<SUBMISSION>
<ACCESSION-NUMBER>0000950149-04-000793
<TYPE>DEF 14A
<PUBLIC-DOCUMENT-COUNT>3
<PERIOD>20040519
<FILING-DATE>20040415
<EFFECTIVENESS-DATE>20040415
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>WILLIAMS SONOMA INC
<CIK>0000719955
<ASSIGNED-SIC>5700
<IRS-NUMBER>942203880
<STATE-OF-INCORPORATION>CA
<FISCAL-YEAR-END>0131
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>DEF 14A
<ACT>34
<FILE-NUMBER>001-14077
<FILM-NUMBER>04736546
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>3250 VAN NESS AVENUE
<CITY>SAN FRANCISCO
<STATE>CA
<ZIP>94109
<PHONE>415-421-7900
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>3250 VAN NESS AVENUE
<CITY>SAN FRANCISCO
<STATE>CA
<ZIP>94109
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>f97543dfdef14a.htm
<DESCRIPTION>NOTICE & PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>def14a</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<B>UNITED STATES</B>
</DIV>

<DIV align="center">
<B>SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center">
<B>WASHINGTON,&nbsp;D.C. 20549</B>
</DIV>

<P align="center">
<B><FONT size="4">SCHEDULE 14A INFORMATION</FONT></B>

<P align="center">
<B><FONT size="2">Proxy Statement Pursuant to Section&nbsp;14(a)
of the Securities Exchange Act of 1934</FONT></B>

<DIV align="center">
<B><FONT size="2">(Amendment No.&nbsp;&nbsp;)</FONT></B>
</DIV>

<P align="left">
<FONT size="2">Filed by the
Registrant&nbsp;<FONT face="wingdings">&#120;</FONT>
</FONT>

<P align="left">
<FONT size="2">Filed by a Party other than the
Registrant&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">
<FONT size="2">Check the appropriate box:
</FONT>

<DIV align="left">
<FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;Preliminary
Proxy Statement
</FONT>
</DIV>

<DIV align="left">
<FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;Confidential,
for Use of the Commission Only (as permitted by
Rule&nbsp;14a-6(e)(2))
</FONT>
</DIV>

<DIV align="left">
<FONT size="2"><FONT face="wingdings">&#120;</FONT>&nbsp;Definitive
Proxy Statement
</FONT>
</DIV>

<DIV align="left">
<FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;Definitive
Additional Materials
</FONT>
</DIV>

<DIV align="left">
<FONT size="2"><FONT face="wingdings">&#111;</FONT>&nbsp;Soliciting
Material under Rule&nbsp;14a-12
</FONT>
</DIV>

<P align="center">
<B><FONT size="4">Williams-Sonoma, Inc.</FONT></B>

<DIV align="center">
<HR size="1" width="100%" align="center" noshade>
</DIV>

<DIV align="left">
<FONT size="2">(Name of Registrant as Specified In Its Charter)
</FONT>
</DIV>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<DIV align="left">
<FONT size="2">(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
</FONT>
</DIV>

<P align="left">
<FONT size="2">Payment of Filing Fee (Check the appropriate box):
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT face="wingdings">&#120;</FONT></TD>
    <TD align="left">
    No fee required</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT face="wingdings">&#111;</FONT></TD>
    <TD align="left">
    Fee computed on table below per Exchange Act
    Rules&nbsp;14a-6(i)(1) and 0-11</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="16%"></TD>
    <TD width="84%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)</TD>
    <TD align="left">
    Title of each class of securities to which transaction
    applies:&nbsp;<HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)</TD>
    <TD align="left">
    Aggregate number of securities to which transaction
    applies:&nbsp;<HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)</TD>
    <TD align="left">
    Per unit price or other underlying value of transaction computed
    pursuant to Exchange Act Rule&nbsp;0-11 (set forth the amount on
    which the filing fee is calculated and state how it was
    determined):&nbsp;<HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)</TD>
    <TD align="left">
    Proposed maximum aggregate value of
    transaction:&nbsp;<HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)</TD>
    <TD align="left">
    Total fee paid:&nbsp;<HR size="1" align="left" noshade></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT face="wingdings">&#111;</FONT></TD>
    <TD align="left">
    Fee paid previously with preliminary
    materials.&nbsp;<HR size="1" align="left" noshade></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT face="wingdings">&#111;</FONT></TD>
    <TD align="left">
    Check box if any part of the fee is offset as provided by
    Exchange Act Rule&nbsp;0-11(a)(2) and identify the filing for
    which the offsetting fee was paid previously. Identify the
    previous filing by registration statement number, or the form or
    schedule and the date of its filing.</TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="16%"></TD>
    <TD width="84%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)</TD>
    <TD align="left">
    Amount Previously Paid:&nbsp;<HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)</TD>
    <TD align="left">
    Form, Schedule or Registration Statement
    No.:&nbsp;<HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)</TD>
    <TD align="left">
    Filing Party:&nbsp;<HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)</TD>
    <TD align="left">
    Date Filed:&nbsp;<HR size="1" align="left" noshade></TD>
</TR>

</TABLE>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<IMG src="f97543dff97543l2.gif" alt="(WILLIAMS-SONOMA LOGO)">
</DIV>

<DIV align="center">
<B><FONT size="2">3250 Van Ness Avenue</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">San&nbsp;Francisco, California 94109</FONT></B>
</DIV>

<P align="center">
<B>NOTICE OF 2004 ANNUAL MEETING OF SHAREHOLDERS</B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="26%"></TD>
    <TD width="1%"></TD>
    <TD width="73%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">MEETING DATE:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Wednesday, May&nbsp;19, 2004
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">TIME:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">9:00&nbsp;a.m. Central Daylight Time
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">PLACE:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Williams-Sonoma,&nbsp;Inc. Southern Operations
    Center <BR>
     4600 Sonoma Cove <BR>
     Memphis, Tennessee 38118
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">ITEMS OF BUSINESS:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">1)&nbsp;The election of our Board of Directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">2)&nbsp;The amendment and restatement of the
    Williams-Sonoma,&nbsp;Inc. 2001 Stock Option Plan to
    (i)&nbsp;increase the shares issuable under the plan by
    3,500,000&nbsp;shares, and (ii)&nbsp;provide for the issuance of
    stock options, restricted stock and deferred stock awards;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">3)&nbsp;The ratification of the selection of
    Deloitte&nbsp;&#38; Touche LLP as our independent auditors for
    the fiscal year ending January&nbsp;30, 2005; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">4)&nbsp;Such other business as may properly come
    before the meeting or any adjournment or postponement of the
    meeting.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">WHO CAN VOTE:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">You may vote if you were a shareholder of record
    as of March&nbsp;29, 2004.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">DATE OF MAILING:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">This notice, the Proxy Statement and the Annual
    Report are first being mailed to shareholders on or about
    April&nbsp;15, 2004.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By Order of the Board of Directors
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Seth R. Jaffe
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Secretary
    </FONT></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="2">YOUR VOTE IS IMPORTANT</FONT></B>

<P align="left">
<FONT size="2">Instructions for submitting your proxy are
summarized in the Proxy Statement and on your proxy card. It is
important that your shares be represented and voted at the
Annual Meeting. Please submit your proxy via the Internet, by
telephone, or mark, sign, date and promptly return the enclosed
proxy card in the enclosed envelope. Any proxy may be revoked at
any time prior to its exercise at the Annual Meeting.
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="center">
<IMG src="f97543dff97543l2.gif" alt="(WILLIAMS-SONOMA LOGO)">
</DIV>

<DIV align="center">
<B><FONT size="2">3250 Van Ness Avenue</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">San&nbsp;Francisco, California 94109</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">www.williams-sonomainc.com</FONT></B>
</DIV>

<P align="center">
<B>PROXY STATEMENT FOR 2004 ANNUAL MEETING OF SHAREHOLDERS</B>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<P align="center">
<B><FONT size="2">GENERAL INFORMATION</FONT></B>

<P align="left">
<FONT size="2">Our Board of Directors is soliciting this Proxy
Statement and the enclosed proxy card for use at our 2004 Annual
Meeting of Shareholders, to be held on Wednesday, May&nbsp;19,
2004 at 9:00&nbsp;a.m. Central Daylight Time, and for any
adjournment or postponement of the meeting. Our Annual Meeting
will be held at our Southern Operations Center located at 4600
Sonoma Cove, Memphis, Tennessee 38118. Our Annual Report to
Shareholders for the fiscal year ended February&nbsp;1, 2004, or
fiscal 2003, including our financial statements for fiscal 2003,
is also enclosed. These proxy materials are first being mailed
to shareholders on or about April&nbsp;15, 2004.
</FONT>

<P align="left">
<B><FONT size="2">What is the purpose of the Annual
Meeting?</FONT></B>

<P align="left">
<FONT size="2">Shareholders will be asked to vote on the
following matters:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The election of our Board of Directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The amendment and restatement of our 2001 Stock
    Option Plan to (i)&nbsp;increase the shares issuable under the
    plan by 3,500,000&nbsp;shares, and (ii)&nbsp;provide for the
    issuance of stock options, restricted stock and deferred stock
    awards;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The ratification of the selection of
    Deloitte&nbsp;&#38; Touche LLP as our independent auditors for
    the fiscal year ending January&nbsp;30, 2005;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Such other business as may properly come before
    the meeting or any adjournment or postponement of the meeting,
    including shareholder proposals. At this time, we do not know of
    any other matters to be brought before the Annual Meeting.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Who may vote?</FONT></B>

<P align="left">
<FONT size="2">Only shareholders of record at the close of
business on March&nbsp;29, 2004, the record date, are entitled
to receive notice of and to vote at the Annual Meeting. Each
holder of our common stock will be entitled to one vote for each
share of our common stock owned as of the record date. As of the
record date, there were 115,927,858&nbsp;shares of our common
stock outstanding and entitled to vote, and there were
522&nbsp;shareholders of record, which number does not include
shares held in the name of a bank or brokerage firm. We do not
have any outstanding shares of preferred stock.
</FONT>

<P align="left">
<B><FONT size="2">How do&nbsp;I vote?</FONT></B>

<P align="left">
<FONT size="2">You may vote in person at the Annual Meeting,
electronically by submitting your proxy through the Internet, by
telephone or by returning the enclosed proxy card in the
enclosed envelope before the Annual Meeting. Proxies properly
executed, timely returned to us and not revoked will be voted in
accordance with the instructions contained in the proxy. If any
matter not described in this Proxy Statement is properly
presented for action at the meeting, the persons named in the
enclosed proxy will have discretionary authority to vote
according to their best judgment.
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center">
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B><FONT size="2">How do&nbsp;I vote electronically or by
telephone?</FONT></B>

<P align="left">
<FONT size="2">You may vote electronically by submitting your
proxy through the Internet or by telephone. The Internet and
telephone voting procedures are designed to authenticate your
identity as a Williams-Sonoma, Inc. shareholder, to allow you to
vote your shares and to confirm that your instructions have been
properly recorded. Specific instructions to be followed for
voting via the Internet or by telephone are summarized below in
this Proxy Statement and on your proxy card.
</FONT>

<P align="left">
<I><FONT size="2">Shares Registered Directly in the Name of the
Shareholder</FONT></I>

<P align="left">
<FONT size="2">If your shares are registered directly in your
name in our stock records maintained by our transfer agent,
Wells Fargo Shareowner Services, then you may vote your shares:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">on the Internet at
    <U>www.eproxy.com/wsm/</U>;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by calling Wells Fargo Shareowner Services from
    within the United States at 800-560-1965.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Proxies for shares registered directly in your
name that are submitted through the Internet or by telephone
must be received before noon Central Daylight Time on
May&nbsp;18, 2004.
</FONT>

<P align="left">
<I><FONT size="2">Shares Registered in the Name of a Brokerage
Firm or Bank</FONT></I>

<P align="left">
<FONT size="2">If your shares are held in an account at a
brokerage firm or bank, you should follow the voting
instructions on your proxy card.
</FONT>

<P align="left">
<B><FONT size="2">What if&nbsp;I return my proxy card but do not
provide voting instructions?</FONT></B>

<P align="left">
<FONT size="2">If a signed proxy card is returned without any
indication on how your shares should be voted, votes will be
cast &#147;FOR&#148; the election of the directors named in this
Proxy Statement; &#147;FOR&#148; the described amendment and
restatement of our 2001 Stock Option Plan; and &#147;FOR&#148;
the ratification of the selection of Deloitte&nbsp;&#38; Touche
LLP as our independent auditors for the fiscal year ending
January&nbsp;30, 2005.
</FONT>

<P align="left">
<B><FONT size="2">How many votes must be present to hold the
Annual Meeting?</FONT></B>

<P align="left">
<FONT size="2">Shareholders holding a majority of our
outstanding shares as of the record date must be present in
person or by proxy at the Annual Meeting so that we may transact
business. This is known as a quorum. Shares that are voted in
person or by the Internet, telephone or signed proxy card, and
abstentions and broker non-votes, will be included in the
calculation of the number of shares considered to be present for
purposes of determining whether there is a quorum at the Annual
Meeting.
</FONT>

<P align="left">
<B><FONT size="2">What is a broker non-vote?</FONT></B>

<P align="left">
<FONT size="2">The term broker non-vote refers to shares that
are held of record by a broker for the benefit of the
broker&#146;s clients but that are not voted at the Annual
Meeting on non-routine matters because a broker did not receive
instructions from the broker&#146;s clients on how to vote the
shares and, therefore, was prohibited from voting the shares.
</FONT>

<P align="left">
<B><FONT size="2">What is cumulative voting and when does it
occur?</FONT></B>

<P align="left">
<FONT size="2">Cumulative voting is a system of shareholder
voting to elect directors which allows a shareholder to cast all
of the shareholder&#146;s votes for a single director or
multiple directors. If a shareholder requests that cumulative
voting take place, then every shareholder entitled to vote may
cumulate votes for director nominees, and you will be entitled
to cast as many votes as are equal to the number of shares owned
by you as of the record date multiplied by the number of
directors to be elected. To engage in cumulative voting, a
shareholder entitled to vote at the Annual Meeting must give
notice of the shareholder&#146;s intention to cumulate votes
before voting begins. If that occurs, you may cumulate votes
only with respect to the election of director nominees whose
names were placed in nomination prior to the voting for
directors. Your cumulative votes may be cast for one director
nominee or distributed among two or more director
</FONT>

<P align="center"><FONT size="2">2
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">nominees. For example, if you owned
100&nbsp;shares of our common stock as of the record date and
eight directors were being elected, you would have 800 votes
(100&nbsp;shares multiplied by eight directors) to cast for one
or more of the director nominees at the Annual Meeting.
</FONT>
</DIV>

<P align="left">
<FONT size="2">A director elected by cumulative voting only can
be removed without cause by the same cumulative <BR>
 voting standards.
</FONT>

<P align="left">
<FONT size="2">As of the date of this Proxy Statement, we have
not received notice that any shareholder has requested the
ability to cumulate votes for directors.
</FONT>

<P align="left">
<B><FONT size="2">How many votes are needed to elect
directors?</FONT></B>

<P align="left">
<FONT size="2">The eight director nominees receiving the highest
number of votes at the Annual Meeting will be elected as
directors. This is called a plurality. Your proxy will be voted
in accordance with your instructions. If no instructions are
given, the proxy holders will vote &#147;FOR&#148; each of the
director nominees. Since directors are elected by a plurality,
broker non-votes and abstentions will have no effect on the
outcome of the election.
</FONT>

<P align="left">
<B><FONT size="2">How many votes are needed to approve Proposals
2 and 3?</FONT></B>

<P align="left">
<FONT size="2">Proposal No.&nbsp;2, amendment and restatement of
our 2001 Stock Option Plan, requires the affirmative vote of a
majority of our outstanding shares of common stock. Proxy cards
marked &#147;abstain&#148; and broker non-votes will have the
effect of a &#147;NO&#148; vote on Proposal&nbsp;2.
</FONT>

<P align="left">
<FONT size="2">Proposal No.&nbsp;3, ratification of auditors,
requires the affirmative vote of a majority of the shares
represented and voting at the Annual Meeting and a majority of
the quorum required to transact business at the Annual Meeting.
Proxy cards marked &#147;abstain&#148; and broker non-votes are
not counted as votes cast. Proxy cards marked
&#147;abstain&#148; or broker non-votes will have the effect of
a &#147;NO&#148; vote on Proposal&nbsp;3 if the number of
affirmative votes is a majority of the votes cast but does not
constitute a majority of the quorum required to transact
business at the Annual Meeting.
</FONT>

<P align="left">
<B><FONT size="2">Are there any shareholder proposals this
year?</FONT></B>

<P align="left">
<FONT size="2">No, we did not receive notice before
March&nbsp;3, 2004, of any shareholder proposals for this
year&#146;s Annual Meeting.
</FONT>

<P align="left">
<B><FONT size="2">What if&nbsp;I want to change my
vote(s)?</FONT></B>

<P align="left">
<FONT size="2">You may revoke your proxy prior to the close of
voting at the Annual Meeting by any of the following methods:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">sending written notice of revocation to our
    Secretary;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">sending a signed proxy card bearing a later date
    to our Secretary;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">attending the Annual Meeting, revoking your proxy
    and voting in person.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">What is householding?</FONT></B>

<P align="left">
<FONT size="2">Householding is a cost-cutting procedure used by
us and approved by the Securities and Exchange Commission, or
SEC. Under the householding procedure, we send only one Annual
Report and Proxy Statement to shareholders of record who share
the same address and last name, unless one of those shareholders
notifies us that the shareholder would like a separate Annual
Report and Proxy Statement. A separate proxy card is included in
the materials for each shareholder of record. If you wish to
update your participation in householding, you may contact your
broker or the mailing agent, ADP Investor Communication
Services, at 800-542-1061.
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">3
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B><FONT size="2">What if&nbsp;I received more than one proxy
card?</FONT></B>

<P align="left">
<FONT size="2">If you received more than one proxy card, it
means that you have multiple accounts with brokers and/or our
transfer agent. You need to complete each proxy card in order to
vote all of your shares. If you are interested in consolidating
your accounts, you may contact your broker or our transfer
agent, Wells Fargo Shareowner Services, at 800-468-9716.
</FONT>

<P align="left">
<B><FONT size="2">Who pays the expenses incurred in connection
with the solicitation of proxies?</FONT></B>

<P align="left">
<FONT size="2">We pay all of the expenses incurred in preparing,
assembling and mailing this Proxy Statement and the materials
enclosed. We have retained Skinner&nbsp;&#38; Company to assist
in the solicitation of proxies at an estimated cost to us of
$5,000. Some of our officers or employees may solicit proxies
personally or by telephone or other means. None of those
officers or employees will receive special compensation for
such&nbsp;services.
</FONT>

<P align="center"><FONT size="2">4
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">PROPOSAL&nbsp;1</FONT></B>

<P align="center">
<B><FONT size="2">ELECTION OF DIRECTORS</FONT></B>

<P align="left">
<B><FONT size="2">What is this proposal?</FONT></B>

<P align="left">
<FONT size="2">This is a proposal to elect our Board of
Directors.
</FONT>

<P align="left">
<B><FONT size="2">How many members are on our Board?</FONT></B>

<P align="left">
<FONT size="2">Our Board consists of eight members who are
elected annually.
</FONT>

<P align="left">
<B><FONT size="2">Has the Board determined which directors are
independent?</FONT></B>

<P align="left">
<FONT size="2">The Board has determined that Sanjiv Ahuja,
Adrian D.P. Bellamy, Jeanne P. Jackson, Michael R. Lynch and
Richard T. Robertson do not have a material relationship with us
and are independent within the meaning of the New&nbsp;York
Stock Exchange, or NYSE, and SEC director independence
standards, as currently in effect. Further, our Board committees
satisfy the independence requirements of the NYSE. The
Board&#146;s independence determination was based on information
provided by our directors and discussions among our officers and
directors.
</FONT>

<P align="left">
<B><FONT size="2">How often did our Board meet in fiscal
2003?</FONT></B>

<P align="left">
<FONT size="2">During fiscal 2003, our Board held a total of
five meetings and acted by unanimous written consent on two
occasions. Each incumbent director attended at least 75% of the
total of our Board meetings held during the time the director
served as a member of our Board.
</FONT>

<P align="left">
<B><FONT size="2">What is our policy for director attendance at
the Annual Meeting?</FONT></B>

<P align="left">
<FONT size="2">Our policy is that directors who are up for
election at our Annual Meeting should attend the Annual Meeting.
Each of the incumbent directors attended our 2003 Annual
Meeting, except for Mr.&nbsp;Ahuja who joined our Board after
our 2003 Annual Meeting had taken place.
</FONT>

<P align="left">
<B><FONT size="2">How can shareholders communicate with members
of the Board?</FONT></B>

<P align="left">
<FONT size="2">Shareholders may send written communications to
the Board or to any of the directors at the following address:
Secretary, Williams-Sonoma,&nbsp;Inc., 3250 Van Ness Avenue,
San&nbsp;Francisco, California 94109. All communications will be
compiled by our Secretary and submitted to the Board or an
individual director, as appropriate, on a periodic basis.
</FONT>

<P align="left">
<B><FONT size="2">Does the Board hold executive
sessions?</FONT></B>

<P align="left">
<FONT size="2">It is the Board&#146;s policy to have a separate
meeting time for independent directors, typically during the
regularly scheduled Board meetings. To date, the executive
sessions have not been led by a lead independent director.
</FONT>

<P align="left">
<B><FONT size="2">What will happen if a nominee is unwilling or
unable to serve prior to the Annual Meeting?</FONT></B>

<P align="left">
<FONT size="2">Our Board has no reason to believe that any of
the nominees will be unwilling or unable to serve as a director.
However, should a nominee become unwilling or unable to serve,
our Nominations and Corporate Governance Committee would
nominate another person or persons to stand for election, and
your proxies would be voted for the person or persons selected
by the committee.
</FONT>

<P align="left">
<B><FONT size="2">How are the directors compensated?</FONT></B>

<P align="left">
<FONT size="2">Directors do not presently receive any cash
compensation for their service on our Board or Board committees.
As their exclusive compensation relating to Board and Board
committee service, non-employee directors are awarded stock
options. Specifically, we grant each non-employee director an
option
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">5
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">to purchase 13,500&nbsp;shares of our common
stock upon the non-employee director&#146;s initial election to
our Board. In 2004, we increased the annual compensation to our
non-employee directors from an option to purchase
10,500&nbsp;shares of our common stock to an option to purchase
12,500&nbsp;shares of our common stock. In addition, in 2004, we
approved the annual grant to each chairperson of a Board
committee of an option to purchase 1,000&nbsp;shares of our
common stock. The exercise price of these options is equal to
the fair market value of our common stock on the date of the
option grant. These options granted to our non-employee
directors vest one year from the date of grant. In addition, we
reimburse travel expenses related to attending Board, committee
or our business meetings and offer discounts on our merchandise
to all non-employee directors and their immediate families.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Are there any family or other special
relationships among the director nominees and our executive
officers?</FONT></B>

<P align="left">
<FONT size="2">No, there are no family relationships between any
director nominee or executive officer and any other director
nominee or executive officer. There are no arrangements or
understandings between any director nominee or executive officer
and any other person pursuant to which he or she has been or
will be selected as our director and/or executive officer.
</FONT>

<P align="left">
<B><FONT size="2">Were any incumbent directors not elected at
the 2003 Annual Meeting?</FONT></B>

<P align="left">
<FONT size="2">Yes, Mr.&nbsp;Ahuja was elected to the Board on
August&nbsp;27, 2003, a date subsequent to the date of our 2003
Annual Meeting. Mr.&nbsp;Ahuja was appointed to fill a vacancy
on our Board and was introduced to our Board by Edward A.
Mueller, our Chief Executive Officer.
</FONT>

<P align="left">
<B><FONT size="2">Information Regarding the Director
Nominees</FONT></B>

