Exhibit 10.322

THE CHARLES SCHWAB CORPORATION

 

DEFERRED COMPENSATION PLAN II

 

(Effective December 9, 2004)

(Amended and Restated December 12, 2007)

(Amended and Restated October 23, 2008)

 

________________________________________________

 

 

 

 

Table of Contents

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ARTICLE 1:

PURPOSE

1 

 

1.1

Establishment of the Plan

1 

 

1.2

Purpose of the Plan

1 

ARTICLE 2:

DEFINITIONS

1 

 

2.1

Definitions

1 

 

2.2

Gender and Number

3 

ARTICLE 3:

ADMINISTRATION

3 

 

3.1

Committee and Administrator

3 

ARTICLE 4:

PARTICIPANTS

3 

 

4.1

Participants

3 

ARTICLE 5:

DEFERRALS

4 

 

5.1

Salary Deferrals

4 

 

5.2

Deferrals of Bonuses, Commissions and

 

 

 

Other Cash Incentive Compensation

4 

 

5.3

Timing of Elections

4 

 

5.4

Deferral Procedures

5 

 

5.5

Election of Time and Manner of Payment

5 

 

5.6

Accounts and Earnings

7 

 

5.7

Maintenance of Accounts

8 

 

5.8

Change in Control

8 

 

5.9

Payment of Deferred Amounts

10 

 

5.10

Payment on Certain Events

10 

ARTICLE 6:

GENERAL PROVISIONS

10 

 

6.1

Unfunded Obligation

10 

 

6.2

Informal Funding Vehicles

11 

 

6.3

Beneficiary

11 

 

6.4

Incapacity of Participant of Beneficiary

11 

 

6.5

Nonassignment

12 

 

6.6

No Right to Continued Employment

12 

 

6.7

Tax Withholding

12 

 

6.8

Claims Procedure and Arbitration

12 

 

6.9

Termination and Amendment

13 

 

6.10

Applicable Law

14 

 

 

 

 

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THE CHARLES SCHWAB CORPORATION

DEFERRED COMPENSATION PLAN II

 

ARTICLE 1:     PURPOSE

 

  1.1      Establishment of the Plan.

 

    Effective as of December 9, 2004, The Charles Schwab
Corporation (hereinafter, the "Company") established The Charles Schwab
Corporation Deferred Compensation Plan II (the "Plan"), as set forth in this
document.  This Plan shall apply to cash compensation that is earned, deferred
and accrued by eligible Participants after December 31, 2004.

 

  1.2      Purpose of the Plan.

 

    The Plan permits participating employees to defer the payment of
certain cash compensation that they may earn. The opportunity to elect such
deferrals is provided in order to help the Company attract and retain key
employees.  This Plan is unfunded and is maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees.  It is accordingly intended to be exempt from the
participation, vesting, funding, and fiduciary requirements set forth in Title I
of the Employee Retirement Income Security Act of 1974. The Plan also is
intended to meet the requirements of section 409A of the Internal Revenue Code
of 1986, as amended, (the “Code”) and is to be construed in accordance with that
section and any regulatory guidance issued thereunder.

 

ARTICLE 2:     DEFINITIONS

 

  2.1      Definitions.

 

    The following definitions are in addition to any other definitions set forth
elsewhere in the Plan. Whenever used in the Plan, the capitalized terms in this
Section 2.1 shall have the meanings set forth below unless otherwise required by
the context in which they are used:

 

    (a)  "Administrator" the administrator described in Section 3.1 that
is selected by the Committee to assist in the administration of the Plan.

 

    (b)  "Beneficiary" means a person entitled to receive any payments
that remain to be paid after a Participant's death, as determined under Section
6.3.

 

    (c)  "Board" means the Board of Directors of the Company.

 

    (d)  "Company" means The Charles Schwab Corporation, a Delaware corporation.

 

    (e)  "Category 1 Participant" and "Category 2 Participant" each refer to
a specific Participant group and have the meaning set forth in Section 4.1.

 

    (f)  "Committee" means the Compensation Committee of the Board.

 

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    (g)  "Deferral Account" means the account representing deferrals of
cash compensation, plus investment adjustments, as described in Sections 5.6 and
5.7.

 

    (h)  "Disability" means a condition such that an individual is “disabled”
within the meaning of section 409A of the Code and any regulatory guidance
promulgated thereunder.  Generally, an individual who is disabled (a) is unable
to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months; or (b) is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under an accident
and health plan covering employees of the Company or its Subsidiaries.

