Exhibit 10.6

NATIONWIDE HEALTH PROPERTIES, INC.

DEFERRED COMPENSATION PLAN

(Effective September 1, 1991, as amended July 1, 1997,

and as amended and restated as of October 28, 2008)

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NATIONWIDE HEALTH PROPERTIES, INC.

DEFERRED COMPENSATION PLAN

TABLE OF CONTENTS

 

ARTICLE I TITLE AND PURPOSE

   1

ARTICLE II DEFINITIONS

   2

2.1

   Definitions    2

ARTICLE III PARTICIPATION

   6

ARTICLE IV DEFERRAL ELECTION

   7

4.1

   Deferral of Compensation    7

4.2

   In-Service Distribution Date    8

4.3

   Irrevocable Election    8

ARTICLE V ACCOUNTS AND INVESTMENT EQUIVALENTS

   10

5.1

   Accounts    10

5.2

   Company Match    10

5.3

   Investment Equivalents    11

5.4

   Investment Options    11

ARTICLE VI VESTING

   13

ARTICLE VII BENEFITS

   14

7.1

   Amount of Benefits    14

7.2

   Method of Payment    14

7.3

   Adjustment of Payments in Case of Unforeseeable Emergency or Hardship    14

7.4

   Company’s Right to Withhold    15

ARTICLE VIII ADMINISTRATION

   16

8.1

   The Plan Committee    16

8.2

   Committee Action    16

8.3

   Rights and Duties    16

8.4

   Indemnity and Liability    17

ARTICLE IX AMENDMENT AND TERMINATION

   19

9.1

   Amendments    19

9.2

   Discontinuance of Plan    19

ARTICLE X MISCELLANEOUS

   22

 

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10.1

   Receipt or Release    22

10.2

   Limitation on Participants’ Rights    22

10.3

   Beneficiaries    22

10.4

   Benefits Not Assignable; Obligations Binding Upon Successors    23

10.5

   Forfeiture    23

10.6

   California Law Governs; Severability    23

10.7

   Gender    24

10.8

   Headings Not Part of Plan    24

10.9

   Section 409A    24

10.10

   Non-Qualified Plan Status and ERISA    25

10.11

   Claims Procedures    25

10.12

   Appeals of Denied Claims    26

CERTIFICATION

  

 

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NATIONWIDE HEALTH PROPERTIES, INC.

DEFERRED COMPENSATION PLAN

(Effective September 1, 1991, as amended July 1, 1997,

and as amended and restated as of October 28, 2008)

ARTICLE I

TITLE AND PURPOSE

This Plan shall be known as the “Nationwide Health Properties, Inc. Deferred
Compensation Plan” and shall become effective September 1, 1991. The purpose of
this Plan is to provide a long-term performance incentive to employees of
Nationwide Health Properties, Inc. and a means of attracting and retaining
employees of outstanding abilities.

 

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ARTICLE II

DEFINITIONS

2.1 Definitions. Whenever the following terms are used in this Plan, they shall
have the meaning specified below unless the context clearly indicates to the
contrary:

Account shall mean the account maintained for each Participant to reflect the
Compensation deferred by the Participant, the Company Match and Investment
Equivalents on the Compensation deferred and the Company Match.

Board of Directors shall mean the Board of Directors of the Company.

Code shall mean the Internal Revenue Code of 1986, as amended.

Company shall mean Nationwide Health Properties, Inc. or its successor or
successors.

Company Match shall mean the additional amount credited to a Participant’s
Account as a result of the Participant’s election to defer Compensation, as
described in Section 5.2.

Compensation shall mean the base salary and bonuses which, but for the elections
permitted under this Plan, would be payable by the Company to a Participant.

Compensation Committee shall mean the Compensation Committee appointed by the
Board of Directors.

 

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Disability shall mean the Participant is, by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than twelve
(12) months, unable to engage in any substantial gainful activity or is
receiving income replacement benefits under the terms of an accident and health
plan covering directors or employees of the Company.