<P align="left">
<FONT size="2">The following table sets forth information, as of
March&nbsp;31, 2004, with respect to each director nominee.
Except for Mr.&nbsp;Ahuja, all nominees currently serving on our
Board were elected at our 2003 Annual Meeting. Each director
nominee furnished the biographical information set forth below.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Director</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Nominee</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Since</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Position with the Company and Recent Business Experience</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">W. Howard Lester
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1979</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Chairman since 1986
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;68
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Chief Executive Officer,
    1979&nbsp;&#150; 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Director of Harold&#146;s Department
    Stores,&nbsp;Inc. (retail sales)
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Edward A. Mueller
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1999</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Chief Executive Officer since 2003
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;56
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;President and Chief Executive Officer
    of Ameritech (telecommunications), 2000&nbsp;&#150;&nbsp;2002
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;President of SBC International
    Operations (telecommunications), 1999&nbsp;&#150;&nbsp;2000
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;President and Chief Executive Officer
    of Pacific Bell (telecommunications), 1997&nbsp;&#150;&nbsp;1999
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sanjiv Ahuja
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Chief Executive Officer of Orange SA
    (wireless
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;47
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;<FONT size="2">&nbsp;communications) since 2004
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Chief Operating Officer of Orange SA,
    2003&nbsp;&#150;&nbsp;2004
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Chief Executive Officer of Comstellar
    Technologies (telecommunications), 2000&nbsp;&#150;&nbsp;2003
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;President of Telcordia Technologies
    (telecommunications), 1997&nbsp;&#150;&nbsp;2000
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Director of Network
    Appliance,&nbsp;Inc. (computer networks)
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="29%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Director</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Nominee</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Since</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Position with the Company and Recent Business Experience</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adrian D.P. Bellamy
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1997</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Chairman of the Compensation
    Committee and member of the
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;62
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;<FONT size="2">&nbsp;Nominations and Corporate Governance
    and Audit Committees
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Executive Chairman and Director of
    The Body Shop International PLC (personal care products) since
    2002
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Chairman and Director of:
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&#149;&nbsp;Gucci Group N.V. (luxury
    goods)
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&#149;&nbsp;Reckitt Benckiser PLC
    (household, personal, health and food&nbsp;products)
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Director of:
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&#149;&nbsp;Gap,&nbsp;Inc. (clothing)
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&#149;&nbsp;The Robert Mondavi
    Corporation (wine)
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Patrick J. Connolly
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1983</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Executive Vice President, Chief
    Marketing Officer
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;57
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;<FONT size="2">&nbsp;since 2000
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Executive Vice President, General
    Manager, Catalog, 1995&nbsp;&#150;&nbsp;2000
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jeanne P. Jackson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Member of the Audit and Compensation
    Committees
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;52
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Founding Partner of MSP Capital
    (strategy and investment services) since 2002
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;President and Chief Executive
    Officer, Walmart.com (on-line retail), 2000&nbsp;&#150;&nbsp;2002
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;President and Chief Executive Officer
    of Banana Republic,<BR>&nbsp;&nbsp;division of Gap,&nbsp;Inc.
    (clothing), 1995&nbsp;&#150;&nbsp;2000
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;President and Chief Executive
    Officer, Gap Inc. Direct (division of Gap,&nbsp;Inc.),
    1998&nbsp;&#150;&nbsp;2000
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Director of:
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&#149;&nbsp;McDonalds Corporation
    (fast food)
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&#149;&nbsp;Nike,&nbsp;Inc. (athletic
    apparel)
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&#149;&nbsp;Nordstrom,&nbsp;Inc.
    (apparel)
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;&nbsp;<FONT size="2">&#149;&nbsp;The United States Ski and
    Snowboard Teams (sports&nbsp;programs)
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael R. Lynch
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Chairman of the Nominations and
    Corporate Governance and
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;52
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    &nbsp;<FONT size="2">&nbsp;Audit Committees
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Managing Director of Goldman,
    Sachs&nbsp;&#38; Co. (investment banking)
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Richard T. Robertson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Member of the Compensation Committee
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;58
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;President of Warner Bros. Domestic
    Television Distribution (entertainment)&nbsp;since 1989
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE &#147;FOR&#148; THE ELECTION OF ALL OF THE
DIRECTORS LISTED ABOVE.</FONT></B>

<P align="left">
<B><FONT size="2">What is our Director Emeritus program, and
when was it initiated?</FONT></B>

<P align="left">
<FONT size="2">In 2003, we initiated our Director Emeritus
program for directors who have, in the opinion of the Board,
provided long and meritorious service as members of the Board.
Individuals who accept appointment to the position of Director
Emeritus agree to provide advisory and consulting services on
such business matters as the Board may determine. These
individuals may attend meetings of the Board but do not vote on
Board&nbsp;matters.
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B><FONT size="2">Information Regarding Directors
Emeritus</FONT></B>

<P align="left">
<FONT size="2">The following table sets forth information, as of
March&nbsp;31, 2004, with respect to each Director Emeritus.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="55%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Director</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Emeritus</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Director Emeritus</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Since</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Position with the Company and Business Experience</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Charles E. Williams
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Director, 1973&nbsp;&#150;&nbsp;2003
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;88
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Vice Chairman,
    1986&nbsp;&#150;&nbsp;2003
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Founder
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">James A. McMahan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Director, 1979&nbsp;&#150;&nbsp;2003
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;81
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;Chief Executive Officer of McMahan
    Furniture Stores (furniture),<BR>
    1947&nbsp;&#150;&nbsp;1999
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">What are the committees of our
Board?</FONT></B>

<P align="left">
<FONT size="2">Our Board has the following committees, with the
following members as of March&nbsp;31, 2004:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Meetings in</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Committee and Members</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Functions of Committee</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fiscal 2003</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Audit:<BR>
    </FONT></B><FONT size="2">Michael R. Lynch, Chairman<BR>
    Adrian D.P. Bellamy<BR>
    Jeanne P. Jackson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;&nbsp;Monitors the integrity of
    financial reports and other financial information prepared by
    us;<BR>
    &#149;&nbsp;&nbsp;Appoints and/or replaces any registered public
    accounting firm issuing an audit report or performing other
    audit, review or attest services;<BR>
    &#149;&nbsp;&nbsp;Reviews the performance of our internal audit
    function, independent auditors and our auditing, accounting and
    financial reporting procedures;<BR>
    &#149;&nbsp;&nbsp;Monitors our compliance with legal and
    regulatory requirements; and<BR>
    &#149;&nbsp;&nbsp;Monitors our system of internal controls.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Compensation:<BR>
    </FONT></B><FONT size="2">Adrian D.P.
    Bellamy,<BR>&nbsp;&nbsp;Chairman<BR>
    Jeanne P. Jackson<BR>
    Richard T. Robertson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;&nbsp;Reviews and determines our
    executive officers&#146;&nbsp;compensation;<BR>
    &#149;&nbsp;&nbsp;Reviews and determines our general
    compensation goals and guidelines for our employees;<BR>
    &#149;&nbsp;&nbsp;Reviews and determines our compensation policy
    for our non-employee directors; and<BR>
    &#149;&nbsp;&nbsp;Administers certain of our compensation plans
    and provides assistance and recommendations with respect to
    other compensation plans.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <B><FONT size="2">Nominations and Corporate
    Governance:<BR>&nbsp;&nbsp;&nbsp;</FONT></B><FONT size="2">Michael
    R. Lynch, Chairman<BR>&nbsp;&nbsp;&nbsp;Adrian D.P. Bellamy
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;&nbsp;&nbsp;Reviews and recommends
    corporate<BR>
    governance policies;<BR>
    &#149;&nbsp;&nbsp;Identifies and makes recommendations for
    nominees for director and considers criteria for selecting
    director candidates;<BR>
    &#149;&nbsp;&nbsp;Considers shareholders&#146; director
    nominations; and<BR>
    &#149;&nbsp;&nbsp;Evaluates the performance of our Chief
    Executive Officer and oversees the evaluation of the performance
    of our management and our Board.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">8
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B><FONT size="2">Did all of the committee members attend at
least 75% of the committee meetings in fiscal 2003?</FONT></B>

<P align="left">
<FONT size="2">Each committee member attended at least 75% of
his or her respective committee meetings in fiscal 2003, except
that Ms.&nbsp;Jackson was unable to attend one of the three
Audit Committee meetings that occurred while she was a member.
</FONT>

<P align="left">
<B><FONT size="2">Will our Nominations and Corporate Governance
Committee consider nominees recommended
by&nbsp;shareholders?</FONT></B>

<P align="left">
<FONT size="2">Yes, our Nominations and Corporate Governance
Committee will consider nominees recommended by shareholders
provided that such nominees are submitted pursuant to the
procedures and timelines described in the &#147;Nominations and
Corporate Governance Committee Report&#148; and
&#147;Shareholder Proposals&#148; sections of this Proxy
Statement.
</FONT>

<P align="left">
<B><FONT size="2">Are there any disclosures relating to
Compensation Committee interlocks and insider
participation?</FONT></B>

<P align="left">
<FONT size="2">During fiscal 2003, none of our executive
officers served as a member of the Board of Directors or
Compensation Committee of any entity that has one or more
executive officers serving as a member of our Board or
Compensation Committee.
</FONT>

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<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

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<P align="center"><FONT size="2">9
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<P align="center">
<B><FONT size="2">PROPOSAL&nbsp;2</FONT></B>

<P align="center">
<B><FONT size="2">AMENDMENT AND RESTATEMENT OF OUR 2001 STOCK
OPTION PLAN</FONT></B>

<P align="left">
<B><FONT size="2">What is this proposal?</FONT></B>

<P align="left">
<FONT size="2">This is a proposal to amend and restate our 2001
Stock Option Plan, so that we can use it to attract and retain
employees to achieve our goals and also receive a federal income
tax deduction for certain compensation paid under the plan. The
amended and restated plan will be renamed the 2001 Long-Term
Incentive Plan and is attached to this Proxy Statement as
Exhibit&nbsp;A.
</FONT>

<P align="left">
<B><FONT size="2">Has our Board approved the amended and
restated plan?</FONT></B>

<P align="left">
<FONT size="2">On March&nbsp;16, 2004, our Board approved the
amended and restated plan, subject to approval from our
shareholders at the Annual Meeting. Our named executive officers
and directors have an interest in this&nbsp;proposal.
</FONT>

<P align="left">
<B><FONT size="2">What changes are being made to the current
plan?</FONT></B>

<P align="left">
<FONT size="2">The plan in place today allows us to only grant
awards in the form of stock options. The amended and restated
plan will increase the number of authorized shares of our common
stock available for grant by 3,500,000&nbsp;shares and will
allow us to grant a wider range of awards, including restricted
stock and deferred stock awards. The changes will help us to
achieve our goal of attracting, retaining and motivating our
talented employees. The amended and restated plan will also help
us to increase shareholder value by enabling us to link some of
the vesting of awards to our performance. We also should be able
to receive a federal income tax deduction for certain
compensation paid under the plan.
</FONT>

<P align="left">
<B><FONT size="2">How many shares are available for issuance
under the amended and restated plan?</FONT></B>

<P align="left">
<FONT size="2">The plan initially reserved for grant up to
5,000,000&nbsp;shares of our common stock. As of March&nbsp;29,
2004, 4,248,062 of these initial shares were subject to
outstanding options and 633,329 of these initial shares remained
available for grant. The amended and restated plan will increase
the number of shares reserved for grant by
3,500,000&nbsp;shares. No more than 30% of the shares available
under the amended and restated plan as of the date of
shareholder approval may be issued as restricted stock or
deferred stock awards.
</FONT>

<P align="left">
<B><FONT size="2">Summary of the amended and restated
plan</FONT></B>

<P align="left">
<FONT size="2">The following questions and answers provide a
summary of the principal features of the amended and restated
plan and its operation. This summary is qualified in its
entirety by the 2001 Long-Term Incentive Plan attached hereto as
Exhibit A.
</FONT>

<P align="left">
<B><FONT size="2">What types of awards are available under the
plan?</FONT></B>

<P align="left">
<FONT size="2">We may grant the following types of incentive
awards under the plan: (i)&nbsp;stock options;
(ii)&nbsp;restricted stock; and (iii)&nbsp;deferred stock awards.
</FONT>

<P align="left">
<B><FONT size="2">Who administers the plan?</FONT></B>

<P align="left">
<FONT size="2">A committee of at least two non-employee members
of our Board administers the plan. To make grants to our
officers or directors, the members of the committee must qualify
as &#147;non-employee directors&#148; under Rule&nbsp;16b-3 of
the Securities Exchange Act of 1934. Members of the committee
must also qualify as &#147;outside directors&#148; under
Section&nbsp;162(m) of the Internal Revenue Code so that we can
receive a federal tax deduction for certain compensation paid
under the plan to our Chief Executive Officer and the next four
highest paid employees. The committee may delegate its authority
under the plan to two or more members of the Board, but only
with respect to grants to certain of our employees with a
corporate rank below senior vice president.
</FONT>

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<P align="left">
<B><FONT size="2">What are the powers of the
committee?</FONT></B>

<P align="left">
<FONT size="2">Subject to the terms of the plan, the committee
has the sole discretion to (i)&nbsp;select the employees and
directors who will receive awards, (ii)&nbsp;determine the terms
and conditions of awards such as the exercise price and vesting
schedule, and (iii)&nbsp;interpret the provisions of the plan
and outstanding awards. The committee may not reduce the
exercise price of stock options, nor may it allow employees to
cancel an existing stock option in exchange for a new award,
without prior consent from our shareholders.
</FONT>

<P align="left">
<B><FONT size="2">Who is eligible to receive awards?</FONT></B>

<P align="left">
<FONT size="2">The committee selects the employees and
non-employee directors who will be granted awards under the
plan. In addition, our non-employee directors receive awards
under the plan as compensation for being a director. The actual
number of employees and non-employee directors who will receive
an award under the plan cannot be determined in advance because
the committee has the discretion to select the participants. As
of February&nbsp;1, 2004, approximately 392 employees and five
non-employee directors were eligible to participate in the plan.
</FONT>

<P align="left">
<B><FONT size="2">What awards may non-employee directors
receive?</FONT></B>

<P align="left">
<FONT size="2">Non-employee directors are eligible for any of
the awards available under the plan. In addition, our
non-employee directors will receive annual grants of
nonqualified stock options in connection with their service on
our Board. Each new non-employee director will receive an option
to purchase a number of shares of our common stock determined by
the committee upon his or her election to the Board and annually
thereafter on the date of our Annual Meeting provided that he or
she has then served as a non-employee director for at least
three months. For 2004, each new non-employee director will
receive an option to purchase 13,500&nbsp;shares of our common
stock upon the director&#146;s election to the Board and each
continuing non-employee director who has served as a
non-employee director for at least three months will receive an
option to purchase 12,500&nbsp;shares of our common stock. In
addition, each chairperson of a Board committee will receive an
option to purchase 1,000&nbsp;shares of our common stock. The
exercise price of each option granted to a non-employee director
shall be equal to 100% of the fair market value on the date of
grant of the shares covered by the option. Subject to the terms
of the plan, the committee determines the other terms and
conditions applicable to the options.
</FONT>

<P align="left">
<B><FONT size="2">What is a stock option?</FONT></B>

<P align="left">
<FONT size="2">A stock option is the right to acquire shares of
our common stock at a fixed exercise price for a fixed period of
time. Under the plan, the committee may grant nonqualified stock
options and incentive stock options. Our practice has been to
grant nonqualified stock options under the plan. The committee
will determine the number of shares covered by each option, but
the committee may not grant options covering more than
1,000,000&nbsp;shares to any one person during any calendar year.
</FONT>

<P align="left">
<B><FONT size="2">What is the exercise price of an
option?</FONT></B>

<P align="left">
<FONT size="2">The exercise price of the shares subject to each
option is set by the committee, but cannot be less than 100% of
the fair market value on the date of grant of the shares covered
by the options.
</FONT>

<P align="left">
<B><FONT size="2">When can an option be exercised?</FONT></B>

<P align="left">
<FONT size="2">An option granted under the plan generally cannot
be exercised until it vests. The committee establishes the
vesting schedule of each option at the time of grant. Options
granted under the plan expire at the times established by the
committee, but not later than 10&nbsp;years after the grant date.
</FONT>

<P align="left">
<B><FONT size="2">How can optionees pay us for the exercise
price of an option?</FONT></B>

<P align="left">
<FONT size="2">The exercise price of each option granted under
the plan may be paid by any of the methods included in a
participant&#146;s option agreement. Such methods may include
payment by (i)&nbsp;cash, (ii)&nbsp;certified or bank
</FONT>

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<FONT size="2">[PROXY SIDE TAG]
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<DIV align="left">
<FONT size="2">check, (iii)&nbsp;through the tender of shares
that are already owned by the participant, (iv)&nbsp;through a
cashless exercise, or (v)&nbsp;through a net exercise. The
participant must pay any taxes we are required to withhold at
the time of exercise. If permitted by the committee, such taxes
may be paid through the withholding of shares issued as a result
of an award&#146;s exercise.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">What is restricted stock?</FONT></B>

<P align="left">
<FONT size="2">Restricted stock awards are shares of our common
stock granted to participants subject to vesting in accordance
with the terms and conditions established by the committee.
Awards of restricted stock may be granted at no cost to the
participant. The committee will determine the number of shares
of restricted stock granted to any participant, but no
participant may be granted more than 200,000&nbsp;shares of
restricted stock during any calendar year.
</FONT>

<P align="left">
<FONT size="2">Vesting of restricted stock awards may be based
on the achievement of performance goals established by the
committee or on continued service to us. Shares of restricted
stock granted at no cost to the participant that do not vest
will be forfeited back to the plan.
</FONT>

<P align="left">
<B><FONT size="2">What is a deferred stock award?</FONT></B>

<P align="left">
<FONT size="2">A deferred stock award is an award of a right to
receive shares of common stock at the end of a specified
deferral period determined by the committee or the participant.
The committee may determine that the right to the award vests
based on continued service to us or on the achievement of
specific performance goals established by the committee. The
receipt of the shares may be deferred beyond vesting (for
instance, until termination of employment or other specified
time). Deferred stock awards allow participants to defer income
tax until the receipt of the shares.
</FONT>

<P align="left">
<FONT size="2">The committee will determine the number of shares
covered by each deferred stock award. No participant may receive
deferred stock awards covering more than 200,000&nbsp;shares
during any calendar year.
</FONT>

<P align="left">
<B><FONT size="2">May a participant elect to further defer
shares covered by a deferred stock award?</FONT></B>

<P align="left">
<FONT size="2">If the committee permits it, a participant may
elect to further defer receipt of the shares payable under a
deferred stock award for an additional specified period or until
a specified event, if the election is made at least one year
prior to the completion of the original applicable deferral
period. A deferred stock award that is vested but not paid out
remains subject to the claims of our general creditors.
</FONT>

<P align="left">
<B><FONT size="2">What are performance goals?</FONT></B>

<P align="left">
<FONT size="2">We have designed the plan so that it permits us
to pay compensation that qualifies as performance-based under
Section&nbsp;162(m) of the Internal Revenue Code. This allows
the committee to make performance goals applicable to a
participant with respect to an award. At the committee&#146;s
discretion, one or more of the following performance goals may
apply: (i)&nbsp;annual revenue; (ii)&nbsp;cash position;
(iii)&nbsp;earnings per share; (iv)&nbsp;net income;
(v)&nbsp;operating cash flow; (vi)&nbsp;operating income;
(vii)&nbsp;return on assets; (viii)&nbsp;return on equity;
(ix)&nbsp;return on sales; and (x)&nbsp;total shareholder
return. Except for cash position and total shareholder return,
these performance goals may apply to either the company or one
of our business units.
</FONT>

<P align="left">
<B><FONT size="2">What happens to awards that expire or are
forfeited?</FONT></B>

<P align="left">
<FONT size="2">If an award expires or is canceled without having
been fully exercised or vested, the unvested, expired or
canceled shares generally will be returned to the available pool
of shares reserved for issuance under the&nbsp;plan.
</FONT>

<P align="left">
<B><FONT size="2">What happens if our capital structure changes
as a result of a stock split or other similar event?</FONT></B>

<P align="left">
<FONT size="2">If we experience a change in our capital
structure as a result of a stock dividend, reorganization,
merger, consolidation, sale of all or substantially all of our
assets, recapitalization, reclassification, stock split, reverse
stock split or other similar transaction, the committee may
adjust (i)&nbsp;the number of shares
</FONT>

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<DIV align="left">
<FONT size="2">available for issuance under the plan,
(ii)&nbsp;the per person limits on awards, (iii)&nbsp;the number
and kind of shares subject to outstanding awards, and
(iv)&nbsp;the exercise price of outstanding awards, as
appropriate to reflect the change to our capital structure.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">What happens in the event of a merger or
similar transaction?</FONT></B>

<P align="left">
<FONT size="2">In the event that we (i)&nbsp;merge or
consolidate with another corporation, (ii)&nbsp;sell all or
substantially all of our assets, (iii)&nbsp;reorganize,
(iv)&nbsp;liquidate, or (v)&nbsp;dissolve, the committee may, in
its discretion, provide that outstanding awards will be assumed
or substituted for by the successor corporation or provide that
all outstanding awards will accelerate vesting and terminate
immediately prior to the consummation of the transaction. In the
event of the acceleration and termination of awards in lieu of
assumption or substitution, awards other than options will be
settled in cash or securities in an amount determined by the
committee after taking into consideration the amount per share
received by shareholders in the transaction (that is, the
transaction price). Under such circumstances, options will be
settled in cash or securities in an amount per share equal to
the transaction price minus the aggregate exercise price of such
options.
</FONT>

<P align="left">
<B><FONT size="2">Can awards be transferred by the
participant?</FONT></B>

<P align="left">
<FONT size="2">Awards granted under the plan generally may not
be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the applicable laws of
descent and distribution. Participants may transfer nonqualified
stock options without consideration for the transfer (i)&nbsp;to
a member of the participant&#146;s family, or (ii)&nbsp;to a
trust or other entity for the sole benefit of the member(s) of
the participant&#146;s family. In each case, the transferee(s)
must agree in writing to be bound by the terms and conditions of
the plan and the applicable option agreement.
</FONT>

<P align="left">
<B><FONT size="2">What are the federal tax consequences to
participants as a result of receiving an award under the
plan?</FONT></B>

<P align="left">
<FONT size="2">The following paragraphs are a summary of the
general federal income tax consequences to U.S.&nbsp;taxpayers
resulting from awards granted under the plan. Tax consequences
for any particular individual may be&nbsp;different.
</FONT>

<P align="left">
<I><FONT size="2">Nonqualified Stock Options</FONT></I>

<P align="left">
<FONT size="2">No taxable income is reportable when a
nonqualified stock option is granted to a participant. Upon
exercise, the participant will recognize ordinary income in an
amount equal to the difference between the fair market value of
the purchased shares on the exercise date and the exercise price
of the option. Any additional gain or loss recognized upon any
later disposition of the shares would be a capital gain or loss.
</FONT>

<P align="left">
<I><FONT size="2">Incentive Stock Options</FONT></I>

<P align="left">
<FONT size="2">No taxable income is reportable when an incentive
stock option is granted or exercised, unless the alternative
minimum tax rules apply, in which case taxation will occur in
the year of exercise. If the participant exercises the option
and then later sells or otherwise disposes of the shares more
than two years after the grant date and more than one year after
the exercise date, the difference between the sale price and the
exercise price will be taxed as a capital gain or loss. If the
participant exercises the option and then later sells or
otherwise disposes of the shares before the end of the two or
one year holding periods described above, the participant
generally will have ordinary income at the time of the sale
equal to the difference between the fair market value of the
shares on the exercise date, or the sale price, if less, and the
exercise price of the option.
</FONT>

<P align="left">
<I><FONT size="2">Restricted Stock</FONT></I>

<P align="left">
<FONT size="2">A participant will not recognize taxable income
upon the grant of restricted stock unless the participant elects
to be taxed at that time. Instead, a participant will recognize
ordinary income at the time of vesting equal to the difference
between the fair market value of the shares on the vesting date
and the amount, if any, paid for the shares.
</FONT>

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<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

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<P align="left">
<I><FONT size="2">Deferred Stock Awards</FONT></I>

<P align="left">
<FONT size="2">A participant will not have taxable income upon
the grant of a deferred stock award. Instead, a participant will
recognize the income at the time of the receipt of the shares
subject to the award equal to the difference between the fair
market value of the shares at the time of receipt and the
amount, if any, paid for the shares. However, a participant will
be subject to employment taxes at the time a deferred stock
award vests, even if the participant has not yet received the
shares subject to the award.
</FONT>

<P align="left">
<B><FONT size="2">What are the tax effects to us as a result of
grants of awards under the plan?</FONT></B>

<P align="left">
<FONT size="2">We generally will be entitled to a tax deduction
in connection with an award under the plan in an amount equal to
the ordinary income realized by a participant at the time the
participant recognizes such income, such as when a participant
exercises a nonqualified stock option. Special rules limit the
deductibility of compensation paid to our Chief Executive
Officer and to each of our four most highly compensated
executive officers. Under Section&nbsp;162(m) of the Internal
Revenue Code, the annual compensation paid to any of these
specified executives will be deductible only to the extent that
it does not exceed $1,000,000. However, we can preserve the
deductibility of certain compensation in excess of $1,000,000 if
the conditions of Section&nbsp;162(m) are met. These conditions
include: (i)&nbsp;shareholder approval of the plan;
(ii)&nbsp;setting limits on the number of awards that any
individual may receive; and (iii)&nbsp;establishing performance
criteria that must be met before the award actually will vest or
be paid. The plan has been designed to permit the committee to
grant awards that qualify as performance-based for purposes of
satisfying the conditions of Section&nbsp;162(m), thereby
permitting us to continue to receive a federal income tax
deduction in connection with such awards.
</FONT>

<P align="left">
<B><FONT size="2">How can we amend or terminate the
plan?</FONT></B>