 

    (i)  "Participant" means any employee who meets the eligibility
requirements of the Plan, as set forth in Article 4, and includes, where
appropriate to the context, any former employee who is entitled to payments
under this Plan.

 

    (j)  "Plan" means The Charles Schwab Corporation Deferred Compensation
Plan II, as in effect from time to time.

 

    (k)  "Plan Year" means the calendar year.

 

    (l)  "Retirement" shall mean: a Separation from Service with respect to the
Company and its Subsidiaries for any reason other than death at any time after
the Participant has attained age fifty (50), but only if, at the time of such
termination, the Participant has been credited with at least seven (7) Years of
Service for deferrals elected prior to October 23, 2008.  For deferrals elected
on or after October 23, 2008, "Retirement" shall mean: a Separation from Service
with respect to the Company and its Subsidiaries for any reason other than death
at any time after the Participant has attained age fifty-five (55), but only if,
at the time of such termination, the Participant has been credited with at least
ten  (10) Years of Service.

 

    For purpose of this subparagraph (l), the term "Years of Service" shall have
the same meaning given to it under the SchwabPlan Retirement Savings
and Investment Plan (or any successor plan).

 

    (m)  “Separation from Service” or “Separate(s) from Service” means
"Separation from Service" within the meaning of section 409A of the Code and any
regulatory guidance promulgated thereunder.  Generally, a separation from
service occurs when an individual ceases to provide services for the Company and
its affiliates.

 

    (n)  "Specified Employee" means a "specified employee" within the meaning
of section 409A of the Code and any regulatory guidance promulgated
thereunder, provided that in determining the compensation of individuals for
this purpose, the definition of compensation in Treas. Reg. § 1.415(c)-2(d)(2)
shall be used.

 

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    (o)  "Subsidiary" means a corporation or other business entity in which
the Company owns, directly or indirectly, securities with more than 80 percent
of the total voting power.

 

    (p)  "Unforeseeable Emergency" means a severe financial hardship to
the Participant resulting from (i) an illness or accident of the Participant,
the Participant's spouse, or the Participant's dependent (as defined in
section 152(a) of the Code); (ii) loss of the Participant's property due to
casualty; or (iii) other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant, as
determined in the sole discretion of the Administrator in accordance with
section 409A of the Code.

 

    (q)  "Valuation Date" means each December 31 and any other date
designated from time to time by the Committee for the purpose of determining the
value of a Participant's Deferral Account balance pursuant to Section 5.6.

 

 

  2.2      Gender and Number.

 

    Except when otherwise indicated by the context, any masculine or
feminine terminology shall also include the neuter and other gender, and the use
of any term in the singular or plural shall also include the opposite number.

 

ARTICLE 3:     ADMINISTRATION

 

  3.1      Committee and Administrator.

 

    The Committee shall administer the Plan and may select one or more
persons to serve as the Administrator.  The Administrator shall perform
such administrative functions as the Committee may delegate to it from time to
time. Any person selected to serve as the Administrator may, but need not, be
a Committee member or an officer or employee of the Company.  However, if a
person serving as Administrator or a member of the Committee is a Participant,
such person may not vote on a matter affecting his or her interest as a
Participant. 

 

    The Committee shall have discretionary authority to construe and interpret
the Plan provisions and resolve any ambiguities thereunder; to prescribe, amend,
and rescind administrative rules relating to the Plan; to select the employees
who may participate and to terminate the future participation of any such
employees; to determine eligibility for benefits under the Plan; and to take all
other actions that are necessary or appropriate for the administration of the
Plan. Such interpretations, rules, and actions of the Committee shall be final
and binding upon all concerned and, in the event of judicial review, shall
be entitled to the maximum deference allowable by law.  Where the Committee
has delegated its responsibility for matters of interpretation and
Plan administration to the Administrator, the actions of the Administrator
shall constitute actions of the Committee.

 

ARTICLE 4:     PARTICIPANTS

 

  4.1      Participants.

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    Officers and other key employees of the Company and each of its Subsidiaries
shall be eligible to participate in this Plan upon selection by
the Administrator.  To be nominated for participation, an employee must be a
member of a select group of management or highly compensated
employees.  Directors of the Company who are full-time employees of the Company
shall be eligible to participate in the Plan. Participating employees of the
Company in the position of Executive Vice President or above shall be "Category
1 Participants." All other participating employees shall be "Category 2
Participants."

