at which shares of Common Stock may be purchased under a
stock option shall be paid in full at the time of the exercise in
cash or such other method permitted by the Committee, including
(i) tendering (either actually or by attestation) Common Stock;
(ii) surrendering a stock award valued at Fair Market Value on
the date of surrender; (iii) authorizing a third party to sell
the shares (or a sufficient portion thereof) acquired upon
exercise of a stock option and assigning the delivery to the
Company of a sufficient amount of the sale proceeds to pay for
all the shares acquired through such exercise; or (iv) any
combination of the above.  The Committee may grant stock options
that provide for the award of a new option when the exercise
price of the option and/or tax withholding obligations related to
the exercise of the option have been paid by tendering shares of
Common Stock to the Company or by the Company's reduction of the
number of shares otherwise deliverable to the optionee.  Any new
option grant contemplated by the preceding sentence (the re-load
grant) would cover the number of shares tendered by the optionee
or withheld by the Company with the option purchase price set at
the then current Fair Market Value and would never extend beyond
the remaining term of the originally exercised option.

     (b)  SARs-A right to receive a payment, in cash and/or Common
Stock, equal to the excess of the Fair Market Value of a
specified number of shares of Common Stock on the date the SAR is
exercised over the Fair Market Value on the date the SAR was
granted as set forth in the applicable award agreement, except
that, in the case of a SAR granted retroactively in tandem with
or as a substitution for another award, the exercise or
designated price may be no lower than the Fair Market Value of a
share on the date such other award was granted.  The maximum term
of an SAR shall be ten (10) years.

     (c)  Other Awards-Other awards, granted or denominated in Common
Stock or units of Common Stock, may be granted under the Plan.
Awards not granted or denominated in Common Stock or units of
Common Stock (cash awards) also may be granted consistent with
clause (ii) below.

          (i)  All or part of any stock award may be subject to
     conditions and restrictions established by the Committee, and
     set forth in the award agreement, which may include, but are
     not limited to, continuous service with the Company (or a
     subsidiary or affiliate), achievement of specific business
     objectives, and other measurements of individual, business
     unit or Company performance.  Unless the Committee otherwise


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     provides, awards under this Section 8(c) to employees of the
     Company or a subsidiary that are either granted or become
     vested, exercisable or payable based on attainment of one
     or more of the performance goals related to the business
     criteria identified below, shall be deemed to be intended
     as Performance-Based Awards under Section 8(c)(ii).

          (ii) Without limiting the generality of the foregoing, and in
     addition to stock options and SAR grants, other performance-based
     awards within the meaning of Section 162(m) of the Code
     ("Performance-Based Awards"), whether in the form of restricted
     stock, performance stock, phantom stock or other rights, the
     vesting of which depends on the absolute or relative performance
     of the Company on a consolidated, segment, subsidiary, division,
     or plant basis with reference to revenue growth, net earnings
     (either before or after interest, taxes, depreciation,
     amortization and/or Net Pension Income (as defined below)), cash
     flow, return on equity or on assets or on net investment, cost
     containment or reduction, stock price appreciation, total
     stockholder return, or EVA (as defined below) relative to
     preestablished performance goals, may be granted under the Plan.
     The applicable business criteria and the specific performance
     goals for Performance-Based Awards must be approved by the
     Committee in advance of applicable deadlines under the Code and
     while the performance relating to such goals remains
     substantially uncertain.  The applicable performance period may
     range from one to ten years.  Performance targets shall, to the
     extent determined by the Committee to be equitable and
     appropriate, be adjusted to mitigate the unbudgeted impact of
     material, unusual or nonrecurring gains and losses, accounting
     charges or other extraordinary events not foreseen at the time
     the targets were set.  In no event shall share-based Performance-
     Based Awards granted to any eligible person under this Plan
     exceed the limit set forth in Section 5(e).  In no event shall
     grants to any eligible person under this Plan of Performance-
     Based Awards payable only in cash in any calendar year and not
     related to shares provide for payment of more than $3,000,000.
     Except as otherwise permitted under Section 162(m) of the Code,
     before any Performance-Based Award is paid, the Committee must
     certify that the performance goal and any other material terms of
     the Performance-Based Award were in fact satisfied.  The
     Committee shall have discretion to determine the conditions,
     restrictions or other limitations, in accordance with the terms
     of the Plan and Section 162(m) of the Code, on the payment of
     individual Performance-Based Awards. The Committee may reserve by
     express provision in any award agreement the right to reduce the
     amount payable in accordance with any standards or on any other
     basis (including the Committee's discretion), as the Committee
     may impose.  Performance-Based Awards may be granted only to key
     employees of the Company or a subsidiary.  "EVA" means operating
     profit after tax (which means net earnings after tax but before
     tax adjusted interest income and expense and goodwill
     amortization), less a charge for the use of capital (which is
     based on average total capital and the weighted average cost of
     capital).  "Net Pension Income" means any positive difference
     between income from employee pension plan investments less the
     cost of employee pension benefits for the relevant period of
     time.