<P align="left">
<FONT size="2">The Board generally may amend or terminate the
plan at any time and for any reason. Amendments will be
contingent on shareholder approval if required by applicable
law, stock exchange listing requirements or if so promised by
the Board. By its terms, the amended and restated plan will
automatically terminate in&nbsp;2014.
</FONT>

<P align="left">
<B><FONT size="2">Why do we recommend that the 2001 Stock Option
Plan be amended and restated?</FONT></B>

<P align="left">
<FONT size="2">We believe that the amended and restated plan is
essential to our continued success. Our employees are our most
valuable asset. Stock options and other awards such as those
provided under the plan will substantially assist us in
continuing to attract and retain employees and non-employee
directors in the extremely competitive labor markets in which we
compete. Such awards also are crucial to our ability to motivate
employees to achieve our goals. We will benefit from increased
stock ownership by selected executives, other employees and
non-employee directors. The increase in the reserve of common
stock available under the plan will enable us to grant such
awards to executives, other eligible employees and our
non-employee directors.
</FONT>

<P align="left">
<B><FONT size="2">What vote is required to approve this
proposal?</FONT></B>

<P align="left">
<FONT size="2">To approve this proposal, a majority of the
outstanding shares of our common stock must vote &#147;FOR&#148;
this&nbsp;proposal.
</FONT>

<P align="left">
<FONT size="2">Brokers and other nominees that are NYSE member
organizations are prohibited from voting in favor of proposals
relating to equity compensation plans, such as the amended and
restated 2001 Stock Option Plan, unless they receive specific
instructions from the beneficial owner of the shares to vote on
such matters. Therefore, for any of your shares held through a
broker or other nominee that is a NYSE member organization, such
shares will only be voted on this proposal if you have provided
specific voting instructions to your broker or other nominee on
how to vote your shares.
</FONT>

<P align="center"><FONT size="2">14
</FONT>

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<P align="left">
<B><FONT size="2">If approved, when would the amended and
restated plan become effective?</FONT></B>

<P align="left">
<FONT size="2">The amended and restated plan would become
effective upon shareholder approval at the Annual Meeting.
</FONT>

<P align="left">
<B><FONT size="2">THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE &#147;FOR&#148; THE APPROVAL OF THE AMENDMENT AND
RESTATEMENT OF THE 2001 STOCK OPTION PLAN.</FONT></B>

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<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

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<P align="center">
<B><FONT size="2">PROPOSAL&nbsp;3</FONT></B>

<P align="center">
<B><FONT size="2">RATIFICATION OF SELECTION OF INDEPENDENT
AUDITORS</FONT></B>

<P align="left">
<B><FONT size="2">What is this proposal?</FONT></B>

<P align="left">
<FONT size="2">This is a proposal to ratify the appointment of
Deloitte&nbsp;&#38; Touche LLP, or Deloitte, as our independent
auditors for the fiscal year ending January&nbsp;30, 2005. The
Audit Committee selected Deloitte as our independent auditors
for the year ending January&nbsp;30, 2005, subject to
ratification by our shareholders. Although shareholder
ratification of our independent auditors is not required by law,
as a matter of corporate governance, we are requesting that our
shareholders ratify such appointment.
</FONT>

<P align="left">
<B><FONT size="2">What relationship does Deloitte currently have
with us?</FONT></B>

<P align="left">
<FONT size="2">Deloitte has audited our financial statements for
the last twenty-four years. Based in part upon information
provided by Deloitte, the Audit Committee determined that
Deloitte is independent under applicable independence standards.
</FONT>

<P align="left">
<B><FONT size="2">Will a Deloitte representative be present at
the Annual Meeting?</FONT></B>

<P align="left">
<FONT size="2">Deloitte&#146;s representative will be present at
the Annual Meeting and will have the opportunity to make a
statement. Deloitte&#146;s representative will be available to
respond to appropriate questions.
</FONT>

<P align="left">
<B><FONT size="2">What services did Deloitte provide in fiscal
2003?</FONT></B>

<P align="left">
<FONT size="2">Deloitte&#146;s services for fiscal 2003 included
an audit of our annual consolidated financial statements, review
of our quarterly consolidated financial statements and audit
services related to periodic filings made with the SEC. In
fiscal 2003, Deloitte also performed certain audit-related and
tax services, and discussed certain matters with our Audit
Committee, in each case as more fully described in the Audit
Committee Report and the Audit and Related Fees section below.
</FONT>

<P align="left">
<B><FONT size="2">What vote is required to approve this
proposal?</FONT></B>

<P align="left">
<FONT size="2">To approve this proposal, a majority of the
shares represented and voting at the Annual Meeting and a
majority of the quorum required to transact business at the
Annual Meeting must vote &#147;FOR&#148; this proposal.
</FONT>

<P align="left">
<B><FONT size="2">What will happen if shareholders vote against
this proposal?</FONT></B>

<P align="left">
<FONT size="2">If shareholders vote against this proposal, we
will consider interviewing other independent auditors. There can
be no assurance, however, that we will choose to appoint other
independent auditors even if this proposal is not approved.
</FONT>

<P align="left">
<B><FONT size="2">THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE &#147;FOR&#148; THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE&nbsp;&#38; TOUCHE LLP AS OUR INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING JANUARY&nbsp;30,
2005.</FONT></B>

<P align="center"><FONT size="2">16
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<P align="center">
<B><FONT size="2">INFORMATION CONCERNING EXECUTIVE
OFFICERS</FONT></B>

<P align="left">
<FONT size="2">This table provides certain information about our
executive officers as of March&nbsp;31, 2004. The executive
officers are elected by our Board and serve at the pleasure of
our Board, subject to rights, if any, under employment contracts.
</FONT>

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<TR>
    <TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="59%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Position with the Company and Business Experience</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>


<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">W. Howard Lester
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">*
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;68
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Edward A. Mueller
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">*
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;56
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Laura J. Alber
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President, Pottery Barn Brands since 2002
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;35
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President, Pottery Barn,
    2000&nbsp;&#150; 2002
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Senior Vice President, Pottery Barn Catalog and
    Pottery Barn Kids Retail, 1999&nbsp;&#150; 2000
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Divisional Vice President, Pottery Barn Catalog,
    1997&nbsp;&#150; 1999
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Patrick J. Connolly
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">*
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;57
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Patrick Cowell
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President, Williams-Sonoma Brand since 2002
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;55
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President of Cowell Development (real estate
    development),<BR>
    1999&nbsp;&#150; 2002
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President and Chief Executive Officer of Airport
    Group International (airport management and development),
    1996&nbsp;&#150; 1999
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">David DeMattei
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President, Emerging Brands since 2003
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;47
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President, North American Retail and Wholesale
    Divisions of Coach,&nbsp;Inc. (luxury goods), 1998&nbsp;&#150;
    2003
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Donna H. Isralsky
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Senior Vice President, Product Supply Chain and
    International
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;48
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Operations since 1999
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Product Supply Chain,
    1996&nbsp;&#150; 1999
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Seth R. Jaffe
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Senior Vice President, General Counsel and
    Secretary since 2003
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;47
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Deputy General Counsel,
    2002&nbsp;&#150; 2003
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Senior Vice President and General Counsel of
    CareThere, Inc. (healthcare technology), 2000&nbsp;&#150; 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chief Counsel of Levi Strauss&nbsp;&#38; Co.
    (apparel), 1984&nbsp;&#150; 1999
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sharon L. McCollam
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President, Chief Financial Officer
    since 2003
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;41
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Senior Vice President, Chief Financial Officer,
    2000&nbsp;&#150; 2003
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Finance, 2000
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chief Financial Officer of Dole Fresh
    Vegetables,&nbsp;Inc. (food products), 1996&nbsp;&#150; 2000
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dean A. Miller
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Senior Vice President, Global Logistics since 2001
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;41
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Retail Distribution, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Global Logistics of United Parcel
    Services, Inc. (logistics), 1996&nbsp;&#150; 2001
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vivian M. Stephenson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chief Operating Officer since 2003
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Age&nbsp;67
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chief Information Officer, 2003
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Technology Consultant to Target Corporation,
    Apple Computer,&nbsp;Inc. and Williams-Sonoma,&nbsp;Inc.,
    2000&nbsp;&#150; 2003
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President and Chief Information
    Officer of Target Corporation (consumer goods), 1999&nbsp;&#150;
    2000
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#149;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Senior Vice President and Chief Information
    Officer of Target Corporation (consumer goods), 1995&nbsp;&#150;
    1999
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Biographical information can be found in the
    table under the section titled &#147;Information Regarding the
    Director Nominees&#148; within this Proxy Statement.
    </FONT></TD>
</TR>

</TABLE>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">17
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<B><FONT size="2">Executive Compensation</FONT></B>

<P align="left">
<FONT size="2">This table sets forth the annual and long-term
compensation earned by our Chief Executive Officer and our four
other most highly compensated executive officers during fiscal
2003. These individuals are collectively known as our
&#147;named executive officers.&#148; None of these officers
held stock appreciation rights during the years represented in
the tables.
</FONT>

<P align="left">
<I><FONT size="2">Summary Compensation Table</FONT></I>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="26%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Long-Term</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Awards</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Annual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Compensation(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Restricted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other Annual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Underlying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">All Other</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name and Principal Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Salary</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Bonus</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Awards</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options(3)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">W. Howard Lester
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">975,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">731,300</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&nbsp;24,171</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">(4)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">12,621</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">(5)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="1">Chairman
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2002</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">904,122</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,356,490</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">65,945</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11,723</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2001</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">899,787</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">400,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">100,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,754</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Edward A. Mueller
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">975,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">731,300</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,193</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">(4)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">196,250</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">(6)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="1">Chief Executive Officer and
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2002</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">37,500</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,021,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">80</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="1">Director
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2001</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">21,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Laura J. Alber
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">514,471</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">258,800</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">30,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14,027</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">(7)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="1">President, Pottery Barn Brands
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2002</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">498,055</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">498,077</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16,800</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2"><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2001</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">407,700</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">175,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">400,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,523</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Patrick J. Connolly
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">514,471</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">193,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">186</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">(4)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">20,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14,027</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">(7)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="1">Executive Vice President, Chief
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2002</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">499,931</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">500,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">16,492</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="1">Marketing Officer and Director
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2001</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">506,065</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">140,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">40,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">7,754</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Patrick Cowell
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2003</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">514,471</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">193,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">45,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">14,027</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">(7)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="1">President, Williams-Sonoma
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2002</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">461,538</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">461,538</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">400,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">290,038</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">(8)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="1">Brand
    </FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2001</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Rows specified &#147;2003,&#148; &#147;2002&#148;
    and &#147;2001&#148; represent fiscal years ended
    February&nbsp;1, 2004, February&nbsp;2, 2003, and
    February&nbsp;3, 2002, respectively.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">While the named executive officers enjoy certain
    perquisites, except as otherwise indicated in the table, the
    aggregate value of such perquisites for the fiscal years shown
    did not equal or exceed the lesser of $50,000 or 10% of each
    such officer&#146;s salary and bonus for the applicable fiscal
    year.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Figures have been adjusted to reflect stock
    splits.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">For personal use of our airplane.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Comprised of (i)&nbsp;premiums in the amount of
    $1,140 paid by us for term life insurance in excess of $50,000,
    (ii)&nbsp;our matching contribution of $5,981 under our
    Associate Stock Incentive Plan, which amounts are subject to
    vesting, and (iii)&nbsp;a $5,500 car allowance paid by us.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Comprised of (i)&nbsp;premiums in the amount of
    $1,140 paid by us for term life insurance in excess of $50,000,
    (ii)&nbsp;a $6,000 car allowance paid by us, and
    (iii)&nbsp;$189,110 as reimbursement for relocation expenses. In
    addition, we have accrued a maximum of $300,000 to reimburse
    Mr.&nbsp;Mueller for losses Mr.&nbsp;Mueller is expected to
    incur upon the sale of his Arizona residence.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Comprised of (i)&nbsp;premiums in the amount of
    $1,140 paid by us for term life insurance in excess of $50,000,
    (ii)&nbsp;our matching contribution of $6,887 under our
    Associate Stock Incentive Plan, which amounts are subject to
    vesting, and (iii)&nbsp;a $6,000 car allowance paid by us.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(8)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Comprised of (i)&nbsp;premiums in the amount of
    $981 paid by us for term life insurance in excess of $50,000,
    (ii)&nbsp;our matching contribution of $10,308 under our
    Associate Stock Incentive Plan, which amounts are subject to
    vesting, (iii)&nbsp;a $5,000 car allowance paid by us, and
    (iv)&nbsp;$273,749 as reimbursement for relocation expenses.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">18
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<I><FONT size="2">Option Grants in Fiscal 2003</FONT></I>

<P align="left">
<FONT size="2">This table sets forth certain information
regarding all stock option grants made to the named executive
officers during fiscal 2003.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">Individual Grants</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Value at Assumed Annual</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage of</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Rates of Stock Price</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Appreciation for Option</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Underlying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Granted to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise or</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Term(3)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Employees in</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Base Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expiration</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Granted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fiscal Year(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Date(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">5%</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">10%</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Laura J. Alber
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.88</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/1/2013</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">411,297</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,042,308</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Patrick J. Connolly
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/1/2013</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">274,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">694,872</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Patrick Cowell
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.82</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4/1/2013</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">616,946</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,563,461</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">In fiscal 2003, we granted options to purchase
    1,596,075 shares of our common stock to our employees.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Stock options generally vest in equal annual
    installments over a five year period.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The 5% and 10% assumed rates of appreciation are
    required by the SEC and do not represent our estimate or
    projection of our future stock price.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<I><FONT size="2">Aggregate Option Exercises in the Last Fiscal
Year and Fiscal Year-End Option Value</FONT></I>

<P align="left">
<FONT size="2">This table sets forth information with respect to
the named executive officers&#146; exercise of stock options
during fiscal 2003 and the fiscal year-end value of unexercised
options held at the end of fiscal 2003.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Number of Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Value of Unexercised</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Underlying Unexercised</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">In-the-Money</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Options at</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Options at</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Fiscal Year-End</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Fiscal Year-End(2)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Acquired on</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Realized</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unexercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unexercisable</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">W. Howard Lester
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">315,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,537,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,470,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">260,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,525,700</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,212,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Edward A. Mueller
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">290,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">800,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,170,960</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,888,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Laura J. Alber
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">631,875</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">174,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">362,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,422,522</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,701,276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Patrick J. Connolly
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">636,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">220,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,818,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,845,320</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Patrick Cowell
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">365,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">676,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,171,150</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Figures have been adjusted to reflect stock
    splits.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The fiscal year-end values are based upon the
    difference between the closing price of our common stock on the
    NYSE on January&nbsp;30, 2004 ($32.11&nbsp;per share) and the
    exercise price of the options.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">What are the terms of the employment,
termination of employment and change-in-control agreements with
the named executive officers?</FONT></B>

<P align="left">
<I><FONT size="2">Laura J. Alber</FONT></I>

<P align="left">
<FONT size="2">We entered into an employment agreement with
Laura J. Alber, effective as of March&nbsp;19, 2001, relating to
her employment as Executive Vice President, Pottery Barn.
Ms.&nbsp;Alber was appointed President, Pottery Barn Brands,
effective February&nbsp;11, 2002. The initial term of the
agreement expired March&nbsp;19, 2004 and, per its terms,
automatically extends for one-year terms until
Ms.&nbsp;Alber&#146;s employment is terminated by her or by us.
We committed in the agreement to pay Ms.&nbsp;Alber an annual
base salary of not less than $400,000. If we terminate
Ms.&nbsp;Alber&#146;s employment without &#147;cause&#148; (as
defined in the agreement), or if she terminates her employment
with us for &#147;good reason&#148; (as defined in the
agreement), she will be entitled to receive
(i)&nbsp;continuation of her base salary at the time of
termination, and (ii)&nbsp;outplacement services at a level
commensurate with Ms.&nbsp;Alber&#146;s position at no cost to
Ms.&nbsp;Alber. In addition, we will
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">19
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">pay the premiums for health coverage under COBRA
for Ms.&nbsp;Alber and her dependents until Ms.&nbsp;Alber
either commences new employment or Ms.&nbsp;Alber or her
dependants are no longer eligible for COBRA&nbsp;coverage.
</FONT>
</DIV>

<P align="left">
<I><FONT size="2">Patrick Cowell</FONT></I>

<P align="left">
<FONT size="2">We entered into an employment agreement with
Patrick Cowell, effective as of March&nbsp;4, 2002, relating to
his employment as President, Williams-Sonoma Brand. The initial
term of the agreement expires March&nbsp;3, 2005, and, per its
terms, automatically extends for one-year terms, until
Mr.&nbsp;Cowell&#146;s employment is terminated by him or by us.
We committed in the agreement to pay Mr.&nbsp;Cowell an annual
base salary of not less than $500,000. In addition,
Mr.&nbsp;Cowell is eligible for a target bonus of one half of
his guaranteed&nbsp;salary.
</FONT>

<P align="center">
<B><FONT size="2">COMMITTEE REPORTS</FONT></B>

<P align="left">
<FONT size="2">The following reports by our Compensation
Committee, Nominations and Corporate Governance Committee and
Audit Committee covering fiscal 2003 shall not be deemed to be
(i)&nbsp;&#147;soliciting material,&#148;
(ii)&nbsp;&#147;filed&#148; with the SEC, (iii)&nbsp;subject to
Regulations&nbsp;14A or 14C of the Securities Exchange Act of
1934, or (iv)&nbsp;subject to the liabilities of Section&nbsp;18
of the Securities Exchange Act of 1934. The reports shall not be
deemed incorporated by reference into any of our other filings
under the Securities Exchange Act of 1934 or the Securities Act
of 1933.
</FONT>

<P align="left">
<B><FONT size="2">Compensation Committee Report</FONT></B>

<P align="left">
<I><FONT size="2">Who serves on the Compensation
Committee?</FONT></I>

<P align="left">
<FONT size="2">The Compensation Committee consisted of Adrian
D.P. Bellamy and Richard T. Robertson from February&nbsp;2, 2003
to May&nbsp;28, 2003. Jeanne P. Jackson was elected to the
Compensation Committee on May&nbsp;28, 2003. From such time
until the present, the Compensation Committee consisted of
Mr.&nbsp;Bellamy, Ms.&nbsp;Jackson and Mr.&nbsp;Robertson.
Mr.&nbsp;Bellamy serves as Chairman of the Compensation
Committee. The Board has determined that each member of the
Compensation Committee is independent under the NYSE rules as
currently in effect, is an outside director as such term is
defined with respect to Section&nbsp;162(m) of the Internal
Revenue Code and is a non-employee director under
Section&nbsp;16(b) of the Securities Exchange Act of 1934. None
of the committee members has ever served as an officer of the
company.
</FONT>

<P align="left">
<I><FONT size="2">How many times did the Compensation Committee
meet during fiscal 2003?</FONT></I>

<P align="left">
<FONT size="2">The Compensation Committee held a total of four
meetings during fiscal 2003.
</FONT>

<P align="left">
<I><FONT size="2">What is the role of the Compensation Committee
with respect to executive compensation?</FONT></I>

<P align="left">
<FONT size="2">Our role is detailed in the Compensation
Committee Charter, which was amended and restated by the Board
on March&nbsp;16, 2004. The Compensation Committee Charter is
available on the company&#146;s website at
<U>www.williams-sonomainc.com</U> and is attached to this Proxy
Statement as Exhibit&nbsp;B. Specifically, we:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review and approve corporate goals and objectives
    relevant to the compensation of the Chief Executive Officer,
    evaluate the Chief Executive Officer&#146;s performance in light
    of those goals and objectives, and review and approve the level
    of compensation, including base salary, bonus, equity
    compensation, and any other benefits to be provided to the Chief
    Executive Officer based on this evaluation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review, make recommendations to the Board
    regarding, and approve, as appropriate, compensation for
    executive officers other than the Chief Executive Officer;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review, make recommendations to the Board
    regarding, and approve, as appropriate, general compensation
    goals and guidelines for the company&#146;s employees;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">20
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review, make recommendations to the Board
    regarding, and approve, as appropriate, the compensation policy
    for the non-employee directors of the company;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Act as the administrator and administer, within
    the authority delegated by the Board, the company&#146;s
    incentive compensation and equity-based plans.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<I><FONT size="2">What is the Compensation Committee&#146;s
philosophy of executive compensation?</FONT></I>

<P align="left">
<FONT size="2">We believe that executive officers and other key
employees should have a significant stake in the company&#146;s
stock performance and that compensation programs should link
executive compensation to shareholder value. For this reason, we
strive to ensure that the company&#146;s executive officer
compensation programs are designed to enable the company to
attract, retain, motivate and reward highly qualified executive
officers while maintaining strong and direct links between
executive pay, individual performance, the company&#146;s
financial performance and shareholder returns.
</FONT>

<P align="left">
<I><FONT size="2">Do we compare the company&#146;s compensation
practices to those of other companies?</FONT></I>

<P align="left">
<FONT size="2">Yes. We believe that the compensation practices
of many different companies within the retail industry are
relevant to establishing the company&#146;s compensation
programs and executive compensation for each year. Specifically,
we strive to ensure that the company&#146;s compensation
programs and executive compensation are competitive, taking into
account pay practices at other companies considered by us to be
comparable each year, based on industry, revenues and other
factors. We refer to these companies collectively as
&#147;comparable companies.&#148; For fiscal 2003, we used over
40&nbsp;specialty retail companies as the comparable companies.
In addition, the company utilizes an independent executive
compensation consultant hired by management for the purpose of
meeting with us to provide information on the competitiveness of
the company&#146;s compensation programs.
</FONT>

<P align="left">
<I><FONT size="2">What are the components of executive
compensation?</FONT></I>

<P align="left">
<FONT size="2">We consider three major elements in our
compensation program: (i)&nbsp;base salary; (ii)&nbsp;annual
incentive opportunities; and (iii)&nbsp;long-term incentives.
</FONT>

<P align="left">
<I><FONT size="2">How are base salaries determined?</FONT></I>

<P align="left">
<FONT size="2">We expect and confirm that the company&#146;s
executive officers&#146; base salaries fall within the third
quartile (i.e., the top 50th to 75th percentile) of comparable
companies, adjusting, as appropriate, to reflect differences in
each particular executive officer&#146;s responsibilities,
experience and individual contributions to the company&#146;s
success. We review and set the company&#146;s executive
officers&#146; base salaries, including those of the named
executive officers, on an annual basis. This review occurred in
April 2003 to confirm appropriate base salaries for fiscal 2003.
For all new executives who joined the company after the April
2003 review, we reviewed and approved base salaries in
connection with their hire.
</FONT>

<P align="left">
<I><FONT size="2">How are annual incentives
determined?</FONT></I>

<P align="left">
<FONT size="2">The company promotes outstanding performance by
rewarding executive officers for achieving specific performance
objectives with an annual cash bonus. The company pays bonuses
only when the company exceeds a specific corporate earnings
objective as established by us in the first quarter of each
fiscal year. Bonuses to executive officers are based on the
company&#146;s performance and on each executive officer&#146;s
individual performance. The executive officers&#146; base
salaries and the bonus target together place annual cash
compensation within the third quartile of comparable companies.
</FONT>

<P align="left">
<I><FONT size="2">What are the criteria considered in awarding
annual incentives?</FONT></I>

<P align="left">
<FONT size="2">Key performance criteria for evaluating executive
officers include business and financial objectives, and people
and organizational goals, as well as other relevant factors as
determined by us with input from the company&#146;s senior
management. These criteria change from year to year. In the
first quarter of each fiscal
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

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<P align="center"><FONT size="2">21
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<DIV align="left">
<FONT size="2">year, we review a performance report that
summarizes management&#146;s view regarding whether, and to what
extent, the key performance criteria were attained. The
performance report also discusses any other significant but
unforeseen factors that may have positively or negatively
affected the company&#146;s&nbsp;performance.
</FONT>
</DIV>

<P align="left">
<FONT size="2">We verify the company&#146;s actual earnings for
each performance period, review management&#146;s recommendation
for the resulting aggregate bonus awards and approve the
aggregate amount. We also review and approve the individual
recommendations for the company&#146;s executive officers. The
company&#146;s Chief Executive Officer approves the
recommendations for all other eligible employees below the
executive officer level.
</FONT>

<P align="left">
<FONT size="2">Based on the company&#146;s performance in fiscal
2003 and certain brand-specific metrics, incentive bonuses were
or will be paid to the named executive officers as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="86%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mr.&nbsp;Lester
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">731,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mr.&nbsp;Mueller
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">731,300</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ms.&nbsp;Alber
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">258,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mr.&nbsp;Connolly
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">193,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mr.&nbsp;Cowell
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">193,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<I><FONT size="2">How is long-term incentive compensation
determined?</FONT></I>