 

ARTICLE 5:     DEFERRALS

 

  5.1      Salary Deferrals.

 

    Each Category 2 Participant selected under Section 4.1 may elect to defer up
to 50 percent of his or her regular base salary (subject to the provisions
of this Article 5). Any such election must be made by entering into a
deferred compensation agreement with the employer in accordance with
procedures established by the Administrator on or before the applicable deadline
under Section 5.3 for the election period during which the services for which
the deferred salary is to be earned are performed.  Deferral elections shall
apply only to a single Plan Year and new deferral elections must be made with
respect to each Plan Year.

 

  5.2      Deferrals of Bonuses, Commissions and Other Cash
Incentive Compensation.

 

    Each Category 1 Participant and each Category 2 Participant may elect
to defer all or any portion (subject to the provisions of this Article 5) of
(a) his or her commissions (if permitted by the Administrator for the applicable
Plan Year); and (b) any amount that he or she subsequently earns under an annual
cash bonus program and/or a long-term cash incentive compensation program of the
Company or a participating Subsidiary.  Any such election must be made by
entering into a deferred compensation agreement with the employer in accordance
with procedures established by the Administrator on or before the applicable
deadline under Section 5.3.  Deferral elections shall apply only to a single
Plan Year and new deferral elections must be made with respect to each Plan
Year.

 

  5.3      Timing of Elections.

 

    (a)  Except as otherwise provided under subparagraph (b) or (c) or (d)
below, compensation for services performed during a Plan Year may be deferred at
the Participant's election only if the election to defer such compensation is
made not later than the close of the preceding Plan Year or, if permitted by
the Administrator in its sole discretion, at such other time permitted under
the Code.

 

    (b)  To the extent permitted under section 409A of the Code and any
regulatory guidance promulgated thereunder, in the case of the first Plan Year
in which a Participant becomes eligible to participate in the Plan, the
Administrator may, in its sole discretion, provide that the Participant may make
an election to defer compensation for services to be performed subsequent to the
election provided that such

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election is made not later than 30 days after the date the Participant becomes
eligible to participate in the Plan.  The election shall only apply to
compensation earned after the effective date of the election.

 

    (c) In the case of "performance-based compensation" within the meaning of
section 409A of the Code and any regulatory guidance promulgated thereunder that
is based on services performed over a period of at least 12 months, the
Administrator may, in its sole discretion, provide that the Participant may make
an election to defer such performance-based compensation provided that such
election is made not later than 6 months before the end of such performance
period.

 

    (d) In the case of "sales commission compensation” and “investment
commission compensation" within the meaning of section 409A of the Code and any
regulatory guidance promulgated thereunder, the Administrator may, in its sole
discretion, provide that the Participant may make an election to defer such
commission compensation at such other time permitted under the Code and any
regulatory guidance promulgated thereunder.

 

  5.4      Deferral Procedures.

 

    Subject to Section 5.3, Participants eligible to elect salary
deferrals under Section 5.1 shall have an opportunity to do so with respect to
each Plan Year.  Participants eligible to elect deferrals under Section 5.2
shall have a separate opportunity to do so for each (a) cash bonus under an
annual bonus program; (b) cash bonus or incentive payment under a long-term
incentive plan; and (c) if permitted by the Administrator, commission that they
may earn. The Administrator shall specify the rules for the deferrals that may
be elected. If a deferral is elected, the election shall be irrevocable
with respect to the particular compensation that is subject to the election
after the deadline for such deferrals as set forth in Section 5.3.
Deferral elections shall be made on a form prescribed by the Committee or
the Administrator.  As provided in Section 6.7, any deferral is subject
to appropriate tax withholding measures and may be reduced to satisfy
tax withholding requirements.

 

  5.5      Election of Time and Manner of Payment.

 

    (a)  At the time a Participant makes a deferral election under Section
5.1 or 5.2, the Participant shall also designate the manner of payment and the
date on which payments from his or her Deferral Account shall begin.  Subject
to Section 5.5(b), a Participant may elect from among the following options:

 

(i)  a lump sum payable in the month of February of any year that the
Participant specifies;

 

(ii)  a lump sum payable in the month of February in the year immediately
following the Participant's Retirement;

 

(iii) a series of annual installments, commencing in any year selected by the
Participant and payable each year in February, over a period of four years; or

 

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(iv) a series of annual installments, commencing in the year following the
Participant's Retirement and payable each year in February, over a period of
five, ten, or fifteen years, as designated by the Participant.