9.   DIVIDENDS AND DIVIDEND EQUIVALENTS

     The Committee may provide that any awards under the Plan
earn dividends or dividend equivalents.  Such dividends or
dividend equivalents may be paid currently or may be credited to


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a participant's account.  Any crediting of dividends or dividend
equivalents may be subject to such restrictions and conditions as
the Committee may establish, including reinvestment in additional
shares or share equivalents.

10.  DEFERRALS AND SETTLEMENTS

     Payment of awards may be in the form of cash, Common Stock,
other awards or combinations thereof as the Committee shall
determine, and with such restrictions as it may impose.  The
Committee may also require or permit participants to elect to
defer the issuance of shares or the settlement of awards in cash
under such rules and procedures as it may establish under the
Plan.  It may also provide that deferred settlements include the
payment or crediting of interest on the deferral amounts, or the
payment of crediting of dividend equivalents where the deferral
amounts are denominated in shares.

11.  TRANSFERABILITY AND EXERCISABILITY

     Unless otherwise expressly provided in (or pursuant to) this
Section 11, by applicable law or by the award agreement, (i) all
awards are non-transferable and shall not be subject in any
manner to sale, transfer, anticipation, alienation, assignment,
pledge, encumbrance or charge; (ii) awards shall be exercised
only by the holder; and (iii) amounts payable or shares issuable
pursuant to an award shall be delivered only to (or for the
account of) the holder.  The foregoing exercise and transfer
restrictions shall not apply to: (a) transfers to the Company;
(b) the designation of a beneficiary to receive benefits in the
event of the participant's death or, if the participant has died,
transfers to or exercise by the participant's beneficiary, or, in
the absence of a validly designated beneficiary, transfers by
will or the laws of descent and distribution; (c) transfers
pursuant to a qualified domestic relations order (as defined in
the Code) (in the case of ISOs, to the extent such transfers are
permitted by the Code); (d) if the participant has suffered a
disability, permitted transfers to or exercises on behalf of the
holder by his or her legal representative; or (e) the
authorization by the Committee of "cashless exercise" procedures.
The Committee by express provision in the award or an amendment
thereto may permit an award (other than an ISO) to be transferred
to, exercised by and paid to certain persons or entities related
to the participant, including but not limited to members of the
participant's family, charitable institutions, or trusts or other
entities whose beneficiaries or beneficial owners are members of
the participant's family and/or charitable institutions, or to
such other persons or entities as may be expressly approved by
the Committee, pursuant to such conditions and procedures as the
Committee may establish.  Any permitted transfer shall be subject
to the condition that the Committee receive evidence satisfactory
to it that the transfer is being made for estate and/or tax
planning purposes (or to a "blind trust" in connection with the
participant's termination of employment with the Company (or a
subsidiary or affiliate) to assume a position with a
governmental, charitable, educational or similar non-profit
institution) and on a basis consistent with the Company's lawful
issue of securities.