<P align="left">
<FONT size="2">The third component of the company&#146;s
executive compensation program consists of annual stock option
grants. We continue to believe that stock option grants are
important for motivating executive officers and other employees
to increase shareholder value over the long term. We granted
stock options to certain of the named executive officers in
fiscal 2003. We believe that stock option grants to executive
officers reflect competitive practices at comparable companies
and the company&#146;s assessment of individual contributions.
</FONT>

<P align="left">
<FONT size="2">Under the company&#146;s existing stock option
plans, the exercise price of all stock options is not less than
100% of the fair market value of the stock on the date of the
option grant or not less than 110% of such fair market value for
an incentive stock option granted to a shareholder with greater
than 10% of the voting power of all company stock. Options
granted pursuant to the company&#146;s stock option plans
generally vest in five equal annual installments. It is the
company&#146;s policy not to reprice stock options in the event
that the fair market value of the common stock falls below the
exercise price of the stock options and not to engage in a stock
option exchange program.
</FONT>

<P align="left">
<I><FONT size="2">How is the Chief Executive Officer
compensated?</FONT></I>

<P align="left">
<FONT size="2">We determined Edward A. Mueller&#146;s
compensation package based, in part, on (i)&nbsp;a review of the
compensation paid to chief executive officers of comparable
companies, (ii)&nbsp;the compensation packages historically paid
to the company&#146;s Chief Executive Officer, and
(iii)&nbsp;our general compensation philosophy as described
above. Mr.&nbsp;Mueller&#146;s compensation package for fiscal
2003 included a salary of $975,000, a bonus of $731,300 and
reimbursement of $189,110 for Mr.&nbsp;Mueller&#146;s relocation
expenses. The bonus portion of Mr.&nbsp;Mueller&#146;s
compensation was based on a formula linked to the company&#146;s
earnings performance and Mr.&nbsp;Mueller&#146;s individual
performance. Mr.&nbsp;Mueller receives no additional material
compensation or benefits not provided to all executives.
</FONT>

<P align="left">
<I><FONT size="2">How does the Compensation Committee address
Internal Revenue Code Section&nbsp;162(m)?</FONT></I>

<P align="left">
<FONT size="2">Internal Revenue Code Section&nbsp;162(m) could,
depending on future compensation levels, limit the
company&#146;s ability to deduct compensation in excess of
$1,000,000 paid to certain executive officers. Exceptions to
this deductibility limit may be made for various forms of
&#147;performance-based&#148; compensation. Based on fiscal 2003
compensation levels, no such limits on the deductibility of
compensation were applicable for any officer. We have not
adopted a policy specifically prohibiting compensation at a
level that would limit deductions. While we cannot predict how
the deductibility limit
</FONT>

<P align="center"><FONT size="2">22
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<DIV align="left">
<FONT size="2">may impact the company&#146;s compensation
program in future years, we intend to maintain an approach to
executive compensation that strongly links pay to performance.
</FONT>
</DIV>

<P align="left">
<I><FONT size="2">Who prepared this report?</FONT></I>

<P align="left">
<FONT size="2">Members of the Compensation Committee at the end
of fiscal 2003, Adrian D.P. Bellamy, Jeanne P. Jackson and
Richard T. Robertson, prepared this report.
</FONT>

<P align="left">
<B><FONT size="2">Nominations and Corporate Governance Committee
Report</FONT></B>

<P align="left">
<I><FONT size="2">Who serves on the Nominations and Corporate
Governance Committee?</FONT></I>

<P align="left">
<FONT size="2">From February&nbsp;2, 2003 to April&nbsp;2, 2003,
the Nominations and Corporate Governance Committee consisted of
Michael R. Lynch, Adrian D.P. Bellamy and W. Howard Lester.
Mr.&nbsp;Lester resigned from the Nominations and Corporate
Governance Committee on April&nbsp;2, 2003. From such time until
the present, the Nominations and Corporate Governance Committee
consisted of Mr.&nbsp;Lynch and Mr. Bellamy. Mr.&nbsp;Lynch
serves as Chairman of the Nominations and Corporate Governance
Committee. The Board has determined that each current member of
the Nominations and Corporate Governance Committee is
independent under the NYSE rules, as currently in effect. Each
current member of the Nominations and Corporate Governance
Committee is a non-employee director.
</FONT>

<P align="left">
<I><FONT size="2">What is the role of the Nominations and
Corporate Governance Committee?</FONT></I>

<P align="left">
<FONT size="2">Our role is detailed in the Nominations and
Corporate Governance Committee Charter, which was amended and
restated by the Board on March&nbsp;16, 2004. The Nominations
and Corporate Governance Committee Charter is available on the
company&#146;s website at <U>www.williams-sonomainc.com</U> and
is attached to this Proxy Statement as Exhibit&nbsp;C.
Specifically, we:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Periodically review and recommend to the Board
    suitable revisions to the corporate governance guidelines
    applicable to the company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Annually consider and review with the Board
    criteria for selecting new director candidates, identify
    individuals qualified to become Board members and periodically
    assist in screening and evaluating director candidates;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Consider director nominations from shareholders;
    and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Annually evaluate the performance of the
    company&#146;s Chief Executive Officer and oversee the
    evaluation of the performance of the company&#146;s management
    and the Board.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<I><FONT size="2">Does the Nominations and Corporate Governance
Committee have a policy with regard to the consideration of
director candidates recommended by shareholders?</FONT></I>

<P align="left">
<FONT size="2">We adopted a Shareholder Recommendations Policy
on March&nbsp;16, 2004. It is our policy to consider
recommendations for candidates to the Board from shareholders
holding no less than 500&nbsp;shares of the company&#146;s
common stock continuously for at least six months prior to the
date of the submission of the recommendation.
</FONT>

<P align="left">
<I><FONT size="2">What are the procedures to be followed by
shareholders in submitting recommendations of director
candidates to the Nominations and Corporate Governance
Committee?</FONT></I>

<P align="left">
<FONT size="2">The Nominations and Corporate Governance
Committee will consider suggestions from shareholders regarding
possible director candidates for election at next year&#146;s
Annual Meeting. A shareholder that desires to recommend a
candidate for election to the Board shall direct the
recommendation in writing to Williams-Sonoma, Inc., Attention:
Secretary, 3250 Van&nbsp;Ness Avenue, San Francisco, California
94109. The recommendation must include (i)&nbsp;the
candidate&#146;s name, home and business contact information,
(ii)&nbsp;detailed biographical data and qualifications of the
candidate, (iii)&nbsp;information regarding any relationships
between the candidate and the company within the last three
years, (iv)&nbsp;evidence of the
</FONT>

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<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

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<P align="center"><FONT size="2">23
</FONT>

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<DIV align="left">
<FONT size="2">recommending person&#146;s ownership of company
common stock, (v)&nbsp;a statement from the recommending
shareholder in support of the candidate, and (vi)&nbsp;a written
indication by the candidate of his or her willingness to serve
if elected. A shareholder that desires to recommend a person
directly for election to the Board at the company&#146;s Annual
Meeting must also meet the deadlines and other requirements set
forth in Rule&nbsp;14a-8 of the Securities Exchange Act of 1934
and the company&#146;s Restated Bylaws, each of which are
described in the &#147;Shareholder Proposals&#148; section of
this Proxy Statement.
</FONT>
</DIV>

<P align="left">
<FONT size="2">Each director nominated in this Proxy Statement
was recommended for election to the Board by the Nominations and
Corporate Governance Committee. The Board did not receive any
notice of a director nominee recommendation from any shareholder
in connection with this Proxy Statement.
</FONT>

<P align="left">
<I><FONT size="2">What are the criteria and process of the
Nominations and Corporate Governance Committee for identifying
and evaluating nominees for the Board?</FONT></I>

<P align="left">
<FONT size="2">Our criteria and process for evaluating and
identifying the candidates that we select, or recommend to the
Board for selection, as director nominees are as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We regularly review the current composition and
    size of the Board;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We evaluate the performance of the Board as a
    whole and evaluate the performance and qualifications of
    individual members of the Board eligible for re-election at the
    Annual Meeting;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We review the qualifications of any candidates
    who have been properly recommended by the shareholders, as well
    as those candidates who have been identified by management,
    individual members of the Board or, if we permit, a search firm.
    Such review may, in our discretion, include a review solely of
    information provided to us or also may include discussions with
    persons familiar with the candidate, an interview with the
    candidate or other actions that we deem proper;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">In evaluating the qualifications of candidates
    for the Board, we consider many factors, including, issues of
    character, judgment, independence, diversity, financial
    expertise, industry experience, diversity of experience, other
    commitments and the like. We evaluate such factors, among
    others, and do not assign any particular weight or priority to
    any of these factors. We consider each individual candidate in
    the context of the current perceived needs of the Board as a
    whole. While we have not established specific minimum
    qualifications for director candidates, we believe that
    candidates and nominees must reflect a Board that is comprised
    of directors (i)&nbsp;a majority of whom are independent,
    (ii)&nbsp;who are of high integrity, (iii)&nbsp;who have
    qualifications that will increase the overall effectiveness of
    the Board, and (iv)&nbsp;who meet other requirements as may be
    required by applicable rules, such as financial literacy or
    financial expertise with respect to Audit Committee members;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">In evaluating and identifying candidates, we have
    the sole authority to retain and terminate any third party
    search firm that is used to identify director candidates and the
    sole authority to approve the fees and retention terms of any
    search firm;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">After such review and consideration, we select,
    or recommend that the Board select, the slate of director
    nominees; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">We endeavor to notify, or cause to be notified,
    all director candidates of the decision as to whether to
    nominate such individual for election to the Board.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">There are no differences in the manner in which
the Nominations and Corporate Governance Committee evaluates
nominees for director based on whether the nominee is
recommended by a shareholder, management or a search firm. We
currently do not pay any third party to identify or assist in
identifying or evaluating potential nominees.
</FONT>

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<P align="left">
<I><FONT size="2">How did we perform our responsibilities in
fiscal 2003?</FONT></I>

<P align="left">
<FONT size="2">The Nominations and Corporate Governance
Committee held a total of two meetings during fiscal 2003.
During fiscal 2003, we did the following, among other things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewed and discussed with company management
    applicable changes in corporate governance requirements under
    federal and state securities laws, the Sarbanes-Oxley Act of
    2002, and the NYSE listing standards, as well as the
    company&#146;s compliance with such requirements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Assisted in the review of the qualifications of
    new Board members Jeanne&nbsp;P. Jackson and Sanjiv&nbsp;Ahuja;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Evaluated the composition of and recommended
    assignments for the committees of the Board;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Considered and reported to the Board on to the
    desirability of identifying additional independent Board
    members; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Considered and recommended to the Board the
    submission to shareholders of the director nominees described in
    this Proxy Statement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<I><FONT size="2">Who prepared this report?</FONT></I>

<P align="left">
<FONT size="2">Members of the Nominations and Corporate
Governance Committee at the end of fiscal 2003, Michael R. Lynch
and Adrian D.P. Bellamy, prepared this report.
</FONT>

<P align="left">
<B><FONT size="2">Audit Committee Report</FONT></B>

<P align="left">
<I><FONT size="2">Who serves on the Audit Committee?</FONT></I>

<P align="left">
<FONT size="2">The Audit Committee consisted of Michael R. Lynch
and Heather M. Reisman from February&nbsp;3, 2003 to
February&nbsp;10, 2003. On February&nbsp;10, 2003,
Mr.&nbsp;Lynch was elected Chairman of the Audit Committee to
fill the position vacated by Edward A. Mueller upon
Mr.&nbsp;Mueller&#146;s election as the company&#146;s Chief
Executive Officer on January&nbsp;13, 2003. Adrian D.P. Bellamy
was elected to the Audit Committee on February&nbsp;11, 2003.
Ms.&nbsp;Reisman resigned from the Audit Committee on
May&nbsp;28, 2003. Jeanne P. Jackson was elected to the Audit
Committee on May&nbsp;28, 2003. From such time until the
present, the Audit Committee consisted of Mr.&nbsp;Lynch,
Mr.&nbsp;Bellamy and Ms.&nbsp;Jackson. The Board has determined
that each member of the Audit Committee is, or was during his or
her membership, independent under the NYSE rules, as currently
in effect, and Rule&nbsp;10A-3 of the Securities Exchange Act of
1934. The Board has also determined that each Audit Committee
member is &#147;financially literate,&#148; as described in the
NYSE rules. While the Board believes that the members of the
Audit Committee appropriately satisfy their responsibilities set
forth in the Audit Committee Charter, the Board has determined
that the Audit Committee does not currently have a member who
qualifies as a &#147;financial expert&#148; as defined under SEC
rules approved in 2003. Therefore, the Board has determined to
add an additional independent director who will serve on the
Audit Committee and qualify as a &#147;financial expert.&#148;
</FONT>

<P align="left">
<I><FONT size="2">What is the role of the Audit
Committee?</FONT></I>

<P align="left">
<FONT size="2">Our role is detailed in the Audit Committee
Charter, which was amended and restated by the Board of
Directors on March&nbsp;30, 2004. The Audit Committee Charter is
available on the company&#146;s website at
<U>www.williams-sonomainc.com</U> and is attached to this Proxy
Statement as Exhibit&nbsp;D. Specifically, we:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Serve as an independent and objective party to
    monitor the company&#146;s financial reporting process and
    internal control system;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review and appraise the audit efforts of the
    company&#146;s independent auditor and internal audit
    department, including obtaining and reviewing a report from the
    company&#146;s independent auditor at least annually regarding
    the adequacy of internal controls, among other things; and
    </FONT></TD>
</TR>

</TABLE>

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<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

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<P align="center"><FONT size="2">25
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Provide an open avenue of communication among the
    independent auditors, financial and senior management, the
    internal audit department and the Board.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<I><FONT size="2">How do we meet our responsibilities?</FONT></I>

<P align="left">
<FONT size="2">We perform the following functions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Monitor the integrity of the company&#146;s
    financial reports, earnings press releases, sales releases,
    guidance releases and other company financial information;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Appoint and/or replace the independent auditors,
    pre-approve all audit and non-audit services of the independent
    auditors and assess their qualifications and independence;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review the performance of the company&#146;s
    internal audit function, the company&#146;s auditing, accounting
    and financial reporting procedures and the company&#146;s
    independent auditors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Monitor the company&#146;s compliance with legal
    and regulatory requirements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Monitor the company&#146;s system of internal
    controls; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Retain independent legal, accounting or other
    advisors when necessary and appropriate.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<I><FONT size="2">How did we perform our responsibilities in
fiscal 2003?</FONT></I>

<P align="left">
<FONT size="2">The Audit Committee held a total of eight
meetings during fiscal 2003. During fiscal 2003, we took the
following actions, among other things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewed and discussed the company&#146;s audited
    financial statements for fiscal 2003 with management and
    Deloitte;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewed and discussed the company&#146;s
    periodic filings on Forms 10-K and 10-Q with management and
    Deloitte;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewed and discussed all company earnings press
    releases, sales releases and guidance releases with management;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Met with Deloitte, with and without management
    present, to discuss the overall quality of the internal and
    external audit process and the financial reporting process; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Confirmed Deloitte&#146;s independence from the
    company and management based on the following: (i)&nbsp;our
    confirmation that no member of Deloitte&#146;s audit team is or
    has been employed by the company in a financial reporting
    oversight role; and (ii)&nbsp;our review of audit and non-audit
    fees and the written disclosures and letter from Deloitte as
    required by Independence Standards Board Standard No.&nbsp;1
    (&#147;Independence Discussions with Audit Committee&#148;), as
    modified and supplemented.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<I><FONT size="2">What matters did we discuss with
Deloitte?</FONT></I>

<P align="left">
<FONT size="2">During fiscal 2003, we discussed the following,
among other things, with Deloitte:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Deloitte&#146;s responsibilities in connection
    with the audit of the company&#146;s financial statements and
    matters relating to Deloitte&#146;s independence;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Any significant issues arising during the audit
    and any other matters relating to the conduct of the audit of
    the company&#146;s financial statements; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Matters required to be discussed pursuant to
    Statement on Auditing Standards No.&nbsp;61
    (&#147;Communications with Audit Committees&#148;), including
    the quality of the company&#146;s accounting principles, the
    soundness of significant judgments and the clarity of
    disclosures in the company&#146;s financial statements.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">26
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<I><FONT size="2">What is our policy regarding pre-approval of
audit and non-audit services performed by Deloitte?</FONT></I>

<P align="left">
<FONT size="2">All services, whether audit or non-audit
services, performed by Deloitte must be pre-approved by us or a
designated member of our committee, whose decisions must be
reported to us at our next meeting. Pre-approval must be
obtained before Deloitte performs the services but cannot be
obtained more than a year before performance begins. Approval
can be for general classes of permitted services such as
&#147;annual audit services&#148; or &#147;tax consulting
services.&#148; A written engagement letter, including a
description of the permitted services, the dates of the
engagement and the fees for such services, must be approved by
the committee in accordance with these procedures before
performance begins.
</FONT>

<P align="left">
<I><FONT size="2">Did we review the fees billed by Deloitte for
fiscal 2003?</FONT></I>

<P align="left">
<FONT size="2">Yes, we reviewed and discussed the fees billed by
Deloitte for services in fiscal 2003, which are described in
detail below. We determined that the provision of non-audit
services was compatible with Deloitte&#146;s independence.
</FONT>

<P align="left">
<I><FONT size="2">Did we review the company&#146;s audited
financial statements for fiscal 2003?</FONT></I>

<P align="left">
<FONT size="2">Yes, we reviewed and discussed the company&#146;s
audited financial statements for fiscal 2003, and we recommended
to the Board that the company&#146;s audited financial
statements be included in the company&#146;s Annual Report on
Form&nbsp;10-K for fiscal 2003 for filing with the SEC.
</FONT>

<P align="left">
<I><FONT size="2">Who prepared this report?</FONT></I>

<P align="left">
<FONT size="2">Members of the Audit Committee at the end of
fiscal 2003, Michael&nbsp;R. Lynch, Adrian D.P. Bellamy and
Jeanne&nbsp;P. Jackson, prepared this report.
</FONT>

<P align="center">
<B><FONT size="2">AUDIT AND RELATED FEES</FONT></B>

<P align="left">
<FONT size="2">During fiscal 2003 and 2002, Deloitte did not
perform any prohibited non-audit services for us, including
financial and systems design and implementation.
</FONT>

<P align="left">
<I><FONT size="2">Audit fees</FONT></I>

<P align="left">
<FONT size="2">Deloitte billed approximately $483,200 for fiscal
2003 and $447,500 for fiscal 2002 for professional services to
audit our consolidated financial statements included in our
Annual Report on Form&nbsp;10-K and to review our condensed,
consolidated financial statements included in our Quarterly
Reports on Form&nbsp;10-Q.
</FONT>

<P align="left">
<I><FONT size="2">Audit-related fees</FONT></I>

<P align="left">
<FONT size="2">Deloitte billed approximately $88,490 for fiscal
2003 and $212,600 for fiscal 2002 for audit related services.
Audit-related services included: (i)&nbsp;the audit of our
401(k) plan; (ii)&nbsp;consultation on various accounting
matters; (iii)&nbsp;consultation on our internal controls; and
(iv)&nbsp;assistance with our readiness under Section&nbsp;404
of the Sarbanes-Oxley Act of 2002.
</FONT>

<P align="left">
<I><FONT size="2">Tax fees</FONT></I>

<P align="left">
<FONT size="2">Deloitte billed a total of $117,264 for fiscal
2003 and $145,900 for fiscal 2002 for tax services. Tax services
included: (i)&nbsp;$20,070 for fiscal 2003 and $18,500 for
fiscal 2002 for tax compliance services, which included
consultation for the preparation of our federal, state and local
tax returns; (ii)&nbsp;$0 for fiscal 2003 and fiscal 2002 for
tax preparation services; (iii)&nbsp;$35,194 for fiscal 2003 and
$99,800 for fiscal 2002 for tax consulting services, which
included consultation on transfer pricing and other
international tax consulting for both years; and
(iv)&nbsp;$62,000 for fiscal 2003 and $27,600 for fiscal 2002
for tax software license fees.
</FONT>

<P align="left">
<I><FONT size="2">All other fees</FONT></I>

<P align="left">
<FONT size="2">Deloitte billed $0 for fiscal 2003 and fiscal
2002 for all other services.
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">27
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS</FONT></B>

<P align="left">
<FONT size="2">During fiscal 2003, we employed Kirk Lester as a
financial analyst for special projects. Kirk Lester is the son
of our Chairman, W.&nbsp;Howard Lester. Kirk Lester earned
$27,606, and received standard employee benefits, for his
services during the year.
</FONT>

<P align="left">
<FONT size="2">Our related party lease transactions include an
operating lease entered into in July 1983 for a distribution
facility in Memphis, Tennessee. The lessor is a general
partnership (&#147;Partnership&nbsp;1&#148;) comprised of
W.&nbsp;Howard Lester, Chairman of the Board of Directors and a
significant shareholder of ours, and James&nbsp;A. McMahan, a
Director Emeritus and significant shareholder of ours.
Partnership&nbsp;1 does not have operations separate from the
leasing of this distribution facility to us and does not have
lease agreements with any unrelated third parties.
</FONT>

<P align="left">
<FONT size="2">Partnership&nbsp;1 financed the construction of
this distribution facility through the sale of a total of
$9,200,000 of Industrial Development Bonds in 1983 and 1985.
Annual principal payments and monthly interest payments are
required through maturity in December 2010. The
Partnership&nbsp;1 Industrial Development Bonds are
collateralized by the distribution facility and the individual
partners guarantee the bond repayments. As of February&nbsp;1,
2004, $2,785,000 was outstanding under the Partnership&nbsp;1
Industrial Development Bonds.
</FONT>

<P align="left">
<FONT size="2">The operating lease for this distribution
facility requires us to pay annual rent of $618,000 plus
interest on the bonds calculated at a variable rate determined
monthly (2.1% in February 2004), applicable taxes, insurance and
maintenance expenses. Although the current term of the lease
expires in August 2004, we are obligated to renew the operating
lease until these bonds are fully repaid.
</FONT>

<P align="left">
<FONT size="2">Our other related party lease transaction
includes an operating lease entered into in August 1990 for
another distribution facility that is adjoined to the
Partnership&nbsp;1 facility in Memphis, Tennessee. The lessor is
a general partnership (&#147;Partnership&nbsp;2&#148;) comprised
of W.&nbsp;Howard Lester, James&nbsp;A. McMahan and two
unrelated parties. Partnership&nbsp;2 does not have operations
separate from the leasing of this distribution facility to us
and does not have lease agreements with any unrelated third
parties.
</FONT>

<P align="left">
<FONT size="2">Partnership&nbsp;2 financed the construction of
this distribution facility and related addition through the sale
of a total of $24,000,000 of Industrial Development Bonds in
1990 and 1994. Quarterly interest and annual principal payments
are required through maturity in August 2015. The
Partnership&nbsp;2 Industrial Development Bonds are
collateralized by the distribution facility and require us to
maintain certain financial covenants. As of February&nbsp;1,
2004, $15,438,000 was outstanding under the Partnership&nbsp;2
Industrial Development Bonds.
</FONT>

<P align="left">
<FONT size="2">The operating lease for this distribution
facility requires us to pay annual rent of approximately
$2,600,000, plus applicable taxes, insurance and maintenance
expenses. This operating lease has a term of 15&nbsp;years
expiring in August 2006, with three optional five-year renewal
periods. We are, however, obligated to renew the lease until the
bonds are fully repaid.
</FONT>

<P align="left">
<FONT size="2">As of February&nbsp;1, 2004, the Company adopted
Financial Accounting Standards Board Interpretation No.&nbsp;46R
(&#147;FIN&nbsp;46R&#148;), &#147;Consolidation of Variable
Interest Entities.&#148; FIN&nbsp;46R requires existing
unconsolidated variable interest entities to be consolidated by
their primary beneficiaries if the entities do not effectively
disperse risks among parties involved. We determined that the
two partnerships described above qualify as variable interest
entities under FIN 46R due to their related party relationship
and our obligation to renew the leases until the bonds are fully
repaid. Accordingly, the two related party variable interest
entity partnerships from which we lease our Memphis-based
distribution facilities were consolidated by us as of
February&nbsp;1, 2004. The consolidation resulted in increases
to our consolidated balance sheet of $19,512,000 in assets
(primarily buildings), $18,223,000 in long-term debt, and
$1,289,000 in other long-term liabilities, with no cumulative
effect charge to our fiscal 2003 consolidated statement of
earnings. Consolidation of these partnerships will not have an
impact on our net income.
</FONT>

<P align="center"><FONT size="2">28
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE</FONT></B>

<P align="left">
<FONT size="2">Section&nbsp;16(a) of the Securities Exchange Act
of 1934 requires our directors, executive officers and holders
of more than 10% of our common stock to file reports regarding
their ownership and changes in ownership of our stock with the
SEC. Based on their filings with the SEC and information
provided to us by them, we believe that during fiscal 2003, our
directors, officers and more than 10% shareholders complied with
all Section&nbsp;16(a) filing requirements, except that
Ms.&nbsp;Alber, Mr.&nbsp;Cowell, Mr.&nbsp;Connolly,
Ms.&nbsp;Isralsky and Ms.&nbsp;McCollam each filed a Form&nbsp;4
reporting an option grant in connection with our executive
compensation program late.
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">29
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS
AND MANAGEMENT</FONT></B>