 

    Notwithstanding the terms of a Participant's election regarding the manner
and date of payment, if a Participant incurs a Separation from Service for any
reason other than Retirement or if the Participant does not have a valid
election in place, the payment of the Participant's entire Deferral Account,
including any unpaid installments pursuant to subparagraph (iii) above, shall be
made in a single lump sum in the year following the Participant’s Separation
from Service in February.  Notwithstanding anything in the Plan to the contrary,
if (i) a payment is to commence upon a Participant's Retirement or other
Separation from Service, (ii) the Participant is a Specified Employee at the
time of the Separation from Service, and (iii) the Separation from Service
occurs after July, such payment shall commence in the year following the
Participant’s Separation from Service in July.

 

    Any election of a specified payment date pursuant to subparagraphs (i)
or (iii), above, shall be subject to any restrictions that the Committee may, in
its sole discretion, choose to establish in order to limit the number of
different payment dates that a Participant may have in effect at one time.

 

    (b)  Notwithstanding anything to the contrary in this Plan, except
as otherwise permitted under section 409A of the Code, a Participant's
Deferral Account shall not be distributed earlier than (i) Separation from
Service or, in the case of a Specified Employee, the date that is at least six
(6) months after  Separation from Service; (ii) Disability; (iii) death; (iv)
the specified time or schedule elected under Section 5.5(a)(i) or (iii); (v) to
the extent permitted under section 409A of the Code and any regulatory guidance
promulgated thereunder, a change in the ownership or effective control of the
Company, or in the ownership of a substantial portion of the assets of the
Company; or (vi) the occurrence of an Unforeseeable Emergency.

 

    (c)  The acceleration of the time or schedule of any payment under the
Plan shall not be permitted unless permitted by the Administrator in accordance
with the requirements of section 409A of the Code and any regulatory
guidance promulgated thereunder.  An election made in accordance with Section
5.5(a)(ii) or (iv) to receive a distribution of a Deferral Account in a lump sum
or installments following Retirement may only be changed once.  In accordance
with the procedures established by the Administrator, a Participant may elect to
delay the timing and or change the form of  payment elected provided that (i)
the election shall not take effect until at least 12 months after the date on
which the election is made; (ii) the first payment with respect to which such
election is made is deferred for a period of not less than five years from the
date such payment would otherwise have been made; and (iii) the election shall
be made at least 12 months prior to the date of the first scheduled payment.

 

    (d)  If payment is due in the form of a lump sum, the payment shall
equal the balance of the Deferral Account being paid, determined as of the
Valuation Date coincident with or immediately preceding the

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payment date. If payment is due in the form of installments, the amount of each
installment payment shall be equal to the quotient determined by dividing (i)
the value of the portion of the Deferral Account to which the installment
payment election applies (determined as of the Valuation Date coincident with or
immediately preceding the date the payment is to be made), by (ii) the number of
years over which the installment payments are to be made, less the number of
years in which prior payments attributable to such installment payment election
have been made.  For purposes of the Plan, installment payments shall be treated
as a single distribution under section 409A of the Code.

 

    (e)  Notwithstanding the foregoing, however, if earnings or losses or any
other amounts credited to a Participant's Deferral Account would not be
deductible under section 162(m) of the Code if paid at the time provided under
the Participant's election, the payment of such amounts, to the extent in excess
of the amount that would be currently tax deductible, shall automatically be
deferred until the earliest year that the payment can be deducted, to the extent
such deferral is permitted under section 409A of the Code.

 

  5.6      Accounts and Earnings.

 

    The Company shall establish a Deferral Account for each Participant who
has elected a deferral under Section 5.1 or 5.2 above, and its accounting
records for the Plan with respect to each such Participant shall include a
separate Deferral Account or subaccount for each deferral election of the
Participant that could cause a payment made at a different time or in a
different form from other payments of deferrals elected by the same
Participant.  Each Deferral Account balance shall reflect the Company's
obligation to pay a deferred amount to a Participant or Beneficiary as provided
in this Article 5.