12.  AWARD AGREEMENTS

     Awards under the Plan shall be evidenced by agreements that
set forth the terms, conditions and limitations for each award
which may include the term of an award, the provisions applicable
in the event the participant's employment terminates, and the
Company's


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authority to unilaterally or bilaterally amend, modify,
suspend, cancel or rescind any award; provided, however, that
such authority shall not extend to the reduction of the exercise
price of a previously granted option, except as provided in
Section 6 hereof.  The Committee need not require the execution
of any such agreement, in which case acceptance of the award by
the respective participant shall constitute agreement to the
terms of the award.

13.  PLAN AMENDMENT

     The plan may only be amended by a disinterested majority of
the Board of Directors as it deems necessary or appropriate to
better achieve the purpose of the Plan, except that no such
amendment shall be made without the approval of the Company's
stockholders which would increase the number of shares available
for issuance under the Plan (except for increases or adjustments
expressly contemplated by Sections 5 and 6).

14.  TAX WITHHOLDING

     The Company shall have the right to deduct from any
settlement of an award made under the Plan, including the
delivery or vesting of shares, a sufficient amount to cover
withholding (at the flat percentage rates applicable to
supplemental wages) of any Federal, state or local taxes required
by law or to take such other action as may be necessary to
satisfy any such withholding obligations.  The Committee may
permit shares to be used to satisfy required tax withholding and
such shares shall be valued at the Fair Market Value as of the
settlement date of the applicable award.

15.  OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS

     Unless otherwise specifically determined by the Committee,
settlements of awards received by participants under the Plan
shall not be deemed a part of a participant's regular, recurring
compensation for purposes of calculating payments or benefits
from any benefit plan or severance program of the Company (or a
subsidiary or affiliate), or any severance pay law of any
country.  Further, the Company may adopt other compensation
programs, plans or arrangements as it deems appropriate or
necessary.

16.  UNFUNDED PLAN

     Unless otherwise determined by the Committee, the Plan shall
be unfunded and shall not create (or be construed to create) a
trust or a separate fund or funds.  The Plan shall not establish
any fiduciary relationship between the Company and any
participant or other person.  To the extent any person holds any
rights by virtue of a grant awarded under the Plan, such rights
(unless otherwise determined by the Committee) shall be no
greater than the rights of an unsecured general creditor of the
Company.

17.  FUTURE RIGHTS

     No person shall have any claim or rights to be granted an
award under the Plan, and no participant shall have any rights
under the Plan to be retained in the employ of the Company (or
any subsidiary or affiliate).


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<PAGE>


18.  GOVERNING LAW; SEVERABILITY; LEGAL COMPLIANCE

     The validity, construction and effect of the Plan, any award
agreements or other documents setting forth the terms of an
award, and any actions taken or relating to the Plan shall be
determined in accordance with the laws of the State of California
and applicable Federal law.  If any provision of the Plan, any
award agreement, or any other document setting forth the terms of
an award shall be held by a court of competent jurisdiction to be
invalid and unenforceable, the remaining provisions of the Plan
or such other document shall continue in effect.

     The Plan, the granting and vesting of awards under the Plan
and the issuance and delivery of Common Stock and/or the payment
of money under the Plan or under awards granted hereunder are
subject to compliance with all applicable federal and state laws,
rules and regulations (including but not limited to state and
federal securities and banking laws) and to such approvals by any
listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in
connection therewith.  Any securities delivered under the Plan
shall be subject to such restrictions as the Company may deem
necessary or desirable to assure compliance with all applicable
legal requirements.

19.  SUCCESSORS AND ASSIGNS

     The Plan shall be binding on all successors and assigns of a
participant, including, without limitation, the estate of such
participant and the executor, administrator or trustee of such
estate, or any receiver or trustee in bankruptcy or
representative of the participant's creditors.

20.  RIGHTS AS A STOCKHOLDER

     Except as otherwise provided in the award agreement, a
participant shall have no rights as a stockholder until he or she
becomes the holder of record of shares of Common Stock.


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