<P align="left">
<FONT size="2">This table sets forth information regarding the
ownership of our common stock, as of March&nbsp;29, 2004, by:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="5%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">each person known to us to own more than 5% of
    our outstanding common stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">each director nominee;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">the named executive officers; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">all current executive officers and directors as a
    group.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Unless otherwise noted, the persons listed below
have sole voting and investment power. In addition, unless
otherwise noted, the address of each shareholder noted in the
following table is c/o Williams-Sonoma, Inc., 3250 Van Ness
Avenue, San Francisco, California 94109. Each director and
executive officer furnished the information as to his or her
ownership of common stock as of March&nbsp;29, 2004. Information
regarding institutional holders is derived from the most
recently available 13-G filings. The options to purchase our
stock listed below are currently exercisable or are exercisable
within 60&nbsp;days of March&nbsp;29,&nbsp;2004.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount and Nature of</FONT></B></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name and Address of Beneficial Owner</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Position with Company</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Beneficial Ownership</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class(1)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">James A. McMahan
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">Director Emeritus</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,350,400</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">84,000
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">2237 Colby Avenue
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Los Angeles, CA 90064
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">W. Howard Lester
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">Chairman</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,134,411</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">1,460,000
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Patrick J. Connolly
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">Executive Vice President,</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">778,786</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">708,000
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">Chief Marketing Officer</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">and Director</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Laura J. Alber
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">President,</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,625</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">285,400
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">Pottery Barn Brands</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Edward A. Mueller
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">Chief Executive Officer</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">290,000
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">and Director</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Patrick Cowell
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">President,</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,670</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(5)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">169,000
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">Williams-Sonoma Brand</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adrian D.P. Bellamy
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">Director</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,568</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">142,500
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Richard T. Robertson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">Director</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,400</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(6)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">79,500
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael R. Lynch
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">Director</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">79,500
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jeanne P. Jackson
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">Director</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">13,500
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Sanjiv Ahuja
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">Director</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">&#151;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All current executive officers and directors as a
    group (16&nbsp;persons)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,956,495</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(7)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom">
    <FONT size="2">3,544,160
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Less than 1%.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Assumes exercise of stock options currently
    exercisable or exercisable within 60&nbsp;days of March&nbsp;29,
    2004 by the named individual or entity into shares of our common
    stock. Based on 115,927,858&nbsp;shares outstanding as of
    March&nbsp;29, 2004.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Lester owns $1,166,284 in the
    Williams-Sonoma, Inc. Stock Fund under the Williams-Sonoma, Inc.
    Associate Stock Incentive Plan, a 401(k) plan, as of
    March&nbsp;29, 2004. The number of shares listed above includes
    34,353 shares held in the Williams-Sonoma, Inc. Stock Fund. This
    number was calculated by dividing the amount owned in the
    Williams-Sonoma, Inc. Stock Fund by $33.95, the closing price of
    Williams-Sonoma, Inc. common stock on March&nbsp;29, 2004.
    Mr.&nbsp;Lester is fully vested in the Williams-Sonoma, Inc.
    Stock Fund.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Connolly owns $878,287 in the
    Williams-Sonoma, Inc. Stock Fund under the Williams-Sonoma, Inc.
    Associate Stock Incentive Plan, a 401(k) plan, as of
    March&nbsp;29, 2004. The number of shares listed above includes
    25,870 shares held in the Williams-Sonoma, Inc. Stock Fund. This
    number was calculated by dividing the amount owned in the
    Williams-Sonoma, Inc. Stock Fund by $33.95, the
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">30
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">closing price of Williams-Sonoma, Inc. common
    stock on March&nbsp;29, 2004. Mr.&nbsp;Connolly is fully vested
    in the Williams-Sonoma, Inc. Stock Fund. In addition,
    Mr.&nbsp;Connolly&#146;s beneficial ownership includes
    7,756&nbsp;shares owned by a trust established for the benefit
    of Mr.&nbsp;Connolly&#146;s children.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Ms. Alber owns $190,969 in the Williams-Sonoma,
    Inc. Stock Fund under the Williams-Sonoma, Inc. Associate Stock
    Incentive Plan, a 401(k) plan, as of March&nbsp;29, 2004. The
    number of shares listed above includes 5,625 shares held in the
    Williams-Sonoma, Inc. Stock Fund. This number was calculated by
    dividing the amount owned in the Williams-Sonoma, Inc. Stock
    Fund by $33.95, the closing price of Williams-Sonoma, Inc.
    common stock on March&nbsp;29, 2004. Ms.&nbsp;Alber is fully
    vested in the Williams-Sonoma, Inc. Stock Fund.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr. Cowell owns $53,947 in the Williams-Sonoma,
    Inc. Stock Fund under the Williams-Sonoma, Inc. Associate Stock
    Incentive Plan, a 401(k) plan, as of March&nbsp;29, 2004. The
    number of shares listed above includes 1,589 shares held in the
    Williams-Sonoma, Inc. Stock Fund. This number was calculated by
    dividing the amount owned in the Williams-Sonoma, Inc. Stock
    Fund by $33.95, the closing price of Williams-Sonoma, Inc.
    common stock on March&nbsp;29, 2004. Of the 1,589&nbsp;shares,
    454 are unvested and will fully vest by March&nbsp;4, 2007.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 4,400&nbsp;shares owned by
    Mr.&nbsp;Robertson&#146;s wife.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The directors and officers as a group own
    $2,585,394 in the Williams-Sonoma, Inc. Stock Fund under the
    Williams-Sonoma, Inc. Associate Stock Incentive Plan, a 401(k)
    plan, as of March&nbsp;29, 2004. The number of shares listed
    above includes 76,153 shares held in the Williams-Sonoma, Inc.
    Stock Fund. This number was calculated by dividing the amount
    owned in the Williams-Sonoma, Inc. Stock Fund by $33.95, the
    closing price of Williams-Sonoma, Inc. common stock on
    March&nbsp;29, 2004. Of the 76,153&nbsp;shares, 1,169&nbsp;are
    unvested and will fully vest by March&nbsp;4, 2007.
    </FONT></TD>
</TR>

</TABLE>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">31
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">EQUITY COMPENSATION PLAN INFORMATION</FONT></B>

<P align="left">
<FONT size="2">The following table provides information
regarding securities authorized for issuance under our equity
compensation plans as of February&nbsp;1, 2004:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of securities</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">remaining available for future</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of securities to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">exercise price of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">issuance under equity</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">be issued upon exercise of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">compensation plans (excluding</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">outstanding options,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">options, warrants</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">securities reflected in</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">warrants and rights</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and rights</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">column&nbsp;(a))</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Plan category</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(a)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(b)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(c)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity compensation plans approved by
    security&nbsp;holders(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,047,396</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">$17.02</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,387,816</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equity compensation plans not approved by
    security&nbsp;holders(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;<FONT size="2">1,732,262</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;<FONT size="2">554,683</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11,779,658</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,942,499</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">This reflects our 1993 and 2001 Stock Option
    Plans.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">This reflects our 2000 Non-Qualified Stock Option
    Plan.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">2000 Non-Qualified Stock Option Plan</FONT></B>

<P align="left">
<FONT size="2">In July 2000, our Compensation Committee approved
the 2000 Non-Qualified Stock Option Plan, or the 2000 Plan. The
2000 Plan provides for the grant of non-qualified stock options
to employees who are not officers or members of our Board, and
persons who have accepted employment and actually become
employees within 120&nbsp;days of such acceptance. The plan
administrator determines when options granted under the 2000
Plan may be exercised, except that no options may be exercised
less than six months after grant, except in the case of the
death or disability of the optionee. Options granted under the
2000 Plan have an exercise price equal to 100% of the fair
market value of the shares underlying the option on the date of
grant. The 2000 Plan permits options to be exercised with cash,
check, certain other shares of our common stock, consideration
received by us under &#147;cashless exercise&#148; programs or,
if permitted by the plan administrator, promissory notes. In the
event that we dissolve, liquidate, reorganize, merge or
consolidate with one or more corporations as a result of which
we are not the surviving corporation, or we sell substantially
all of our assets or more than 80% of our then-outstanding
stock, the 2000 Plan provides that the plan administrator will
provide for one or more of the following: (i)&nbsp;each
outstanding option will fully vest and become exercisable;
(ii)&nbsp;the successor will assume or substitute for the
options; (iii)&nbsp;the 2000 Plan will continue; and
(iv)&nbsp;each outstanding option will be exchanged for a
payment in cash or shares equal to the excess of the fair market
value of our common stock over the exercise price. There are
3,000,000 shares of common stock reserved under the 2000 Plan,
and 554,683&nbsp;shares remain available for future issuance.
</FONT>

<P align="center">
<B><FONT size="2">SHAREHOLDER PROPOSALS</FONT></B>

<P align="left">
<B><FONT size="2">How can shareholders submit a proposal for
inclusion in our Proxy Statement for the 2005 Annual
Meeting?</FONT></B>

<P align="left">
<FONT size="2">To be included in our Proxy Statement for the
2005 Annual Meeting, shareholder proposals must comply with the
requirements of Rule&nbsp;14a-8 under the Securities Exchange
Act of 1934 and be received by our Secretary no later than
December&nbsp;16, 2004.
</FONT>

<P align="left">
<B><FONT size="2">How can shareholders submit proposals to be
raised at the 2005 Annual Meeting that will not be included in
our Proxy Statement for the 2005 Annual Meeting?</FONT></B>

<P align="left">
<FONT size="2">To be raised at the 2005 Annual Meeting,
shareholder proposals must comply with our Restated Bylaws.
Under our Restated Bylaws, a shareholder must give advance
notice to our Secretary of any business, including nominations
of directors for our Board, that the shareholder wishes to raise
at our Annual
</FONT>

<P align="center"><FONT size="2">32
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">Meeting. To be timely, the notice must be
received by our Secretary not less than 45&nbsp;days or more
than 75&nbsp;days prior to the first anniversary of the date of
the mailing of proxy materials for the preceding year&#146;s
Annual Meeting. Since this Proxy Statement is being mailed to
you on or about April&nbsp;15, 2004, shareholder proposals must
be received by our Secretary between January&nbsp;30, 2005 and
March&nbsp;1, 2005, in order to be raised at our 2005 Annual
Meeting.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">What if the date of the 2005 Annual Meeting
changes by more than 30&nbsp;days from the anniversary of this
year&#146;s Annual Meeting?</FONT></B>

<P align="left">
<FONT size="2">Under Rule&nbsp;14a-8 of the Securities Exchange
Act of 1934, if the date of the 2005 Annual Meeting changes by
more than 30&nbsp;days from the anniversary of this year&#146;s
Annual Meeting, shareholder proposals must be received by us
within a reasonable time before our solicitation is made to be
included in our Proxy Statement.
</FONT>

<P align="left">
<FONT size="2">Under our Restated Bylaws, if the date of the
2005 Annual Meeting changes by more than 30&nbsp;days from the
anniversary of this year&#146;s Annual Meeting, shareholder
proposals to be brought before the 2005 Annual Meeting must be
delivered not later than the close of business on the later of
the 90th day prior to the 2005 Annual Meeting and the 10th day
following the day on which public announcement of the date of
such meeting is first made by us.
</FONT>

<P align="left">
<B><FONT size="2">What if the number of directors to be elected
to our Board is increased?</FONT></B>

<P align="left">
<FONT size="2">In the event that the number of directors to be
elected to our Board is increased and there is no public
announcement naming all of the nominees for director or
specifying the size of the increased Board at least 55&nbsp;days
prior to the anniversary date of this year&#146;s Annual
Meeting, or March&nbsp;25, 2005, a notice shall also be
considered timely, but only with respect to nominees for any new
positions created by such increase, if it is delivered no later
than the close of business on the 10th day following the day on
which we first make such public announcement.
</FONT>

<P align="left">
<B><FONT size="2">Does a shareholder proposal require specific
information?</FONT></B>

<P align="left">
<FONT size="2">With respect to a shareholder&#146;s nomination
of a candidate for our Board, the shareholder notice to the
Secretary must contain certain information as set forth in our
Restated Bylaws and our Nominations and Corporate Governance
Committee Report about both the nominee and the shareholder
making the nomination. With respect to any other business that
the shareholder proposes, the shareholder notice must contain a
brief description of such business and the reasons for
conducting such business at the meeting, as well as certain
other information as set forth in our Restated Bylaws.
</FONT>

<P align="left">
<B><FONT size="2">What happens if we do not receive any
shareholder proposals within the timeframes described
above?</FONT></B>

<P align="left">
<FONT size="2">If we do not have notice of a matter to come
before the 2005 Annual Meeting in accordance with the deadlines
described above, we will use our discretion in determining
whether or not to bring such matter before the Annual Meeting.
If such matter is brought before the Annual Meeting then our
proxy card for such meeting will confer upon our proxy holders
discretionary authority to vote on such matter.
</FONT>

<P align="left">
<B><FONT size="2">Where should shareholder proposals be
sent?</FONT></B>

<P align="left">
<FONT size="2">Shareholder proposals should be sent to:
Secretary, Williams-Sonoma, Inc., 3250&nbsp;Van Ness Avenue, San
Francisco, California 94109.
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">33
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">PERFORMANCE GRAPH</FONT></B>

<P align="left">
<FONT size="2">This graph compares the cumulative total
shareholder return for our common stock with those for the CRSP
Index for the NYSE and the CRSP Index for the NASDAQ Retail
Trade Stocks, our peer index group. Our peer group includes over
150 companies. The cumulative total return listed below assumed
an initial investment of $100 and reinvestment of dividends. The
graph shows historical stock price performance, including
reinvestment of dividends, and is not necessarily indicative of
future performance.
</FONT>

<P align="center">
<B><FONT size="2">Comparison of Five-Year Cumulative Total
Returns of Williams-Sonoma, Inc.</FONT></B>

<DIV align="center">
<B><FONT size="2">CRSP* Index for the NYSE (U.S. Companies)
and</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">CRSP Index for NASDAQ Retail Trade
Stocks</FONT></B>
</DIV>

<P align="center">
<IMG src="f97543dff9754303.gif" alt="(PERFORMANCE GRAPH)">

<P align="left">
<FONT face="wingdings">&#110;</FONT><FONT size="2">&nbsp;Williams-Sonoma,
Inc.
</FONT>

<DIV align="left">
<FONT face="wingdings">&#171;</FONT><FONT size="2">&nbsp;NYSE
Stock Market
</FONT>
</DIV>

<DIV align="left">
<FONT face="webdings">&#53;</FONT><FONT size="2">&nbsp;NASDAQ
Retail Trade
</FONT>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="32%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="13"></TD>
</TR>

<TR>
    <TD colspan="13" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">1/31/99</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">1/30/00</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">1/28/01</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">2/03/02</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">2/02/03</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">2/01/04</FONT></B></TD>
</TR>

<TR>
    <TD colspan="13"></TD>
</TR>

<TR>
    <TD colspan="13" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <FONT size="2">Williams-Sonoma, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">100.0
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">&nbsp;90.8
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">&nbsp;73.3
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">129.1
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">136.5
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">185.1
    </FONT></TD>
</TR>

<TR>
    <TD colspan="13" align="left"><HR size="1" noshade></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <FONT size="2">NYSE Stock Market
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">100.0
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">101.9
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">112.6
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">102.1
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">&nbsp;83.1
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">111.3
    </FONT></TD>
</TR>

<TR>
    <TD colspan="13" align="left"><HR size="1" noshade></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <FONT size="2">NASDAQ Retail Trade
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">100.0
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">&nbsp;80.1
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">&nbsp;58.7
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">&nbsp;73.4
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">&nbsp;59.7
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">&nbsp;87.6
    </FONT></TD>
</TR>

<TR>
    <TD colspan="13" align="left"><HR size="1" noshade></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Notes:</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">A.</FONT></TD>
    <TD align="left">
    <FONT size="2">The lines represent monthly index levels derived
    from compounded daily returns that include all dividends.
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">B.</FONT></TD>
    <TD align="left">
    <FONT size="2">The indices are reweighted daily, using the
    market capitalization on the previous trading day.
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">C.</FONT></TD>
    <TD align="left">
    <FONT size="2">If the monthly interval, based on the fiscal
    year-end, is not a trading day, the preceding trading day is
    used.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">D.</FONT></TD>
    <TD align="left">
    <FONT size="2">The index level for all series was set to $100.00
    on 1/31/99.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Center for Research in Security Prices,
    University of Chicago Graduate School of Business.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">34
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<B><FONT size="2">AVAILABILITY OF ANNUAL REPORT ON
FORM&nbsp;10-K</FONT></B>

<P align="left">
<FONT size="2">A copy of our Annual Report on Form&nbsp;10-K,
including the financial statements for fiscal 2003 as filed with
the SEC, is available at our website at
<U>www.williams-sonomainc.com</U> and upon written request and
without charge to any shareholder by writing to: Secretary,
Williams-Sonoma, Inc., 3250 Van Ness Avenue, San Francisco,
California 94109.
</FONT>

<P align="left">
<FONT size="2">San Francisco, California
</FONT>

<DIV align="left">
<FONT size="2">April&nbsp;15, 2004
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[PROXY SIDE TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">35
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center">
<FONT size="2">EXHIBIT A
</FONT>

<P align="center">
<B><FONT size="2">Williams-Sonoma, Inc.</FONT></B>

<P align="center">
<B><FONT size="2">2001 Long-Term Incentive Plan</FONT></B>

<P align="center">
<B><FONT size="2">amending and restating the 2001 Stock Option
Plan effective as of May&nbsp;19, 2004</FONT></B>

<P align="center">
<B><FONT size="2">SECTION 1.</FONT></B>

<P align="center">
<B><FONT size="2">PURPOSES AND DEFINITIONS</FONT></B>

<P align="left">
<FONT size="2">(a)&nbsp;<I>Purposes.</I> The purposes of the
Plan are (i)&nbsp;to attract, retain and incent talented
personnel with respect to positions of substantial
responsibility at the Company and any Subsidiary; and
(ii)&nbsp;to enable the officers, key employees and Non-employee
Directors, upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its
business, to acquire a proprietary interest in the Company.
</FONT>

<P align="left">
<FONT size="2">(b)&nbsp;<I>Effect of Amendment and
Restatement.</I> The Plan, as hereby amended and restated,
applies to Awards made on or after the Effective Date. With
respect to Awards made prior to the Effective Date, the 2004
amendment and restatement of the Plan only applies to the extent
that it (i)&nbsp;does not impair the rights of an optionee,
unless otherwise agreed in writing by any such optionee and the
Company, and (ii)&nbsp;does not enlarge the rights of an
optionee to the extent such enlargement would disqualify an
outstanding Incentive Stock Option or give rise to a
compensation expense for financial accounting purposes.
</FONT>

<P align="left">
<FONT size="2">(c)&nbsp;<I>Definitions.</I> The following terms
are defined as set forth below:
</FONT>

<P align="left">
<FONT size="2">&#147;Administrator&#148; means the Committee
described in Section&nbsp;2.
</FONT>

<P align="left">
<FONT size="2">&#147;Annual Revenue&#148; means the
Company&#146;s or a business unit&#146;s net sales for the
Fiscal Year, determined in accordance with generally accepted
accounting principles; provided, however, that prior to the
Fiscal Year, the Administrator shall determine whether any
significant item(s) shall be excluded or included from the
calculation of Annual Revenue with respect to one or more
Participants.
</FONT>

<P align="left">
<FONT size="2">&#147;Applicable Laws&#148; means the
requirements relating to the administration of equity
compensation plans under U.S. state corporate laws, U.S. federal
and state securities laws, the Code, any stock exchange or
quotation system on which the Common Stock is listed or quoted
and the applicable laws of any foreign country or jurisdiction
where Awards are granted under the Plan.
</FONT>

<P align="left">
<FONT size="2">&#147;Award&#148; or &#147;Awards,&#148; except
where referring to a particular category of grant under the
Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Restricted Stock Awards and Deferred Stock Awards.
</FONT>

<P align="left">
<FONT size="2">&#147;Award Agreement&#148; means a written
agreement between the Company and the recipient of an Award
specifying the terms and conditions of the Award. Each Award
Agreement is subject to the terms and conditions of this Plan.
</FONT>

<P align="left">
<FONT size="2">&#147;Awarded Stock&#148; means the Common Stock
subject to an Award.
</FONT>

<P align="left">
<FONT size="2">&#147;Board&#148; means the Board of Directors of
the Company.
</FONT>

<P align="left">
<FONT size="2">&#147;Cash Position&#148; means the
Company&#146;s level of cash and cash equivalents.
</FONT>

<P align="left">
<FONT size="2">&#147;Code&#148; means the Internal Revenue Code
of 1986, as amended, and any successor tax code, along with
related rules and regulations.
</FONT>

<P align="left">
<FONT size="2">&#147;Committee&#148; means the Committee of the
Board referred to in Section&nbsp;2.
</FONT>

<P align="left">
<FONT size="2">&#147;Company&#148; means Williams-Sonoma, Inc.,
a California corporation, and any successor thereto.
</FONT>

<P align="left">
<FONT size="2">&#147;Disability&#148; means total and permanent
disability as defined in Section&nbsp;22(e)(3) of the Code.
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[EXHIBITS TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">A-1
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<FONT size="2">&#147;Deferred Stock Award&#148; means an Award
granted pursuant to Section&nbsp;7.
</FONT>

<P align="left">
<FONT size="2">&#147;Earnings Per Share&#148; means as to any
Fiscal Year, the Company&#146;s or a business unit&#146;s Net
Income, divided by a weighted average number of common shares
outstanding and dilutive common equivalent shares deemed
outstanding, determined in accordance with generally accepted
accounting principles.
</FONT>

<P align="left">
<FONT size="2">&#147;Effective Date&#148; means the date of the
Company&#146;s 2004 annual shareholders meeting.
</FONT>

<P align="left">
<FONT size="2">&#147;Exchange Act&#148; means the Securities
Exchange Act of 1934, as amended from time to time.
</FONT>

<P align="left">
<FONT size="2">&#147;Fair Market Value&#148; means, as of any
date, the closing sales price for a share of Stock (or the
closing bid, if no sales are reported) as quoted on the New York
Stock Exchange on the last market trading day prior to the day
of determination, as reported in the Wall Street Journal or any
other source the Administrator considers reliable, or, if the
shares of Stock cease to be traded on the New York Stock
Exchange, the value which the Administrator determines most
closely reflects the fair market value of the shares.
</FONT>

<P align="left">
<FONT size="2">&#147;Fiscal Year&#148; means a fiscal year of
the Company.
</FONT>

<P align="left">
<FONT size="2">&#147;Incentive Stock Option&#148; means any
Stock Option that is intended to qualify as, and is designated
in writing in the related Option Award agreement as intending to
constitute, an &#147;incentive stock option&#148; as defined in
Section 422 of the Code.
</FONT>

<P align="left">
<FONT size="2">&#147;Net Income&#148; means as to any Fiscal
Year, the income after taxes of the Company or a business unit
for the Fiscal Year determined in accordance with generally
accepted accounting principles, provided that prior to the
Fiscal Year, the Administrator shall determine whether any
significant item(s) shall be included or excluded from the
calculation of Net Income with respect to one or more
Participants.
</FONT>

<P align="left">
<FONT size="2">&#147;Non-employee Director&#148; means a member
of the Board who is not also an employee of the Company or any
Subsidiary.
</FONT>

<P align="left">
<FONT size="2">&#147;Non-Qualified Stock Option&#148; means any
Stock Option that is not an Incentive Stock Option.
</FONT>

<P align="left">
<FONT size="2">&#147;Operating Cash Flow&#148; means the
Company&#146;s or a business unit&#146;s sum of Net Income plus
depreciation and amortization less capital expenditures plus
changes in working capital comprised of accounts receivable,
inventories, other current assets, trade accounts payable,
accrued expenses, product warranty, advance payments from
customers and long-term accrued expenses, determined in
accordance with generally acceptable accounting principles.
</FONT>

<P align="left">
<FONT size="2">&#147;Operating Income&#148; means the
Company&#146;s or a business unit&#146;s income from operations
but excluding any unusual items, determined in accordance with
generally accepted accounting principles.
</FONT>

<P align="left">
<FONT size="2">&#147;Parent&#148; means a &#147;parent
corporation,&#148; whether now or hereafter existing, as defined
in Section&nbsp;424(e) of the Code.
</FONT>

<P align="left">
<FONT size="2">&#147;Participant&#148; means the holder of an
outstanding Award granted under the Plan.
</FONT>