 

    Under procedures approved by the Committee and communicated to Participants,
a Participant's Deferral Account balance shall be increased periodically (not
less frequently than annually) to reflect an assumed earnings increment, based
on an interest rate or other benchmark selected by the Committee and in effect
at the time. Until the time for determining the amount to be paid to the
Participant or Beneficiary, such assumed earnings shall accrue from each
Valuation Date on the Deferral Account balance as of that date and shall be
credited to the account as of the next Valuation Date.  The rate of earnings
may, but need not, be determined with reference to the actual rate of earnings
on assets held under any existing grantor trust or other informal funding
vehicle that is in effect pursuant to Section 6.2. Any method of crediting
earnings that is followed from time to time may, with reasonable advance notice
to affected Participants, be revoked or revised prospectively as of the
beginning of any new Plan Year. Earnings that have been credited for any Plan
Year, like deferred amounts that have been previously credited to a Participant,
shall not be reduced or eliminated retroactively unless they were credited in
error.  The crediting of assumed earnings shall not mean that any deferred
compensation promise to a Participant is secured by particular investment assets
or that the Participant is actually earning interest or any other form of
investment income under the Plan.  Consistent with the foregoing authority to
exercise flexibility in establishing a method for crediting assumed earnings on
account balances, the Committee may, but need not, consult with Participants
about their

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investment preferences and may, but need not, institute a program of assumed
earnings that tracks the investment performance in a Participant's qualified
defined contribution plan account or in an assumed participant-directed
investment arrangement.

 

  5.7      Maintenance of Accounts.

 

    The Accounts of each Participant shall be entered on the books of
the Company and shall represent a liability, payable when due under this Plan,
out of the general assets of the Company.  Prior to benefits becoming due
hereunder, the Company shall expense the liability for such accounts in
accordance with policies determined appropriate by the Company's
auditors.  Except to the extent provided pursuant to the second paragraph of
this Section 5.7, the Accounts created for a Participant by the Company shall
not be funded by a trust or an insurance contract; nor shall any assets of the
Company be segregated or identified to such account; nor shall any property or
assets of the Company be pledged, encumbered, or otherwise subjected to a lien
or security interest for payment of benefits hereunder.

 

    Notwithstanding that the amounts to be paid hereunder to
Participants constitute an unfunded obligation of the Company, the Company may
direct that an amount equal to any portion of the Accounts shall be invested by
the Company as the Company, in its sole discretion, shall determine.  The
Committee may in its sole discretion determine that all or any portion of an
amount equal to the Accounts shall be paid into one or more grantor trusts that
may be established by the Company for the purpose of providing a potential
source of funds to pay Plan benefits.  The Company may designate an investment
advisor to direct the investment of funds that may be used to pay benefits,
including the investment of the assets of any grantor trusts hereunder.

 

  5.8      Change in Control.

 

    In the event of a Change in Control (as defined below), the following
rules shall apply:

 

    (a)  All Participants shall continue to have a fully vested, non-forfeitable
interest in their Deferral Accounts.

 

    (b)  To the extent permitted under section 409A of the Code and
any regulatory guidance issued thereunder when the Plan is terminated within 30
days preceding the Change in Control or the 12 months following the Change in
Control, deferrals of amounts for the year that includes the Change in Control
shall cease beginning with the first payroll period that follows the termination
of the Plan.

 

    (c)  A special allocation of earnings on all Deferral Accounts shall be made
under Section 5.6 as of the date of the Change in Control (such that the date of
the Change in Control is a Valuation Date) on a basis no less favorable to
Participants than the method being followed prior to the Change in Control.

 

    (d)  To the extent permitted under section 409A of the Code and
any regulatory guidance issued thereunder and not withstanding any election made
pursuant to Section 5.5(a), the unpaid balance of a Participant’s Deferral
Account, including any unpaid installments, 

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shall be distributed in a cash lump sum no later than 30 days following the
Change in Control and shall be in an amount equal to the full Deferral Account
balance, as adjusted pursuant to subparagraph (c) above, as of the date of the
Change in Control.

 

    (e)  Subject to section 409A and any regulatory guidance
promulgated thereunder, nothing in this Plan shall prevent a Participant from
enforcing any rules in a contract or another plan of the Company or any
Subsidiary concerning the method of determining the amount of a bonus, incentive
compensation, or other form of compensation to which a Participant may become
entitled following a change in control, or the time at which that compensation
is to be paid in the event of a change in control.

 

    (f)  For purposes of this Plan, a "Change in Control" means any of
the Following but only to the extent that such change in control transaction is
a change in the ownership or effective control of the Company or a change in the
ownership of a substantial portion of the assets of the Company as defined in
the regulations promulgated under section 409A of the Code:

 

           (1)  Any "person" who, alone or together with all "affiliates"
and "associates" of such person, is or becomes (A) an "acquiring person" or (B)
the "beneficial owner" of 35% of the outstanding voting securities of the
Company (the terms “acquiring person”, "person", "affiliates", "associates" and
"beneficial owner" are used as such terms are used in the Securities Exchange
Act of 1934 and the General Rules and Regulations thereunder); provided,
however, that a "Change in Control" shall not be deemed to have occurred if such
"person" is Charles R. Schwab, the Company, any subsidiary or any employee
benefit plan or employee stock plan of the Company or of any Subsidiary, or any
trust or other entity organized, established or holding shares of such voting
securities by, for or pursuant to, the terms of any such plan; or

 

           (2)  Individuals who at the beginning of any one year period
constitute the Board cease for any reason, during such period, to constitute at
least a majority thereof, unless the election, or the nomination for election by
the Company's Shareholders, of each new Board Member was approved by a vote of a
majority of the Board members then still in office who were Board members at the
beginning of such one year period; or

 

           (3)  Approval by the shareholders of the Company of:

 

                (A)  the sale or transfer of substantially all of the
Company's business and/or assets to a person or entity which is not a
"subsidiary" (any corporation or other entity a majority or more of whose
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company); or

 

                (B)  an agreement to merge or consolidate, or
otherwise reorganize, with one or more entities which are not subsidiaries (as
defined in (A) above), as a result of which less than 50% of the outstanding
voting securities of the surviving or resulting entity are, or are to be, owned
by former shareholders of the Company.

 

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    A Change in Control shall occur on the first day on which any of
the preceding conditions has been satisfied. However, notwithstanding the
foregoing, this Section 5.8 shall not apply to any Participant who alone or
together with one or more other persons acting as a partnership, limited
partnership, syndicate, or other group for the purpose of acquiring, holding or
disposing of securities of the Company, triggers a "Change in Control" within
the meaning of paragraphs (1) or (2) above.

 

  5.9      Payment of Deferred Amounts.

 

    A Participant shall have a fully vested, non-forfeitable interest in his
or her Deferral Account balance at all times.  However, vesting does not confer
a right to payment other than in the manner elected by the Participant pursuant
to Section 5.5 (subject to any modification that may occur pursuant to Section
5.6 or 5.8).  Upon the expiration of a deferral period selected by the
Participant in one or more deferral elections or at such earlier time as
provided for in Section 5.5, the Company shall pay to such Participant (or
to the Participant's Beneficiary, in the case of the Participant's death) an
amount equal to the balance of the Participant's Account attributable to such
expiring deferral elections, plus assumed earnings (determined by the Company
pursuant to Section 5.6) thereon.

 

  5.10     Payment on Certain Events.

 

    Notwithstanding any elections that have been made under Section 5.5,
the unpaid balance of a Participant's Deferral Account, including any
unpaid installments, shall be paid in a lump sum within sixty (60) days in the
event of the Participant's death, Disability, or upon receipt of a written
request from a Participant and the Administrator's determination that the
Participant has incurred an Unforeseeable Emergency; provided, that the amounts
distributed because of an Unforeseeable Emergency shall not exceed the amounts
necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay
taxes reasonably anticipated as a result of the distribution, after taking into
account the extent to which such Unforeseeable Emergency is or may be relieved
through reimbursement or compensation by insurance or otherwise or by
liquidation of the individual's assets (to the extent the liquidation of such
assets would not itself cause severe financial hardship).

 

ARTICLE 6:     GENERAL PROVISIONS

 

  6.1      Unfunded Obligation.

 

    The deferred amounts to be paid to Participants pursuant to this
Plan constitute unfunded obligations of the Company.  Except to the
extent specifically provided hereunder, the Company is not required to segregate
any monies from its general funds, to create any trusts, or to make any
special deposits with respect to this obligation.  Title to and beneficial
ownership of any investments, including any grantor trust investments which the
Company has determined and directed the Administrator to make to fulfill
obligations under this Plan shall at all times remain in the Company.  Any
investments and the creation or maintenance of any trust or Accounts shall not
create or constitute a trust or a fiduciary relationship between the
Administrator or the

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Company and a Participant, or otherwise create any vested or beneficial interest
in any Participant or his or her Beneficiary or his or her creditors in any
assets of the Company whatsoever.  The Participants shall have no claim for any
changes in the value of any assets which may be invested or reinvested by the
Company in an effort to match its liabilities under this Plan.