<P align="left">
<FONT size="2">&#147;Performance Goals&#148; means the goal(s)
(or combined goal(s)) determined by the Administrator (in its
discretion) to be applicable to a Participant with respect to an
Award. As determined by the Administrator, the Performance Goals
applicable to an Award may provide for a targeted level or
levels of achievement using one or more of the following
measures: (a)&nbsp;Annual Revenue, (b)&nbsp;Cash Position,
(c)&nbsp;Earnings Per Share, (d)&nbsp;Net Income,
(e)&nbsp;Operating Cash Flow, (f)&nbsp;Operating Income,
(g)&nbsp;Return on Assets, (h)&nbsp;Return on Equity, (i) Return
on Sales, and (j)&nbsp;Total Shareholder Return. The Performance
Goals may differ from Participant to Participant and from award
to award.
</FONT>

<P align="left">
<FONT size="2">&#147;Plan&#148; means this 2001 Long-Term
Incentive Plan, as amended and restated on the Effective Date.
</FONT>

<P align="left">
<FONT size="2">&#147;Restricted Stock Award&#148; means an Award
granted pursuant to Section&nbsp;6.
</FONT>

<P align="left">
<FONT size="2">&#147;Return on Assets&#148; means the percentage
equal to the Company&#146;s or a business unit&#146;s Operating
Income before incentive compensation, divided by average net
Company or business unit, as applicable, assets, determined in
accordance with generally accepted accounting principles.
</FONT>

<P align="center"><FONT size="2">A-2
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">
<FONT size="2">&#147;Return on Equity&#148; means the percentage
equal to the Company&#146;s Net Income divided by average
shareholder&#146;s equity, determined in accordance with
generally accepted accounting principles.
</FONT>

<P align="left">
<FONT size="2">&#147;Return on Sales&#148; means the percentage
equal to the Company&#146;s or a business unit&#146;s Operating
Income before incentive compensation, divided by the
Company&#146;s or the business unit&#146;s, as applicable,
revenue, determined in accordance with generally accepted
accounting principles.
</FONT>

<P align="left">
<FONT size="2">&#147;Rule&nbsp;16b-3&#148; means Rule&nbsp;16b-3
promulgated under the Exchange Act, and any future regulation
amending, supplementing or superseding such regulation.
</FONT>

<P align="left">
<FONT size="2">&#147;Stock&#148; means the common stock, $.01
par value per share, of the Company, subject to adjustments
pursuant to Section&nbsp;3.
</FONT>

<P align="left">
<FONT size="2">&#147;Stock Option&#148; means any option to
purchase shares of Stock granted pursuant to Section&nbsp;5 or
previously granted under this Plan prior to its 2004 amendment
and restatement.
</FONT>

<P align="left">
<FONT size="2">&#147;Subsidiary&#148; means a &#147;subsidiary
corporation,&#148; whether now or hereafter existing, as defined
in Section&nbsp;424(f) of the Code.
</FONT>

<P align="left">
<FONT size="2">&#147;Total Shareholder Return&#148; means the
total return (change in share price plus reinvestment of any
dividends) of a share of Stock.
</FONT>

<P align="center">
<B><FONT size="2">SECTION 2.</FONT></B>

<P align="center">
<B><FONT size="2">ADMINISTRATION OF PLAN; ADMINISTRATOR
AUTHORITY TO SELECT</FONT></B>

<DIV align="center">
<B><FONT size="2">PARTICIPANTS AND DETERMINE AWARDS</FONT></B>
</DIV>

<P align="left">
<FONT size="2">(a)&nbsp;<I>Committee.</I> The Plan shall be
administered by a committee of not fewer than two
(2)&nbsp;Non-employee Directors (the &#147;Administrator&#148;).
To the extent desirable to qualify transactions hereunder as
exempt under Rule&nbsp;16b-3, each member of the Committee shall
be a &#147;non-employee director&#148; within the meaning of
Rule&nbsp;16b-3(b)(3)(i) promulgated under the Exchange Act, or
any successor definition. To the extent that the Administrator
determines it to be desirable to qualify Options granted
hereunder as &#147;performance-based compensation&#148; within
the meaning of Section&nbsp;162(m) of the Code, each member of
the Committee shall also be an &#147;outside director&#148;
within the meaning of Section&nbsp;162(m) of the Code and the
regulations (including temporary and proposed regulations)
promulgated thereunder. In addition, each member of the
Committee shall meet the then applicable requirements and
criteria of the New&nbsp;York Stock Exchange (or other market on
which the Stock then trades) for qualification as an
&#147;independent director.&#148;
</FONT>

<P align="left">
<FONT size="2">(b)&nbsp;<I>Delegation by the Administrator.</I>
The Administrator, in its sole discretion and on such terms and
conditions as it may provide, may delegate all or any part of
its authority and powers under the Plan to two or more Directors
of the Company; provided, however, that the Administrator may
not delegate its authority and powers (a)&nbsp;with respect to
any person who, with respect to the Stock, is subject to
Section&nbsp;16 of the Exchange Act, or (b)&nbsp;in any way
which would jeopardize the Plan&#146;s qualification under
Applicable Laws.
</FONT>

<P align="left">
<FONT size="2">(c)&nbsp;<I>Powers of Administrator.</I> The
Administrator shall have the power and authority to grant Awards
consistent with the terms of the Plan, including the power and
authority:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(i)&nbsp;to select the individuals to whom Awards
    may from time to time be granted;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(ii)&nbsp;to determine the time or times of
    grant, and the extent, if any, of Incentive Stock Options,
    Non-Qualified Stock Options, Restricted Stock Awards and
    Deferred Stock Awards, or any combination of the foregoing,
    granted to any one or more Participants;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(iii)&nbsp;to determine the number of shares of
    Stock to be covered by any Award;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(iv)&nbsp;to determine and modify from time to
    time the terms and conditions, including restrictions,
    consistent with the terms of the Plan, of any Award, which terms
    and conditions may differ among
    </FONT></TD>
</TR>

</TABLE>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[EXHIBITS TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">A-3
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">individual Awards and Participants, and to
    approve the form of written instruments evidencing
    the&nbsp;Awards;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(v)&nbsp;to accelerate at any time the
    exercisability or vesting of all or any portion of any Award;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(vi)&nbsp;subject to the provisions of
    Section&nbsp;5(a)(iii), to extend at any time the
    post-termination period in which Stock Options may be exercised;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(vii)&nbsp;to determine at any time whether, to
    what extent, and under what circumstances Stock and other
    amounts payable with respect to an Award shall be deferred
    either automatically or at the election of the Participant and
    whether and to what extent the Company shall pay or credit
    amounts constituting deemed interest (at rates determined by the
    Administrator) or dividends or deemed dividends on such
    deferrals;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(viii)&nbsp;to develop, approve and utilize forms
    of notices, Award Agreements and similar materials for
    administration and operation of the Plan; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(ix)&nbsp;at any time to adopt, alter and repeal
    such rules, guidelines and practices for administration of the
    Plan and for its own acts and proceedings as the Administrator
    shall deem advisable; to interpret the terms and provisions of
    the Plan and any Award (including related written instruments);
    to make all determinations it deems necessary or advisable for
    the administration of the Plan; to decide all disputes arising
    in connection with the Plan; and to otherwise supervise the
    administration of the Plan.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">All decisions and interpretations of the
Administrator shall be made in the Administrator&#146;s sole and
absolute discretion and shall be final and binding on all
persons, including the Company and Plan&nbsp;Participants.
</FONT>

<P align="center">
<B><FONT size="2">SECTION 3.</FONT></B>

<P align="center">
<B><FONT size="2">STOCK ISSUABLE UNDER THE PLAN; TERM OF
PLAN;</FONT></B>

<DIV align="center">
<B><FONT size="2">RECAPITALIZATIONS; MERGERS; SUBSTITUTE
AWARDS</FONT></B>
</DIV>

<P align="left">
<FONT size="2">(a)&nbsp;<I>Stock Issuable.</I> Subject to the
provisions of Section&nbsp;3(c), 8,500,000 shares of Stock are
reserved and available for issuance under the Plan provided,
however, that in no event shall more than&nbsp;30% of the Stock
remaining issuable under the Plan as of the date of obtaining
shareholder approval in 2004 be granted pursuant to Awards with
an exercise price or purchase price that is less than&nbsp;100%
of Fair Market Value on the date of grant. The shares available
for issuance under the Plan may be authorized but unissued
shares of Stock or shares of Stock reacquired by the Company. If
any portion of an Award is forfeited, cancelled, satisfied
without the issuance of Stock or otherwise terminated, the
shares of Stock underlying such portion of the Award shall be
added back to the shares of Stock available for issuance under
the&nbsp;Plan.
</FONT>

<P align="left">
<FONT size="2">(b)&nbsp;<I>Term of Plan.</I> No Awards shall be
made more than ten (10)&nbsp;years after the date upon which the
Board approved the amended and restated Plan in 2004.
Notwithstanding the foregoing, Stock Options granted hereunder
may, except as otherwise expressly provided herein, be
exercisable for up to ten (10)&nbsp;years after the date they
become exercisable.
</FONT>

<P align="left">
<FONT size="2">(c)&nbsp;<I>Impact of Transactions.</I> Subject
to the provisions of Section&nbsp;13, if, through or as a result
of any merger, consolidation, sale of all or substantially all
of the assets of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, the outstanding shares of
Stock are increased or decreased or are exchanged for a
different number or kind of shares or other securities of the
Company, or additional shares or new or different shares or
other securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other
securities, the Administrator may make an appropriate or
proportionate adjustment in (i)&nbsp;the maximum number of
shares reserved for issuance under the Plan, (ii)&nbsp;the
number of Awards that can be granted to any one individual
Participant in any calendar year, (iii)&nbsp;the number and kind
of shares or other securities subject to any then outstanding
Awards under the Plan, and (iv)&nbsp;the price for each share
</FONT>

<P align="center"><FONT size="2">A-4
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">subject to any then outstanding Stock Options
under the Plan, without changing the aggregate exercise price.
The adjustment by the Administrator shall be final, binding and
conclusive. No fractional shares of Stock shall be issued under
the Plan resulting from any such adjustment, but the
Administrator in its discretion may make a cash payment in lieu
of fractional shares.
</FONT>
</DIV>

<P align="left">
<FONT size="2">(d)&nbsp;<I>Substitute Awards.</I> The
Administrator may grant Awards under the Plan in substitution
for stock and stock based awards held by employees of another
corporation who become employees of the Company or a Subsidiary
as the result of a merger or consolidation of the employing
corporation with the Company or a Subsidiary or the acquisition
by the Company or a Subsidiary of property or stock of the
employing corporation. The Administrator may direct that the
substitute Awards be granted with such terms and conditions as
the Administrator considers appropriate in the circumstances.
</FONT>

<P align="center">
<B><FONT size="2">SECTION 4.</FONT></B>

<P align="center">
<B><FONT size="2">ELIGIBILITY</FONT></B>

<P align="left">
<FONT size="2">Those persons eligible to participate in the Plan
shall be officers, employees and Non-employee Directors of the
Company, its Parent and any Subsidiaries. Selection of
Participants shall be made from time to time by the
Administrator, in its sole discretion.
</FONT>

<P align="center">
<B><FONT size="2">SECTION 5.</FONT></B>

<P align="center">
<B><FONT size="2">STOCK OPTIONS</FONT></B>

<P align="left">
<FONT size="2">Any Stock Option granted under the Plan shall be
in such form as the Administrator may from time to time approve.
Stock Options granted under the Plan may be either Incentive
Stock Options or Non-Qualified Stock Options. Incentive Stock
Options may be granted only to employees of the Company, its
Parent or any Subsidiary. To the extent that any Option does not
qualify as an Incentive Stock Option, it shall be a
Non-Qualified Stock Option.
</FONT>

<P align="left">
<FONT size="2">(a)&nbsp;<I>Stock Option Grants.</I> The
Administrator, in its discretion, may grant Stock Options to
eligible officers and key employees of the Company, its Parent
or any Subsidiary. Stock Options granted pursuant to this
Section&nbsp;5(a) shall be subject to the following terms and
conditions and each Stock Option Award Agreement shall contain
such additional terms and conditions, consistent with the terms
of the Plan, as the Administrator deems desirable.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(i)&nbsp;<I>Exercise Price.</I> The exercise
    price per share shall be determined by the Administrator at the
    time of grant and set forth in an Award Agreement, but it shall
    not be less than&nbsp;100% of the Fair Market Value on the date
    of grant. If an employee owns or is deemed to own (by reason of
    the attribution rules of Section&nbsp;424(d) of the Code) more
    than&nbsp;10% of the combined voting power of all classes of
    stock of the Company or any parent or subsidiary corporation and
    an Incentive Stock Option is granted to such employee, the
    option price of such Incentive Stock Option shall be not less
    than&nbsp;110% of the Fair Market Value on the grant date. The
    exercise price for the Stock to be issued pursuant to an already
    granted Stock Option may not be lowered without the prior
    consent of the Company&#146;s shareholders. This shall include,
    without limitation, a repricing of the Stock Option as well as a
    Stock Option exchange program whereby the Participant agrees to
    cancel an existing Stock Option in exchange for an Option or
    other Award.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(ii)&nbsp;<I>Option Term.</I> The term of each
    Stock Option shall be fixed by the Administrator in an Award
    Agreement, but no Incentive Stock Option shall be exercisable
    more than ten (10)&nbsp;years after the date the option is
    granted. If an employee owns or is deemed to own more
    than&nbsp;10% of the combined voting power of all classes of
    stock of the Company or any Parent or Subsidiary and an
    Incentive Stock Option is granted to such employee, the term of
    such option shall be no more than five (5)&nbsp;years from the
    date of grant.
    </FONT></TD>
</TR>

</TABLE>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[EXHIBITS TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">A-5
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(iii)&nbsp;<I>Exercisability; Rights of a
    Shareholder.</I> Stock Options shall become exercisable at such
    time or times, whether or not in installments, as shall be
    determined by the Administrator in an Award Agreement;
    <I>provided</I>, however, that all Stock Options must be
    exercised within ten (10)&nbsp;years of the date they become
    exercisable or they shall automatically expire. The
    Administrator may, at any time, accelerate the exercisability of
    all or any portion of any Stock Option. An optionee shall have
    the rights of a shareholder only as to shares acquired upon the
    exercise of a Stock Option and not as to unexercised Stock
    Options.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(iv)&nbsp;<I>Method of Exercise.</I> Stock
    Options may be exercised in whole or in part, by giving written
    notice of exercise to the Company, specifying the number of
    shares to be purchased. To the extent permitted by Applicable
    Law, payment of the purchase price may be made by one or more of
    the following methods to the extent provided in the Award
    Agreement:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(A)&nbsp;In cash, by certified or bank check or
    other instrument acceptable to the Administrator;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(B)&nbsp;In the form of shares of Stock that are
    not then subject to restrictions under any Company plan and that
    have been beneficially owned by the optionee for at least six
    months, if permitted by the Administrator in its discretion.
    Such surrendered shares shall be valued at Fair Market Value on
    the exercise date;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(C)&nbsp;By the optionee delivering to the
    Company a properly executed exercise notice together with
    irrevocable instructions to a broker to promptly deliver to the
    Company cash or a check payable and acceptable to the Company to
    pay the purchase price; <I>provided</I> that the payment method
    described in this Section&nbsp;5(a)(iv)(C) shall not be
    available to an optionee who is subject to the reporting and
    other provisions of Section&nbsp;16 of the Exchange Act unless
    the optionee and the broker comply with such procedures and
    enter into such agreements as the Administrator shall prescribe
    as a condition of such payment procedure; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(D)&nbsp;By a net exercise procedure.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">The actual or constructive delivery of
certificates (as described in Section 14(b)) representing the
shares of Stock to be purchased pursuant to the exercise of a
Stock Option will be contingent upon receipt from the optionee
(or a purchaser acting in his or her stead in accordance with
the provisions of the Stock Option) by the Company of the full
purchase price for such shares and the fulfillment of any other
requirements contained in the Stock Option or Applicable Laws.
</FONT>

<P align="left">
<FONT size="2">(b)&nbsp;<I>Annual Limit on Incentive Stock
Options.</I> To the extent that the aggregate Fair Market Value
(determined as of the time of grant) of the shares of Stock with
respect to which Incentive Stock Options granted under this Plan
and any other plan of the Company or its parent and subsidiary
corporations become exercisable for the first time by an
optionee during any calendar year in excess of $100,000, it
shall constitute a Non-Qualified Stock Option.
</FONT>

<P align="left">
<FONT size="2">(c)&nbsp;<I>Non-Transferability of Options.</I>
Except as otherwise set forth in the following sentence, no
Stock Option shall be transferable by the optionee other than by
will or by the laws of descent and distribution and all Stock
Options shall be exercisable, during the optionee&#146;s
lifetime, only by the optionee. Notwithstanding the foregoing,
an optionee may transfer his or her Non-Qualified Stock Options,
without consideration for the transfer, to members of his or her
family or to trusts for the benefit of such family members,
<I>provided</I> that the transferee agrees in writing with the
Company to be bound by all of the terms and conditions of this
Plan and the applicable Award Agreement.
</FONT>

<P align="left">
<FONT size="2">(d)&nbsp;<I>Termination.</I> Except as may
otherwise be provided by the Administrator either in the Award
Agreement or, subject to Section&nbsp;11 below, in writing after
the Award Agreement is issued, an optionee&#146;s rights in all
Stock Options shall automatically terminate ninety
(90)&nbsp;days following optionee&#146;s termination of
employment (or cessation of business relationship) with the
Company and its Subsidiaries for any reason. Notwithstanding the
foregoing, if an optionee ceases to be employed by the Company
and the Company&#146;s Subsidiaries by reason of his or her
death, or if the employee dies within the thirty (30)&nbsp;day
period after the employee ceases to be employed by the Company
and the Company&#146;s Subsidiaries, any
</FONT>

<P align="center"><FONT size="2">A-6
</FONT>

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<DIV align="left">
<FONT size="2">Stock Options of such optionee may be exercised,
to the extent of the number of shares with respect to which he
or she could have exercised it on the date of his or her death,
by his or her estate, personal representative or beneficiary who
has acquired the Stock Options by will or by the laws of descent
and distribution, at any time prior to the earlier of the
specified expiration date of the Options or one hundred eighty
(180)&nbsp;days from the date of such optionee&#146;s death.
Additionally, if an optionee ceases to be employed by the
Company and the Company&#146;s Subsidiaries by reason of his or
her Disability, he or she shall have the right to exercise any
Stock Options held by the optionee on the date of termination of
employment, to the extent of the number of shares with respect
to which he or she could have exercised it on that date, at any
time prior to the earlier of the specified expiration date of
the Stock Options or one hundred eighty (180)&nbsp;days from the
date of the termination of the optionee&#146;s employment.
</FONT>
</DIV>

<P align="left">
<FONT size="2">(e)&nbsp;<I>162(m) Limits.</I> A Participant can
receive no more than one&nbsp;million shares of Stock covered by
Stock Options during any one calendar year, subject to
adjustment under Section&nbsp;3(c).
</FONT>

<P align="left">
<FONT size="2">(f)&nbsp;<I>Notice to Company of Disqualifying
Disposition.</I> Each employee who receives an Incentive Stock
Option must agree to notify the Company in writing immediately
after the employee makes a Disqualifying Disposition of any
Stock acquired pursuant to the exercise of an Incentive Stock
Option. A &#147;Disqualifying Disposition&#148; is any
disposition (including any sale) of such Stock before the later
of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(i)&nbsp;two years after the date the employee
    was granted the Incentive Stock Option, or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(ii)&nbsp;one year after the date the employee
    acquired Stock by exercising the Incentive Stock Option. If the
    employee has died before such stock is sold, these holding
    period requirements do not apply and no Disqualifying
    Disposition can occur thereafter.
    </FONT></TD>
</TR>

</TABLE>

<P align="center">
<B><FONT size="2">SECTION 6.</FONT></B>

<P align="center">
<B><FONT size="2">RESTRICTED STOCK AWARDS</FONT></B>

<P align="left">
<FONT size="2">(a)&nbsp;<I>Nature of Restricted Stock
Awards.</I> A Restricted Stock Award is an Award entitling the
recipient to acquire shares of Stock subject to such
restrictions and conditions as the Administrator may determine
at the time of grant (&#147;Restricted Stock&#148;). A
Restricted Stock Award can be made without any required payment,
upon payment of par value or upon any other such payment, all as
determined by the Administrator in its discretion and in
compliance with Applicable Law. Conditions may be based on
continuing employment (or service as a Non-employee Director)
and/or achievement of pre-established performance goals and
objectives. The grant of a Restricted Stock Award is contingent
on the Participant executing the Restricted Stock Award
Agreement. The terms and conditions of each such Award Agreement
shall be determined by the Administrator, and such terms and
conditions may differ among individual Awards and Participants.
</FONT>

<P align="left">
<FONT size="2">(b)&nbsp;<I>Rights as a Shareholder.</I> Upon
execution of the Restricted Stock Award Agreement and paying any
applicable purchase price, a Participant shall have the rights
of a shareholder with respect to the voting of the Restricted
Stock, subject to such terms and conditions as may be contained
in the Restricted Stock Award Agreement. Unless the
Administrator shall otherwise determine, certificates (as
described in Section&nbsp;14(b)) evidencing the Restricted Stock
shall remain in the possession of the Company until such
Restricted Stock is vested as provided in Section&nbsp;6(d)
below, and the Participant may be required, as a condition of
the grant, to deliver to the Company a stock power endorsed in
blank.
</FONT>

<P align="left">
<FONT size="2">(c)&nbsp;<I>Restrictions.</I> Restricted Stock
may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of except as specifically provided herein
or in the Restricted Stock Award Agreement. Except as may
otherwise be provided by the Administrator either in the Award
Agreement or, subject to Section&nbsp;13 below, in writing after
the Award Agreement is issued, if a Participant&#146;s
employment (or service as a Non-employee Director) with the
Company and its Subsidiaries terminates for any reason, the
Company shall have the right to repurchase Restricted Stock that
has not vested at the time of termination at its original
purchase price (which may be zero), from the Participant or the
Participant&#146;s legal representative.
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[EXHIBITS TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">A-7
</FONT>

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<P align="left">
<FONT size="2">(d)&nbsp;<I>Vesting of Restricted Stock.</I> The
Administrator at the time of grant shall specify the date or
dates and/or the attainment of pre-established performance
goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the
Company&#146;s right of repurchase or forfeiture shall lapse,
<I>provided</I>, however, that any Awards of Restricted Stock
that vest solely on the basis of continuing employment (or
service as a Non-employee Director) shall be subject to a period
of vesting determined by the Administrator, <I>subject</I>,
however, at the Administrator&#146;s discretion, to accelerated
vesting upon the achievement of specified performance goals.
Except as may otherwise be provided by the Administrator either
in the Award Agreement or, subject to Section&nbsp;13 below, in
writing after the Award Agreement is issued, a
Participant&#146;s rights in any shares of Restricted Stock that
have not vested shall automatically terminate upon the
Participant&#146;s termination of employment (or service as a
Non-employee Director) with the Company and its Subsidiaries and
such shares shall be subject to the Company&#146;s right of
repurchase as provided in Section&nbsp;6(c) above.
</FONT>

<P align="left">
<FONT size="2">(e)&nbsp;<I>Waiver, Deferral and Reinvestment of
Dividends.</I> The Restricted Stock Award Agreement may require
or permit the immediate payment, waiver, deferral or
reinvestment (in the form of additional Restricted Stock) of
dividends paid on the Restricted Stock.
</FONT>

<P align="left">
<FONT size="2">(f)&nbsp;<I>162(m) Limit on Restricted Stock
Awards.</I> A Participant can receive grants covering no more
than two hundred thousand shares of Restricted Stock during any
one calendar year, subject to adjustment under Section&nbsp;3(c).
</FONT>

<P align="left">
<FONT size="2">(g)&nbsp;<I>Section&nbsp;162(m) Performance
Restrictions.</I> For purposes of qualifying grants of
Restricted Stock as &#147;performance-based compensation&#148;
under Section 162(m) of the Code, the Administrator, in its
discretion, may set restrictions based upon the achievement of
Performance Goals. The Performance Goals shall be set by the
Administrator on or before the latest date permissible to enable
the Restricted Stock to qualify as &#147;performance-based
compensation&#148; under Section&nbsp;162(m) of the Code. In
granting Restricted Stock which is intended to qualify under
Section&nbsp;162(m) of the Code, the Administrator shall follow
any procedures determined by it from time to time to be
necessary or appropriate to ensure qualification of the
Restricted Stock under Section&nbsp;162(m) of the Code
(e.g.,&nbsp;in determining the Performance Goals).
</FONT>

<P align="center">
<B><FONT size="2">SECTION&nbsp;7.</FONT></B>

<P align="center">
<B><FONT size="2">DEFERRED STOCK AWARDS</FONT></B>

<P align="left">
<FONT size="2">(a)&nbsp;<I>Nature of Deferred Stock Awards.</I>
A Deferred Stock Award is an Award of a right to receive shares
of Stock at the end of a specified deferral period. The
Administrator in its sole discretion shall determine the persons
to whom and the time or times at which Deferred Stock Awards
will be made, the number of shares of Stock covered by any
Deferred Stock Award, the duration of the period (the
&#147;Deferral Period&#148;) prior to which the Stock will be
delivered, and the restrictions and other conditions under which
receipt of the Stock will be deferred and any other terms and
conditions of the Deferred Stock Awards. The Administrator may
condition a Deferred Stock Award upon the attainment of
specified performance goals by the Participant or by the Company
or a Subsidiary, including a division or department of the
Company or a Subsidiary for or within which the Participant is
primarily employed, or upon such other factors or criteria as
the Administrator shall determine. The provisions of Deferred
Stock Awards need not be the same with respect to any
Participant. The Administrator may make Deferred Stock Awards
independent of or in connection with the granting of any other
Award under the Plan.
</FONT>

<P align="left">
<FONT size="2">(b)&nbsp;<I>Terms and Conditions.</I> Deferred
Stock Awards shall be subject to the following terms
and&nbsp;conditions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(1)&nbsp;<I>Limitations on Transferability.</I>
    Except as otherwise provided in an agreement with a Participant,
    Deferred Stock Awards, or any interest therein, may not be sold,
    assigned, transferred, pledged or otherwise encumbered during
    the Deferral Period. At the expiration of the Deferral Period
    (or Elective Deferral Period as defined in Section&nbsp;7(b)(4),
    where applicable), the Administrator shall deliver Stock to the
    Participant for the shares of Stock covered by the Deferred
    Stock Award.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-8
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(2)&nbsp;<I>Rights.</I> Unless otherwise
    determined by the Administrator and the applicable Award
    Agreement with a Participant, cash dividends on the Stock that
    is the subject of the Deferred Stock Award shall be
    automatically deferred and reinvested in an additional Deferred
    Stock Award with respect to the same class as the Stock on which
    such dividend was payable, and dividends on the Stock that is
    the subject of the Deferred Stock Award payable in Stock shall
    be awarded in the form of a Deferred Stock Award with respect to
    the same class as the Stock on which such dividend was payable.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(3)&nbsp;<I>Acceleration and Waiver.</I> Based on
    such factors or criteria as the Administrator may determine, the
    Administrator may provide in the Award Agreement for the lapse
    of restrictions, conditions or deferral limitations in
    installments and may accelerate the vesting of all or any part
    of any Deferred Stock Award and waive such remaining
    restrictions, conditions or deferral limitations for all or any
    part of such Deferred Stock Award.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(4)&nbsp;<I>Election.</I> A Participant may elect
    further to defer receipt of the shares of Stock payable under a
    Deferred Stock Award (or an installment thereof) for a specified
    period or until a specified event (an &#147;Elective Deferral
    Period&#148;), subject in each case to the Administrator&#146;s
    approval and to such terms as are determined by the
    Administrator. Subject to any exceptions adopted by the
    Administrator, such election must be made at least one
    (1)&nbsp;year prior to completion of the Deferral Period for the
    Deferred Stock Award (or of the applicable installment thereof),
    and any such deferral that is effective after the vesting date
    of a Deferred Stock Award shall result in the Deferred Stock
    Award remaining subject to the claims of the Company&#146;s
    general creditors until the distribution date.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">(c)&nbsp;<I>Rights as a Shareholder.</I> A
Participant receiving a Deferred Stock Award shall have the
rights of a shareholder only as to shares actually received by
the Participant under the Plan and not with respect to shares
subject to the Award but not actually received by the
Participant. A Participant shall be entitled to receive a stock
certificate (as described in Section&nbsp;14(b)) evidencing the
acquisition of shares of Stock under a Deferred Stock Award only
upon satisfaction of all conditions specified in the Deferred
Stock Award Agreement.
</FONT>

<P align="left">
<FONT size="2">(d)&nbsp;<I>Termination.</I> Except as may
otherwise be provided by the Administrator either in the
Deferred Stock Award Agreement or, subject to Section&nbsp;11
below, in writing after the Deferred Stock Award Agreement is
issued, a Participant&#146;s rights in all Deferred Stock Awards
shall automatically terminate upon the Participant&#146;s
termination of employment (or service as a Non-employee
Director) with the Company and its Subsidiaries for any reason.
</FONT>

<P align="left">
<FONT size="2">(e)&nbsp;<I>162(m) Limit on Deferred Stock
Awards.</I> A Participant can receive grants covering no more
than two hundred thousand shares of Deferred Stock Awards during
any one calendar year, subject to adjustment under
Section&nbsp;3(c).
</FONT>

<P align="left">
<FONT size="2">(f)&nbsp;<I>Section&nbsp;162(m) Performance
Restrictions.</I> For purposes of qualifying grants of Deferred
Stock Awards as &#147;performance-based compensation&#148; under
Section&nbsp;162(m) of the Code, the Administrator, in its
discretion, may set restrictions based upon the achievement of
Performance Goals. The Performance Goals shall be set by the
Administrator on or before the latest date permissible to enable
the Restricted Stock to qualify as &#147;performance-based
compensation&#148; under Section&nbsp;162(m) of the Code. In
granting Deferred Stock Awards which are intended to qualify
under Section&nbsp;162(m) of the Code, the Administrator shall
follow any procedures determined by it from time to time to be
necessary or appropriate to ensure qualification of the Deferred
Stock Awards under Section&nbsp;162(m) of the Code (e.g., in
determining the Performance Goals).
</FONT>

<P align="center">
<B><FONT size="2">SECTION&nbsp;8.</FONT></B>

<P align="center">
<B><FONT size="2">NON-EMPLOYEE DIRECTOR STOCK OPTION
PROGRAM</FONT></B>

<P align="left">
<FONT size="2">Each person who is elected as a Non-employee
Director shall be granted, on the date of his or her initial
election and annually thereafter on the date of the annual
shareholders meeting (so long as the Non-Employee Director has
then been serving as such for at least three months), a
Non-Qualified Stock
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[EXHIBITS TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">A-9
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV align="left">
<FONT size="2">Option to acquire such number of shares of Stock
as may be determined by the Administrator with an exercise price
per share for the Stock covered by such Stock Option at least
equal to the Fair Market Value on the date as of which the Stock
Option is granted. Such Stock Options shall become exercisable
as may be determined by the Administrator. Stock Options granted
under this Section&nbsp;8 may be exercised only by written
notice to the Company specifying the number of shares to be
purchased. Payment of the full purchase price of the shares to
be purchased may be made by one or more of the methods specified
in Section&nbsp;5(a)(iv). An optionee shall have the rights of a
shareholder only as to shares acquired upon the exercise of a
Stock Option and not as to unexercised Stock Options.
</FONT>
</DIV>

<P align="center">
<B><FONT size="2">SECTION&nbsp;9.</FONT></B>

<P align="center">
<B><FONT size="2">TAX WITHHOLDING</FONT></B>

<P align="left">
<FONT size="2">(a)&nbsp;<I>Payment by Participant.</I> Each
Participant shall, no later than the date as of which the value
of an Award or of any Stock or other amounts received thereunder
first becomes includable in the gross income of the Participant
for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment
of, any Federal, state, or local taxes of any kind required by
law to be withheld with respect to such income. The Company and
its Subsidiaries shall, to the extent permitted by Applicable
Law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the Participant. The Company&#146;s
obligation to deliver stock certificates to any Participant is
subject to and conditioned on tax obligations being satisfied by
the Participant.
</FONT>

<P align="left">
<FONT size="2">(b)&nbsp;<I>Payment in Stock.</I> Subject to
approval by the Administrator, a Participant may elect to have
such tax withholding obligation satisfied, in whole or in part,
by (i)&nbsp;authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with
an aggregate Fair Market Value (as of the date the withholding
is effected) that would satisfy the required statutory minimum
(but no more than such required minimum) with respect to the
Company&#146;s withholding obligation, or (ii)&nbsp;transferring
to the Company shares of Stock owned by the Participant with an
aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the required statutory minimum (but
no more than such required minimum) with respect to the
Company&#146;s withholding obligation.
</FONT>

<P align="center">
<B><FONT size="2">SECTION&nbsp;10.</FONT></B>

<P align="center">
<B><FONT size="2">TRANSFER, LEAVE OF ABSENCE, ETC.</FONT></B>

<P align="left">
<FONT size="2">For purposes of the Plan, the following events
shall not be deemed a termination of employment:
</FONT>

<P align="left">
<FONT size="2">(a)&nbsp;a transfer to the employment of the
Company from a Subsidiary or from the Company to a Subsidiary,
or from one Subsidiary to another;&nbsp;or
</FONT>

<P align="left">
<FONT size="2">(b)&nbsp;an approved leave of absence for
military service or sickness, or for any other purpose approved
by the Company, if the employee&#146;s right to re-employment is
guaranteed either by a statute or by contract or under the
written policy pursuant to which the leave of absence was
granted or if the Administrator otherwise so provides in writing.
</FONT>

<P align="center">
<B><FONT size="2">SECTION&nbsp;11.</FONT></B>

<P align="center">
<B><FONT size="2">AMENDMENTS AND TERMINATION</FONT></B>

<P align="left">
<FONT size="2">The Board may, at any time, amend or discontinue
the Plan, and the Administrator may, at any time, amend or
cancel any outstanding Award for the purpose of satisfying
changes in law or for any other lawful purpose, but no such
action shall adversely affect rights under any outstanding Award
without the holder&#146;s written consent. If and to the extent
determined by the Administrator to be required by (a)&nbsp;the
Code to ensure that Incentive Stock Options granted under the
Plan are qualified under Section&nbsp;422 of the Code or ensure
that compensation earned under Awards granted under the Plan
qualify as performance-based compensation under
Section&nbsp;162(m) of the Code, if and to the extent intended
to so qualify, or
</FONT>

<P align="center"><FONT size="2">A-10
</FONT>

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<DIV align="left">
<FONT size="2">(b)&nbsp;the rules of the New&nbsp;York Stock
Exchange, Plan amendments shall be subject to approval by the
Company&#146;s shareholders entitled to vote at a meeting of
shareholders. Nothing in this Section&nbsp;11 shall limit the
Board&#146;s authority to take any action permitted pursuant to
Section&nbsp;3(c) or 3(d).
</FONT>
</DIV>

<P align="center">
<B><FONT size="2">SECTION&nbsp;12.</FONT></B>

<P align="center">
<B><FONT size="2">STATUS OF PLAN</FONT></B>

<P align="left">
<FONT size="2">Unless the Administrator shall otherwise
expressly determine in writing, with respect to the portion of
any Award which has not been exercised and any payments in cash,
Stock or other consideration not received by a Participant, a
Participant shall have no rights greater than those of a general
creditor of the Company. In its sole discretion, the
Administrator may authorize the creation of trusts or other
arrangements to meet the Company&#146;s obligations to deliver
Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements
is consistent with the foregoing sentence.
</FONT>

<P align="center">
<B><FONT size="2">SECTION&nbsp;13.</FONT></B>

<P align="center">
<B><FONT size="2">MERGER&nbsp;&#38; SIMILAR TRANSACTION
PROVISIONS</FONT></B>

<P align="left">
<FONT size="2">In contemplation of and subject to the
consummation of a consolidation or merger or sale of all or
substantially all of the assets of the Company in which
outstanding shares of Stock are exchanged for securities, cash
or other property of an unrelated corporation or business entity
or in the event of a liquidation or dissolution of the Company
or in the case of a corporate reorganization of the Company (in
each case, a &#147;Transaction&#148;), the Board, or the board
of directors of any corporation or other entity assuming the
obligations of the Company, may, in its discretion, take any one
or more of the following actions, as to outstanding Awards:
(i)&nbsp;provide that such Awards shall be assumed or equivalent
awards shall be substituted, by the acquiring or succeeding
corporation or other entity (or an affiliate thereof), and/or
(ii)&nbsp;upon written notice to the Participants, provide that
all Awards will terminate immediately prior to the consummation
of the Transaction. In the event that, pursuant to
clause&nbsp;(ii) above, Awards will terminate immediately prior
to the consummation of the Transaction, all outstanding Awards
shall vest 100% immediately prior to their termination.
Moreover, in such event, all Awards, other than Options, shall
be fully settled in cash, in kind or in some combination
thereof, at such appropriate consideration as determined by the
Administrator in its sole discretion after taking into account
any and all consideration payable per share of Stock pursuant to
the Transaction (the &#147;Transaction Price&#148;) and all
Stock Options shall be fully settled, in cash, in kind or in
some combination thereof, in an amount equal to the difference
between (A)&nbsp;the Transaction Price times the number of
shares of Stock subject to such outstanding Stock Options (to
the extent then exercisable at prices not in excess of the
Transaction Price) and (B)&nbsp;the aggregate exercise price of
all such outstanding Stock Options.
</FONT>

<P align="center">
<B><FONT size="2">SECTION&nbsp;14.</FONT></B>

<P align="center">
<B><FONT size="2">GENERAL PROVISIONS</FONT></B>

<P align="left">
<FONT size="2">(a)&nbsp;<I>No Distribution; Compliance with
Legal Requirements.</I> The Administrator may require each
person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof. No shares of
Stock shall be issued pursuant to an Award until all Applicable
Laws have been satisfied. The Administrator may require the
placing of such stop-orders and restrictive legends on
certificates for Stock (as described in Section&nbsp;14(b)
below) as it deems appropriate.
</FONT>

<P align="left">
<FONT size="2">(b)&nbsp;<I>Stock Certificates.</I> To the extent
the Company uses certificates to represent shares of Stock,
certificates to be delivered to Participants under this Plan
shall be deemed delivered for all purposes when the Company or a
stock transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the
Participant, at the Participant&#146;s last known address on
file with the Company.
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[EXHIBITS TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">A-11
</FONT>

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<DIV align="left">
<FONT size="2">Any reference in this Section&nbsp;14(b) or
elsewhere in the Plan to actual stock certificates and/or the
delivery of actual stock certificates shall be deemed satisfied
by the electronic record-keeping and electronic delivery of
shares of Stock or other mechanism then utilized by the Company
and its agents for reflecting ownership of such shares.
</FONT>
</DIV>

<P align="left">
<FONT size="2">(c)&nbsp;<I>Other Compensation Arrangements; No
Employment Rights.</I> Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation
arrangements, including trusts, and such arrangements may be
either generally applicable or applicable only in specific
cases. The adoption of this Plan and the grant of Awards shall
not confer upon any individual any right to continued employment
or service as a director with the Company or any Subsidiary and
shall not interfere in any way with the right of the Company or
any Subsidiary to terminate the employment of any of its
employees at any time, with or without cause or notice.
</FONT>

<P align="left">
<FONT size="2">(d)&nbsp;<I>Trading Policy Restrictions.</I>
Awards and related transactions under the Plan shall be subject
to such Company insider-trading-policy-related restrictions,
terms and conditions as may be established by the Administrator,
or in accordance with policies set by the Administrator, from
time to time.
</FONT>

<P align="center">
<B><FONT size="2">SECTION&nbsp;15.</FONT></B>

<P align="center">
<B><FONT size="2">GOVERNING LAW</FONT></B>

<P align="left">
<FONT size="2">This Plan and all Awards and actions taken
thereunder shall be governed by, and construed in accordance
with, the laws of the State of California, applied without
regard to conflict of law principles.
</FONT>

<P align="center"><FONT size="2">A-12
</FONT>

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<P align="center">
<FONT size="2">EXHIBIT B
</FONT>

<P align="center">
<B><FONT size="2">WILLIAMS-SONOMA,&nbsp;INC.</FONT></B>

<P align="center">
<B><FONT size="2">COMPENSATION COMMITTEE CHARTER</FONT></B>

<P align="center">
<B><FONT size="2">(as adopted on March&nbsp;16, 2004)</FONT></B>

<P align="left">
<B><FONT size="2">PURPOSE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purpose of the Compensation Committee of the
Board of Directors of Williams-Sonoma,&nbsp;Inc. (the
&#147;Company&#148;) is to: (i)&nbsp;assist the Board of
Directors in discharging its responsibilities relating to
oversight of the compensation of the Company&#146;s Chief
Executive Officer, other executive officers, and directors;
(ii)&nbsp;administer the Company&#146;s incentive compensation
and other equity-based plans (the &#147;Plans&#148;) and make
grants under them; and (iii)&nbsp;oversee the Company&#146;s
compensation policies, plans, and benefits programs generally.
In addition, the Compensation Committee will undertake those
specific duties and responsibilities listed below and such other
duties as the Board of Directors from time to time prescribes.
</FONT>

<P align="left">
<B><FONT size="2">COMPOSITION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee shall consist of not
less than two (2)&nbsp;independent members of the Company&#146;s
Board of Directors. The members of the Compensation Committee
are appointed by the Board of Directors upon the recommendation
of the Nominations and Corporate Governance Committee and serve
at the discretion of the Board of Directors. The Board of
Directors shall designate one member of the Compensation
Committee to serve as the chairperson.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Members of the Compensation Committee must meet
the following criteria:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Each member will be an independent director, as
    defined by: (i)&nbsp;the rules of the New&nbsp;York Stock
    Exchange; and (ii)&nbsp;the rules of the Securities and Exchange
    Commission (&#147;SEC&#148;).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Each member will be an &#147;Outside
    Director&#148; as such term is defined with respect to
    Section&nbsp;162(m) of the Internal Revenue Code of 1986, as
    amended.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Each member will be a &#147;non-employee&#148;
    director as defined under Rule&nbsp;16b-3 promulgated under
    Section&nbsp;16 of the Securities Exchange Act of 1934, as
    amended (the &#147;Exchange Act&#148;).
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Determinations as to whether a particular
director satisfies the requirements for membership on the
Compensation Committee shall be made by the Board of Directors.
</FONT>

<P align="left">
<B><FONT size="2">RESPONSIBILITIES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The responsibilities of the Compensation
Committee shall include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewing and approving corporate goals and
    objectives relevant to the compensation of the Chief Executive
    Officer, evaluating the Chief Executive Officer&#146;s
    performance in light of those goals and objectives, and
    reviewing and approving the level of compensation, including
    base salary, bonus, equity compensation, and any other benefits
    to be provided to the Chief Executive Officer based on this
    evaluation. In determining the long-term incentive component of
    the Chief Executive Officer&#146;s compensation, the
    Compensation Committee shall consider such factors as the
    Company&#146;s performance and relative shareholder return, the
    value of similar incentive awards given to Chief Executive
    Officers of comparable companies, and the awards given to the
    Company&#146;s Chief Executive Officer in past years. Such
    review and approval shall be made without the presence of the
    Chief Executive Officer.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewing, making recommendations to the Board of
    Directors regarding, and approving, as appropriate, compensation
    for executive officers other than the Chief Executive Officer.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewing, making recommendations to the Board of
    Directors regarding, and approving, as appropriate, general
    compensation goals and guidelines for the Company&#146;s
    employees.
    </FONT></TD>
</TR>

</TABLE>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[EXHIBITS TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">B-1
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Reviewing, making recommendations to the Board of
    Directors regarding, and approving, as appropriate, the
    compensation policy for the non-employee directors of the
    Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Acting as the Administrator (as defined under
    each Plan) and administering, within the authority delegated by
    the Board of Directors, the Company&#146;s Plans. In its
    administration of the Plans, the Compensation Committee may:
    (i)&nbsp;grant stock options or stock purchase rights to
    individuals eligible for such grants (including, to the extent
    relevant, grants to individuals subject to Section&nbsp;16 of
    the Exchange Act in compliance with Rule&nbsp;16b-3 promulgated
    thereunder); (ii)&nbsp;amend such stock options or stock
    purchase rights; and (iii)&nbsp;take all other actions permitted
    under the Plans. The Compensation Committee may delegate to two
    or more directors of the Company the authority to make grants
    and awards to any non-executive officer of the Company under
    such of the Plans as the Compensation Committee deems
    appropriate in accordance with the terms of such Plans. The
    Compensation Committee also shall review and make
    recommendations to the Board of Directors with respect to
    changes in the number of shares reserved for issuance under
    those Plans.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Preparing a compensation committee report on
    executive compensation as required by the SEC to be included in
    the Company&#146;s annual proxy statement or annual report on
    Form&nbsp;10-K filed with the SEC.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">As appropriate, obtaining advice and assistance
    from independent counsel or other advisors, including, without
    limitation, any compensation consultant to be used by the
    Company or the Compensation Committee in the evaluation of Chief
    Executive Officer, executive officer, other officer, employee or
    director compensation.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Conducting an annual evaluation of the
    Compensation Committee&#146;s own performance.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">MEETINGS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee shall meet as often as
it determines, but not less frequently than two (2)&nbsp;times
each year. The members of the Compensation Committee may invite
the Chief Executive Officer or any other person to attend
meetings as appropriate and consistent with this charter;
provided, however, that the Chief Executive Officer may not be
present during the voting on or deliberations regarding the
Chief Executive Officer&#146;s compensation.
</FONT>

<P align="left">
<B><FONT size="2">MINUTES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee will maintain written
minutes of its meetings, which minutes will be filed with the
minutes of the meetings of the Board of Directors.
</FONT>

<P align="left">
<B><FONT size="2">REPORTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee will report to the
Board of Directors on a periodic basis and make such
recommendations with respect to any of the above matters as the
Compensation Committee deems necessary or appropriate.
</FONT>

<P align="left">
<B><FONT size="2">COMPENSATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Members of the Compensation Committee shall
receive such fees, if any, for their service as committee
members as may be determined by the Board of Directors in its
sole discretion. Fees may be paid in such form of consideration
as is determined by the Board of Directors.
</FONT>

<P align="left">
<B><FONT size="2">DELEGATION OF AUTHORITY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Compensation Committee may form and delegate
authority to subcommittees when appropriate.
</FONT>

<P align="center"><FONT size="2">B-2
</FONT>

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<P align="center">
<FONT size="2">EXHIBIT C
</FONT>

<P align="center">
<B><FONT size="2">WILLIAMS-SONOMA,&nbsp;INC.</FONT></B>

<P align="center">
<B><FONT size="2">NOMINATIONS AND CORPORATE GOVERNANCE COMMITTEE
CHARTER</FONT></B>

<P align="center">
<B><FONT size="2">(as amended and restated on March&nbsp;16,
2004)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Nominations and Corporate Governance
Committee (the &#147;Committee&#148;) of the Board of Directors
(the &#147;Board&#148;) of Williams-Sonoma,&nbsp;Inc. (the
&#147;Company&#148;) acts on behalf of and with the concurrence
of the Board with respect to matters relating to the composition
and membership of the Board and the Board&#146;s governance
responsibilities.
</FONT>

<P align="left">
<B><FONT size="2">COMPOSITION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee shall be comprised entirely of
independent members of the Company&#146;s Board. The exact
number of members of the Committee shall be fixed and may be
changed from time to time by resolution duly adopted by the
Board. The members of the Committee shall be appointed by the
Board. Committee members may be removed or replaced by the
Board. The members of the Committee shall meet the independence
requirements of the New&nbsp;York Stock Exchange and the
Securities and Exchange Commission.
</FONT>

<P align="left">
<B><FONT size="2">COMMITTEE PURPOSE AND
RESPONSIBILITIES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee&#146;s primary purpose and
responsibilities are to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">In consultation with the Chairman of the Board,
    periodically review and recommend to the Board suitable
    revisions to the Board&#146;s guidelines on corporate
    governance, which are updated periodically.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Annually consider and review with the Board the
    appropriate skills and characteristics required of prospective
    Board members in light of the then-current composition of the
    Board.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Identify individuals qualified to become Board
    members, consistent with criteria approved by the Board.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Assist the Chairman of the Board and the Board in
    general with screening potential Board candidates, meet with
    potential Board candidates and, as appropriate, participate in
    the recruitment of potential Board members, consistent with the
    procedures prescribed by the Board&#146;s guidelines on
    corporate governance.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">As appropriate, use its sole authority to retain
    and terminate any search firm to be used to identify director
    candidates, including its sole authority to approve the search
    firm&#146;s fees and other retention terms.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Select, or recommend that the Board select, the
    director nominees for the next annual meeting of shareholders.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Consider director nominees recommended and
    properly submitted by the Company&#146;s shareholders in
    accordance with the Committee&#146;s Shareholder Recommendations
    Policy.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Annually evaluate the performance of the
    Company&#146;s Chief Executive Officer, annually oversee
    evaluation of the performance of the Board and the
    Company&#146;s management and provide a report with respect to
    this performance to the members of the Board, together with
    recommended performance enhancements.
    </FONT></TD>
</TR>

</TABLE>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[EXHIBITS TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">C-1
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Periodically assess the Board&#146;s meeting
    schedule and evaluate the effectiveness of meeting agendas.
    Subsequently prepare recommendations to the Chairman of the
    Board regarding suggested modifications in the schedule of Board
    meetings and suggested topics to be covered at future meetings.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Conduct an annual performance evaluation of the
    Committee.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">MEETINGS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Nominations and Corporate Governance
Committee will set its own schedule and will meet periodically,
but not less frequently than at least one (1)&nbsp;time each
year. The members of the Committee may invite the Chief
Executive Officer or any other person to attend meetings as
appropriate and consistent with this charter.
</FONT>