 

  6.2      Informal Funding Vehicles.

 

    Notwithstanding Section 6.1, the Company may, but need not, arrange for
the establishment and use of a grantor trust or other informal funding vehicle
to facilitate the payment of benefits and to discharge the liability of the
Company under this Plan to the extent of payments actually made from such trust
or other informal funding vehicle.  Any investments and any creation or
maintenance of memorandum accounts or a trust or other informal funding vehicle
shall not create or constitute a trust or a fiduciary relationship between the
Committee or the Company and a Participant, or otherwise confer on any
Participant or Beneficiary or his or her creditors a vested or beneficial
interest in any assets of the Company whatsoever.  Participants and
Beneficiaries shall have no claim against the Company for any changes in the
value of any assets which may be invested or reinvested by the Company with
respect to this Plan.

 

  6.3      Beneficiary.

 

    The term "Beneficiary" shall mean the person or persons to whom payments are
to be paid pursuant to the terms of the Plan in the event of the Participant's
death.  A Participant may designate a Beneficiary on a form provided by the
Administrator, executed by the Participant, and delivered to
the Administrator.  The Administrator may require the consent of the
Participant's spouse to a designation if the designation specifies a Beneficiary
other than the spouse.  Subject to the foregoing, a Participant may change a
Beneficiary designation at any time.  Subject to the property rights of any
prior spouse, if no Beneficiary is designated, if the designation is
ineffective, or if the Beneficiary dies before the balance of the Account is
paid, the balance shall be paid to the Participant's surviving spouse, or if
there is no surviving spouse, to the Participant's estate.

 

  6.4      Incapacity of Participant or Beneficiary.

 

    Every person receiving or claiming benefits under the Plan shall
be conclusively presumed to be mentally competent and of age until the date
on which the Administrator receives a written notice, in a form and
manner acceptable to the Administrator, that such person is incompetent or a
minor, for whom a guardian or other person legally vested with the care of his
or her person or estate has been appointed; provided, however, that if
the Administrator finds that any person to whom a benefit is payable under the
Plan is unable to care for his or her affairs because of incompetency, or
because he or she is a minor, any payment due (unless a prior claim therefor
shall have been made by a duly appointed legal representative) may be paid to
the spouse, a child, a parent, a brother or sister, or to any person or
institution considered by the Administrator to have incurred expense for such
person otherwise entitled to payment.  To the extent permitted by law,

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any such payment so made shall be a complete discharge of liability therefor
under the Plan.

 

    If a guardian of the estate of any person receiving or claiming
benefits under the Plan is appointed by a court of competent jurisdiction,
benefit payments may be made to such guardian provided that proper proof of
appointment and continuing qualification is furnished in a form and manner
acceptable to the Administrator.  In the event a person claiming or receiving
benefits under the Plan is a minor, payment may be made to the custodian of an
account for such person under the Uniform Gifts to Minors Act. To the extent
permitted by law, any such payment so made shall be a complete discharge of any
liability therefore under the Plan.

 

  6.5      Nonassignment.

 

    The right of a Participant or Beneficiary to the payment of any
amounts under the Plan may not be assigned, transferred, pledged or encumbered
nor shall such right or other interests be subject to attachment, garnishment,
execution, or other legal process.

 

  6.6      No Right to Continued Employment.

 

    Nothing in the Plan shall be construed to confer upon any Participant
any right to continued employment with the Company, nor shall the Plan interfere
in any way with the right of the Company to terminate the employment of
such Participant at any time without assigning any reason therefor.

 

  6.7      Tax Withholding.

 

    Appropriate taxes shall be withheld from cash payments made to
Participants pursuant to the Plan.  To the extent tax withholding is payable in
connection with the Participant's deferral of income rather than in connection
with the payment of deferred amounts, such withholding may be made from other
wages and salary currently payable to the Participant, or, as determined by
the Administrator, the amount of the deferral elected by the Participant may
be reduced in order to satisfy required tax withholding for employment taxes
and any other taxes.

 

  6.8      Claims Procedure and Arbitration.

 

    The Administrator shall establish a reasonable claims procedure
consistent with the requirements of the Employee Retirement Income Security Act
of 1974, as amended.  Following a Change in Control of the Company (as
determined under Section 5.8) the claims procedure shall include the following
arbitration procedure. 