<P align="left">
<B><FONT size="2">MINUTES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee will maintain written minutes of
its meetings, which minutes will be filed with the minutes of
the meetings of the Board.
</FONT>

<P align="left">
<B><FONT size="2">REPORTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee will report to the Board on a
periodic basis and make such recommendations with respect to any
of the above matters as the Committee deems necessary or
appropriate.
</FONT>

<P align="left">
<B><FONT size="2">COMPENSATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Members of the Committee shall receive such fees,
if any, for their service as Committee members as may be
determined by the Board in its sole discretion. Fees may be paid
in such form of consideration as is determined by the Board.
</FONT>

<P align="left">
<B><FONT size="2">DELEGATION OF AUTHORITY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Committee may form and delegate authority to
subcommittees when appropriate.
</FONT>

<P align="center"><FONT size="2">C-2
</FONT>

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<P align="center">
<FONT size="2">EXHIBIT D
</FONT>

<P align="center">
<B><FONT size="2">WILLIAMS-SONOMA, INC.</FONT></B>

<P align="center">
<B><FONT size="2">AUDIT COMMITTEE CHARTER</FONT></B>

<P align="center">
<B><FONT size="2">(as amended and restated March&nbsp;30,
2004)</FONT></B>

<P align="left">
<B><FONT size="2">PURPOSE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The primary function of the Audit Committee is to
assist the Board of Directors (the &#147;Board&#148;) in
fulfilling its oversight responsibilities by:
(1)&nbsp;monitoring the integrity of the financial reports and
other financial information provided by
Williams-Sonoma,&nbsp;Inc. (the &#147;Company&#148;) to any
governing body or the public, (2)&nbsp;appointing and/or
replacing the Company&#146;s independent auditor and assessing
the independent auditor&#146;s qualifications and independence,
(3)&nbsp;reviewing the performance of the Company&#146;s
internal audit function and independent auditors, and the
Company&#146;s auditing, accounting, and financial reporting
processes in general, (4)&nbsp;monitoring the Company&#146;s
compliance with legal and regulatory requirements, and
(5)&nbsp;monitoring the Company&#146;s system of internal
controls. Consistent with this function, the Audit Committee
should encourage continuous improvement of, and should foster
adherence to, the Company&#146;s policies, procedures, and
practices at all levels. The Audit Committee&#146;s primary
duties and responsibilities are to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Serve as an independent and objective party to
    monitor the Company&#146;s financial reporting process and
    internal control system.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review and appraise the audit efforts of the
    Company&#146;s independent auditor and internal audit
    department, including obtaining and reviewing a report from the
    Company&#146;s independent auditor at least annually regarding
    the adequacy of internal controls, among other things.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Provide an open avenue of communication among the
    independent auditors, financial and senior management, the
    internal audit department, and the Board.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee shall prepare the report
required by the rules of the Securities and Exchange Commission
(the &#147;Commission&#148;) to be included in the
Company&#146;s annual proxy statement.
</FONT>

<P align="left">
<B><FONT size="2">FORMATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Williams-Sonoma,&nbsp;Inc. has
established the Audit Committee pursuant to Section&nbsp;311 of
the General Corporation Law of the State of California and
Article&nbsp;III of the Company&#146;s Restated Bylaws.
</FONT>

<P align="left">
<B><FONT size="2">COMPOSITION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee shall be comprised of not
less than three independent members of the Company&#146;s Board.
Subject to the foregoing, the exact number of members of the
Audit Committee shall be fixed and may be changed from time to
time by resolution duly adopted by the Board. Audit Committee
members shall not simultaneously serve on the audit committees
of more than two other public companies. The members of the
Audit Committee shall be appointed by the Board on the
recommendation of the Nominations and Corporate Governance
Committee. Audit Committee members may be replaced by the Board.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The members of the Audit Committee shall meet the
independence and experience requirements of the New&nbsp;York
Stock Exchange, Section&nbsp;10A(m)(3) of the Securities
Exchange Act of 1934 (the &#147;Exchange Act&#148;) and the
rules and regulations of the Commission. Each member of the
Audit Committee must be financially literate, as such
qualification is interpreted by the Company&#146;s Board, or
must become financially literate within a reasonable period of
time after his or her appointment to the Audit Committee. At
least one member of the Audit Committee shall have accounting or
related financial management expertise, as the Company&#146;s
Board interprets such qualification in its business judgment.
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[EXHIBITS TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">D-1
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The members of the Audit Committee shall be
appointed by the Board until their successors shall be duly
appointed and qualified. Unless a Chair is appointed by the full
Board, the members of the Committee may designate a Chair by
majority vote of the full Committee membership.
</FONT>

<P align="left">
<B><FONT size="2">Committee Authority and
Responsibilities</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Audit Committee shall be directly responsible
    for the appointment, compensation, retention and oversight of
    the work of (including resolution of disagreements between
    management and the independent auditor regarding financial
    reporting) any registered public accounting firm engaged for the
    purpose of preparing or issuing an audit report or performing
    other audit, review or attest services. The independent auditor
    shall report directly to the Audit Committee.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Audit Committee shall pre-approve all
    auditing services and permitted non-audit services (including
    the fees and terms thereof) to be performed for the Company by
    its independent auditor, subject to the de&nbsp;minimus
    exceptions for non-audit services described in
    Section&nbsp;10A(i)(1)(B) of the Exchange Act, which services
    are approved by the Audit Committee prior to the completion of
    the audit.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Audit Committee may form and delegate
    authority to subcommittees consisting of one or more members
    when appropriate, including the authority to grant pre-approvals
    of audit and permitted non-audit services, provided that
    decisions of such subcommittee to grant pre-approvals shall be
    presented to the full Audit Committee at its next scheduled
    meeting.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Audit Committee shall have the authority, to
    the extent it deems necessary or appropriate, to retain
    independent legal, accounting or other advisors. The Company
    shall provide for appropriate funding, as determined by the
    Audit Committee, for payment of compensation to the independent
    auditor for the purpose of rendering or issuing an audit report
    and to any advisors employed by the Audit Committee.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Audit Committee shall make regular reports to
    the Board, which reports shall include any issues that arise
    with respect to the quality or integrity of the Company&#146;s
    financial statements, the Company&#146;s compliance with legal
    or regulatory requirements, the performance and independence of
    the Company&#146;s independent auditors, or the performance of
    the internal audit function.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Audit Committee shall review and reassess the
    adequacy of this Charter annually and recommend any proposed
    changes to the Board for approval. The Audit Committee shall
    annually review the Audit Committee&#146;s own performance.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the responsibilities outlined
elsewhere in this Charter, the Audit Committee shall perform
such other specific functions as the Company&#146;s Board may
from time to time direct, and make such investigations and
reviews of the Company and its operations as the Chief Executive
Officer or the Board may from time to time request. The Audit
Committee, to the extent it deems necessary or appropriate,
shall:
</FONT>

<P align="left">
<B><FONT size="2">Financial Statement and Disclosure
Matters</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review and discuss with management and the
    independent auditor the annual audited financial statements,
    including disclosures made in management&#146;s discussion and
    analysis, and recommend to the Board whether the audited
    financial statements and management&#146;s discussion and
    analysis should be included in the Company&#146;s Form&nbsp;10-K.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review and discuss with management and the
    independent auditor the Company&#146;s quarterly financial
    statements prior to the filing of its Form&nbsp;10-Q, including
    the results of the independent auditor&#146;s review of the
    quarterly financial statements.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Discuss with management and the independent
    auditor significant financial reporting issues and judgments
    made in connection with the preparation of the Company&#146;s
    financial statements,
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">D-2
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">including the review of (a)&nbsp;major issues
    regarding accounting principles and financial statement
    presentations, including any significant changes in the
    Company&#146;s selection or application of accounting
    principles, and major issues as to the adequacy of the
    Company&#146;s internal controls and any special audit steps
    adopted in light of material control deficiencies; and
    (b)&nbsp;analyses prepared by management and/or the independent
    auditor setting forth significant financial reporting issues and
    judgments made in connection with the preparation of the
    financial&nbsp;statements.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review and discuss quarterly reports from the
    independent auditors on:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="10%"></TD>
    <TD width="3%"></TD>
    <TD width="87%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">All critical accounting policies and practices to
    be used.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">All alternative treatments of financial
    information within generally accepted accounting principles
    (&#147;GAAP&#148;) that have been discussed with management,
    ramifications of the use of such alternative disclosures and
    treatments, and the treatment preferred by the independent
    auditor.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Other material written communications between the
    independent auditor and management, such as any management
    letter or schedule of unadjusted differences.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Discuss with management the Company&#146;s
    earnings press releases, including the proposed use of any
    &#147;pro forma&#148; or &#147;adjusted&#148; non-GAAP
    information, as well as financial information and earnings
    guidance provided to analysts and rating agencies. Such
    discussion may be done generally (consisting of discussing the
    types of information to be disclosed and the types of
    presentations to be made).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Discuss with management and the independent
    auditor the effect on the Company&#146;s financial statements of
    regulatory and accounting initiatives as well as off-balance
    sheet arrangements, contractual obligations and contingent
    liabilities and commitments.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Discuss with management the Company&#146;s major
    financial risk exposures and the steps management has taken to
    monitor and control such exposures, including the Company&#146;s
    risk assessment and risk management policies.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Discuss with the independent auditor the matters
    required to be discussed by Statement on Auditing Standards
    No.&nbsp;61 relating to the conduct of the audit, including any
    problems or difficulties encountered in the course of the audit
    work and management&#146;s response thereto, including any
    restrictions on the scope of activities or access to requested
    information, and any significant disagreements with management.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review disclosures made to the Audit Committee by
    the Company&#146;s CEO and CFO during their certification
    process for the Form&nbsp;10-K and Form&nbsp;10-Q about any
    significant deficiencies in the design or operation of internal
    controls or material weaknesses therein and any fraud involving
    management or other employees who have a significant role in the
    Company&#146;s internal&nbsp;controls.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Oversight of the Company&#146;s Relationship
with the Independent Auditor</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review and evaluate the lead partner of the
    independent auditor team.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Obtain and review a report from the independent
    auditor at least annually regarding (a)&nbsp;the independent
    auditor&#146;s internal quality-control procedures, (b)&nbsp;any
    material issues raised by the most recent internal
    quality-control review, or peer review, of the firm, or by any
    inquiry or investigation by governmental or professional
    authorities within the preceding five years respecting one or
    more independent audits carried out by the firm, and any steps
    taken to deal with any such issues, and (c)&nbsp;all
    relationships between the independent auditor and the Company
    (for purposes of assessing the auditor&#146;s independence).
    Evaluate the qualifications, performance and independence of the
    independent auditor, including considering whether the
    </FONT></TD>
</TR>

</TABLE>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[EXHIBITS TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">D-3
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">auditor&#146;s quality controls are adequate and
    the provision of permitted non-audit services is compatible with
    maintaining the auditor&#146;s independence, and taking into
    account the opinions of management and internal auditors. The
    Audit Committee shall present its conclusions with respect to
    the independent auditor to the Board.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Ensure the rotation of the lead (or coordinating)
    audit partner having primary responsibility for the audit and
    the audit partner responsible for reviewing the audit as
    required by law. Consider whether, in order to assure continuing
    auditor independence, it is appropriate to adopt a policy of
    rotating the independent auditing firm on a regular basis.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Set clear policies for the Company&#146;s hiring
    of employees or former employees of the independent auditor who
    participated in any capacity in the audit of the Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Consider discussing with the national office of
    the independent auditor material issues on which they were
    consulted by the Company&#146;s audit team and matters of audit
    quality and consistency.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Meet with the independent auditor prior to the
    audit to discuss the planning and staffing of the audit.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Oversight of the Company&#146;s Internal Audit
Function</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review the appointment and replacement of the
    senior internal auditing executive.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review the significant reports to management
    prepared by the internal auditing department and
    management&#146;s responses and subsequent follow-up on the
    responses.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Discuss with the independent auditor and
    management the internal audit department responsibilities,
    budget and staffing and any recommended changes in the planned
    scope of the internal audit.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Oversight of the Company&#146;s Information
Technology Systems to Support the Company&#146;s Internal
Controls</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Discuss with the senior information technology
    executive and the Company&#146;s Chief Financial Officer and
    Chief Accounting Officer at least once each year the sufficiency
    of company systems to support effective internal controls and
    any recommended changes in the information technology
    department&#146;s priorities and projects planned for improving
    such systems.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Review reports to management, if any, prepared by
    the Company&#146;s information technology department relating to
    systems&#146; integrity and security, and subsequent follow-up
    on the responses.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Compliance Oversight
Responsibilities</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Obtain from the independent auditor assurance
    that Section&nbsp;10A(b) of the Exchange Act (relating to audit
    discoveries of illegal acts) has not applied.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Obtain reports from management, the
    Company&#146;s senior internal auditing executive and the
    independent auditor that the Company and its subsidiary/foreign
    affiliated entities are in conformity with applicable legal
    requirements and the Company&#146;s Code of Conduct and Ethics
    Policy. Review reports and disclosures of insider and affiliated
    party transactions. Advise the Board with respect to the
    Company&#146;s policies and procedures regarding compliance with
    applicable laws and regulations and with the Company&#146;s Code
    of Conduct and Ethics Policy.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Establish procedures for the receipt, retention
    and treatment of complaints received by the Company regarding
    accounting, internal accounting controls or auditing matters,
    and the confidential, anonymous submission by employees of
    concerns regarding questionable accounting or auditing matters.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">D-4
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Discuss with management and the independent
    auditor any correspondence with regulators or governmental
    agencies and any published reports which raise material issues
    regarding the Company&#146;s financial statements or accounting
    policies.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Discuss with the Company&#146;s General Counsel
    legal matters that may have a material impact on the financial
    statements or the Company&#146;s compliance policies.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Qualified Legal Compliance Committee</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="3%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;</FONT></TD>
    <TD align="left">
    <FONT size="2">Act as the Company&#146;s Qualified Legal
    Compliance Committee (&#147;QLCC&#148;) for the purposes of
    internal and external attorney reporting under Commission rules.
    The Committee also shall establish procedures for confidential
    receipt, retention and consideration of any attorney report to
    the QLCC.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Limitation of Audit Committee&#146;s
Role</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">While the Audit Committee has the
    responsibilities and powers set forth in this Charter, it is not
    the duty of the Audit Committee to plan or conduct audits or to
    determine that the Company&#146;s financial statements and
    disclosures are complete and accurate and are in accordance with
    GAAP and applicable rules and regulations. These are the
    responsibilities of management and the independent auditor.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">It is recognized that members of the Audit
    Committee are not full-time employees of the Company, it is not
    the duty or responsibility of the Audit Committee or its members
    to conduct &#147;field work&#148; or other types of auditing or
    accounting reviews or procedures or to set auditor independence
    standards, and each member of the Audit Committee shall be
    entitled to rely on (i)&nbsp;the integrity of those persons and
    organizations within and outside the Company from which the
    Audit Committee receives information and (ii)&nbsp;the accuracy
    of the financial and other information provided to the Audit
    Committee, in either instance absent actual knowledge to the
    contrary.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">MEETINGS</FONT></B>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="1%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Audit Committee shall keep regular minutes of
    its meetings. Meetings and actions of the Audit Committee shall
    be governed by, and held and taken in accordance with, the
    provisions of Article&nbsp;III, Section&nbsp;3.9 of the
    Company&#146;s Restated Bylaws.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Audit Committee shall meet as often as it
    determines, but not less frequently than four times per year.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Audit Committee shall meet at least annually
    with management, the internal auditors, and the independent
    auditors in separate executive sessions. The Audit Committee may
    request any officer or employee of the Company or the
    Company&#146;s outside counsel or independent auditor to attend
    a meeting of the Audit Committee or to meet with any members of,
    or consultants to, the Audit Committee.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">COMPENSATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Members of the Audit Committee shall receive such
fees, if any, for their service as committee members as may be
determined by the Board in its sole discretion. Fees may be paid
in such form of consideration as is determined by the Board.
</FONT>

<P><HR size="5" noshade><P>

<DIV align="left">
<FONT size="2">[EXHIBITS TAG]
</FONT>
</DIV>

<P><HR size="5" noshade><P>

<P align="center"><FONT size="2">D-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>WILLIAMS-SONOMA, INC.</B>



<P align="center" style="font-size: 10pt"><B>ANNUAL MEETING OF SHAREHOLDERS</B>



<P align="center" style="font-size: 10pt"><B>Wednesday, May&nbsp;19,
2004<BR>
9:00 a.m. (CDT)</B>



<P align="center" style="font-size: 10pt"><B>Williams-Sonoma, Inc. Southern Operations Center<BR>
4600 Sonoma Cove<BR>
Memphis, Tennessee 38118</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Williams-Sonoma, Inc.<BR>
3250 Van Ness Avenue<BR>
San Francisco, California 94109</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD style="font-size: 14pt" align="right" valign="top"><B>proxy</B></TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><HR size="1" noshade></TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt"><B>This Proxy is solicited on behalf of the Board of Directors.</B>


<P align="left" style="font-size: 10pt">The undersigned shareholder of Williams-Sonoma, Inc. (the &#147;Company&#148;) hereby
appoints W. Howard Lester and Patrick J. Connolly, and each of them (the &#147;Named
Proxies&#148;), with full power of substitution to each, true and lawful attorneys,
agents and proxyholders of the undersigned, and hereby authorizes them to
represent and vote, as specified herein, all shares of Common Stock of the
Company held of record by the undersigned on March&nbsp;29, 2004, at the 2004 Annual
Meeting of Shareholders of the Company, to be held on Wednesday, May&nbsp;19, 2004,
at 9:00 a.m. (Central Daylight Time) at the Company&#146;s Southern Operations
Center located at 4600 Sonoma Cove, Memphis, Tennessee 38118, and any
adjournments or postponements thereof.


<P align="left" style="font-size: 10pt"><B>This Proxy when properly signed will be voted in the manner directed on this
Proxy by the undersigned. If no direction is made, this Proxy will be voted
&#147;FOR&#148; the election of the named directors, &#147;FOR&#148; Proposal 2 and &#147;FOR&#148; Proposal
3.</B>



<P align="center" style="font-size: 10pt"><I>(Please date and sign on reverse side.)</I>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="73%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>COMPANY #</B></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade></TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt"><B>There are three ways to vote your Proxy</B>

<P align="left" style="font-size: 10pt"><B>Your telephone or Internet vote authorizes the Named Proxies to vote your
shares in the same manner as if you marked, signed and returned your proxy
card.</B>


<P align="left" style="font-size: 10pt"><B>VOTE BY PHONE &#151; TOLL FREE &#151; 1-800-560-1965 &#151; QUICK *** EASY *** IMMEDIATE</B>



<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Use any touch-tone telephone to vote your proxy 24 hours a day, 7&nbsp;days a
week, until noon (CDT)&nbsp;on May&nbsp;18, 2004.</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Please have your proxy card and the last four digits of your Social
Security Number available. Follow the simple instructions the voice
provides you.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt"><B>VOTE BY INTERNET &#151; http://www.eproxy.com/wsm/ &#151; QUICK *** EASY *** IMMEDIATE</B>



<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Use the Internet to vote your proxy 24 hours a day, 7&nbsp;days a week, until
noon (CDT)&nbsp;on May&nbsp;18, 2004.</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Please have your proxy card and the last four digits of your Social
Security Number available. Follow the simple instructions to obtain your
records and create an electronic ballot.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><B>VOTE BY MAIL</B>

<P align="left" style="font-size: 10pt">Mark, sign and date your proxy card and return it in the postage-paid envelope
we&#146;ve provided or return it to <B>Williams-Sonoma, Inc., </B>c/o Shareowner
Services<sup>SM</sup>, P.O. Box 64873, St. Paul, MN 55164-0873.



<P align="center" style="font-size: 10pt"><B>If you vote by Phone or Internet, please do not mail your Proxy Card</B><BR>
- <I>Please detach here -</I>


<DIV align="center" style="font-size: 10pt"><HR size="1" noshade></DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>



<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 7pt"><B>The Board of Directors recommends a vote &#147;FOR&#148; Items 1, 2 and 3.</B>



<P><DIV style="position: relative; float: left; margin-right: 1%; width: 59%">
<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="23%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>1.</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Election of Directors:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">01 W. Howard Lester
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">04 Adrian D.P. Bellamy
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">07 Michael R. Lynch</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">02 Edward A. Mueller
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">05 Patrick J. Connolly
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">08 Richard T. Robertson</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">03 Sanjiv Ahuja
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">06 Jeanne P. Jackson</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD colspan="9" valign="top" align="left"><B>(Instructions: To withhold authority to vote for
any individual nominee, write the number(s) of the
nominee(s) in the box provided to the right.)</B></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><B>2.</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" valign="top" align="left">The amendment and restatement of the
Williams-Sonoma, Inc. 2001 Stock Option Plan to
(i)&nbsp;increase the shares issuable under the plan
by 3,500,000 shares, and (ii)&nbsp;provide for the
issuance of stock options, restricted stock and
deferred stock awards.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><B>3.</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" valign="top" align="left">The ratification of the selection of Deloitte &#038;
Touche LLP as our independent auditors for the
fiscal year ending January&nbsp;30, 2005.</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


</DIV>

<DIV style="position: relative; float: right; margin-left: 1%; width: 39%">
<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD style="font-size: 11pt" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vote FOR<BR>
all nominees<BR>
(except as marked)
</TD>
    <TD>&nbsp;</TD>
    <TD style="font-size: 11pt" align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vote WITHHELD<BR>
from all nominees</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><HR size="1" noshade>



<P align="center" style="font-size: 10pt"><HR size="1" noshade>


<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>

<!-- End Table Head -->


<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV  style="margin-left:0px; text-indent:-0px"><font style="font-size: 11pt"> <FONT face="Wingdings">&#111;</FONT></FONT>&nbsp;&nbsp;&nbsp; For</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><font style="font-size: 11pt"><FONT face="Wingdings">&#111;</FONT></FONT> &nbsp;&nbsp;&nbsp;Against
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><font style="font-size: 11pt"><FONT face="Wingdings">&#111;</FONT></FONT> &nbsp;&nbsp;&nbsp;Abstain</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV  style="margin-left:0px; text-indent:-0px"><font style="font-size: 11pt"> <FONT face="Wingdings">&#111;</FONT></FONT>&nbsp;&nbsp;&nbsp; For</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><font style="font-size: 11pt"><FONT face="Wingdings">&#111;</FONT></FONT> &nbsp;&nbsp;&nbsp;Against
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><font style="font-size: 11pt"><FONT face="Wingdings">&#111;</FONT></FONT> &nbsp;&nbsp;&nbsp;Abstain</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


</DIV>
<BR clear="all"><BR>
<P align="left" style="font-size: 7pt"><B>THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, THE PROXY
HOLDERS ARE AUTHORIZED TO VOTE IN THEIR DISCRETION &#147;FOR&#148; THE ELECTION OF THE NAMED DIRECTORS, &#147;FOR&#148;
PROPOSAL 2 AND &#147;FOR&#148; PROPOSAL 3. THIS PROXY ALSO CONFERS DISCRETIONARY
AUTHORITY ON THE PROXYHOLDERS TO VOTE AS TO ANY OTHER MATTER THAT IS PROPERLY
BROUGHT BEFORE THE ANNUAL MEETING THAT THE BOARD OF DIRECTORS DID NOT HAVE
NOTICE OF PRIOR
TO THE DATE SPECIFIED IN THE PROXY STATEMENT.</B>



<P><DIV style="position: relative; float: left; margin-right: 1%; width: 59%">
<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="68%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Address Change? Mark Box</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Indicate changes below:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><font style="font-size: 11pt"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


</DIV>

<DIV style="position: relative; float: right; margin-left: 1%; width: 39%">
<P align="left" style="font-size: 7pt">NOTE: When stock has been issued in the name of two or more
persons, all should sign. When signing as
attorney, administrator, trustee or guardian, give full title as such. A
corporation should have the name signed by its president or other
authorized
officer, with the office held designated. The undersigned hereby
acknowledges
receipt of the Notice of Annual Meeting of Shareholders, the Proxy
Statement
and the Annual Report for the 2003 Fiscal Year furnished herewith.


<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="100%">

<!-- Begin Table Head --><TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Date
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">, 2004</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>


<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 7pt"><HR size="1" noshade>&nbsp;<HR



size="1" noshade>


<DIV align="left" style="font-size: 7pt">Signature(s) in Box<BR>
Please sign exactly as
your name(s) appears
on this Proxy and
return it in the
enclosed envelope.</DIV>


</DIV>
<BR clear="all"><BR>


<P align="center" style="font-size: 10pt">&nbsp;
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