 

    Following a Change in Control of the Company (as determined under Section
5.8) the claims procedure shall include the following arbitration procedure. 
Since time will be of the essence in determining whether any payments are due to
the Participant under this Plan following a Change in Control, a Participant may
submit any claim for payment to arbitration as follows: On or after the second
day following the Change in Control or other event triggering a right to
payment, the claim may be filed with an arbitrator of the Participant's

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choice by submitting the claim in writing and providing a copy to the
Company.  The arbitrator must be

 

 

 

 

(a)

a member of the National Academy of Arbitrators or one who currently appears on
arbitration panels issued by the Federal Mediation and Conciliation Service or
the American Arbitration Association; or

 

 

 

 

(b)

a retired judge of the State in which the claimant is a resident who served at
the appellate level or higher.

 

    The arbitration hearing shall be held within 72 hours (or as soon thereafter
as possible) after filing of the claim unless the Participant and the Company
agree to a later date.  No continuance of said hearing shall be allowed without
the mutual consent of the Participant and the Company.  Absence from
or nonparticipation at the hearing by either party shall not prevent the
issuance of an award.  Hearing procedures which will expedite the hearing may be
ordered at the arbitrator's discretion, and the arbitrator may close the hearing
in his or her sole discretion upon deciding he or she has heard sufficient
evidence to satisfy issuance of an award. In reaching a decision, the arbitrator
shall have no authority to ignore, change, modify, add to or delete from any
provision of this Plan, but instead is limited to interpreting this Plan.  The
arbitrator's award shall be rendered as expeditiously as possible, and unless
the arbitrator rules within seven days after the close of the hearing, he will
be deemed to have ruled in favor of the Participant.  If the arbitrator finds
that any payment is due to the Participant from the Company, the arbitrator
shall order the Company to pay that amount to the Participant within 48 hours
after the decision is rendered.  The award of the arbitrator shall be final and
binding upon the Participant and the Company.

 

    Judgment upon the award rendered by the arbitrator may be entered in any
court in any State of the United States. In the case of any arbitration
regarding this Agreement, the Participant shall be awarded the Participant's
costs, including attorney's fees.  Such fee award may not be offset against the
deferred compensation due hereunder.  The Company shall pay the arbitrator's fee
and all necessary expenses of the hearing, including stenographic reporter if
employed.

 

  6.9      Termination and Amendment.

 

    The Committee may from time to time amend, suspend or terminate the Plan, in
whole or in part, and if the Plan is suspended, the Committee may reinstate any
or all of its provisions.  The Executive Vice President – Human Resources has
the authority to amend the Plan to comply with the requirements of the Code, to
avoid a plan failure under section 409A of the Code and to facilitate
administration of the Plan to the extent that any such amendments will not
materially increase the cost of the Plan.  Except as otherwise required by law,
the Committee may delegate to the Administrator all or any of its foregoing
powers to amend or suspend the Plan.  Any such amendment or suspension may
affect future deferrals without the consent of any Participant or Beneficiary.
However, with respect to deferrals that have already occurred, no amendment or
suspension may impair the right of a Participant or a designated Beneficiary to
receive payment of the related deferred compensation in accordance with the
terms of the Plan prior to the 

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effective date of such amendment or suspension, unless the affected Participant
or Beneficiary gives his or her express written consent to the change; provided
that such consent shall not be required if an amendment is required to avoid a
plan failure under section 409A of the Code.

 

    Subject to the requirements of section 409A of the Code and any regulatory
guidance promulgated thereunder, the Committee may terminate the Plan at any
time and in the Committee’s discretion the Deferral Accounts of Participants may
be distributed within the period beginning twelve months after the date the Plan
was terminated and ending twenty-four months after the date the Plan was
terminated, or pursuant to Section 5.5. 5.8 or 5.10, if earlier.  If the Plan is
terminated and Deferral Accounts are distributed, the Company shall terminate
all account balance non-qualified deferred compensation plans that are
aggregated with the Plan under section 409A of the Code with respect to all
participants and shall not adopt a new account balance non-qualified deferred
compensation plan that is aggregated with the Plan under section 409A of the
Code for at least three years after the date the Plan was terminated.

 

    The Committee, in its discretion, may terminate the Plan upon a corporate
dissolution of the Company that is taxed under section 331 of the Code or with
the approval of a bankruptcy court pursuant to 11 U.S.C. section 503(b)(1(A),
provided that the Participants’ Deferral Accounts are distributed and included
in the gross income of the Participants at the time required under section 409A
of the Code.

 

  6.10     Applicable Law.

 

    The Plan shall be construed and governed in accordance with
applicable federal law and, to the extent not preempted by such federal law, the
laws of the State of California to the extent the application of such state laws
would not result in the taxation of amounts deferred under the Plan until such
amounts are distributed to participants under the Plan.

 

 

 

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