Election and Agreement shall have the meaning as set forth in Section 4.1.

ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended
and the regulations promulgated thereunder.

Investment Equivalent shall mean the amount determined by the Plan Committee for
each Participant pursuant to Article V.

Investment Option shall mean the options available for the crediting of
Investment Equivalents, as set forth in Article V.

In-Service Distribution Date shall mean a date specified by the Participant in a
valid Election and Agreement and as described in Section 4.2.

Participant shall mean a member of management or a highly compensated employee
of the Company (including officers and directors) and may include a member of
the Plan Committee or Compensation Committee who is also management or a highly
compensated

 

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employee of the Company, selected by the Compensation Committee from such
management and highly compensated employees as eligible to participate in the
Plan.

Plan shall mean this Nationwide Health Properties, Inc. Deferred Compensation
Plan.

Plan Committee shall mean the committee appointed by the Compensation Committee
to administer this Plan in accordance with Article VIII. The Plan Committee may
be comprised of Participants in this Plan.

Plan Year shall mean the calendar year.

Separation from Service shall mean the cessation of a Participant’s services as
an employee or director of the Company, whether voluntary or involuntary, for
any reason including retirement, Disability or death, where the Company and the
Participant reasonably anticipate that no further services of any kind would be
performed following such Separation from Service, or that the level of bona fide
services the Participant would perform after such Separation from Service
(whether as an employee, director or as an independent contractor) would
permanently decrease to no more than 20% of the average level of bona fide
services performed (whether as an employee, director or as an independent
contractor) over the immediately preceding thirty six (36)-month period (or, if
shorter, the full period of services to the Company).

Subsequent Deferral Election shall have the meaning as set forth in Section 4.3.

 

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Valuation Date shall mean the last day of each Plan Year.

 

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ARTICLE III

PARTICIPATION

Eligibility for participation in the Plan shall be limited to management and
highly compensated employees of the Company (including officers and directors)
and may include members of the Plan Committee or Compensation Committee who are
also management or highly compensated employees of the Company. Participants in
the Plan shall be selected by the Compensation Committee from such management
and highly compensated employees.

 

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ARTICLE IV

DEFERRAL ELECTION

4.1 Deferral of Compensation. In order to defer receipt of Compensation for any
Plan Year, a Participant must file a written application for participation with
the Plan Committee on a form provided by the Plan Committee (the “Election and
Agreement”) not later than the December 31st immediately preceding such Plan
Year, stating the (1) dollar amount or percentage per pay period of base salary
or bonus award, if any, that the Participant elects to defer and (2) In-Service
Distribution Date desired, if any, as described in Section 4.2. A Participant
may also elect Investment Options on a separate form as prescribed by the Plan
Committee, as described in Section 5.4. The Participant’s Compensation shall be
reduced by the amount so stated and said amount shall be credited to the
Participant’s Account as of the earliest date such Compensation would otherwise
be due and payable.

Notwithstanding the above, if an employee or director is first employed or his
services engaged by the Company during a Plan Year, and is otherwise eligible
and has been selected for Plan participation by the Compensation Committee
pursuant to Article III, such Participant may defer receipt of Compensation for
the remainder of that Plan Year by filing an Election and Agreement not later
than thirty (30) days after the date he or she was selected for Plan
participation (in this case Compensation shall mean base salary to be earned
after the date the Election and Agreement is executed and a pro-rata portion of
the Participant’s bonus for such Plan Year based on the date the Election and
Agreement is executed). Such Participant’s Compensation for that Plan Year shall
be reduced, commencing with the first full pay period after the date of such
Participant’s Election and Agreement, by the amount so stated and said

 

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amount shall be credited to such Participant’s Account as of the earliest date
such Compensation would otherwise be due and payable.

4.2 In-Service Distribution Date. A Participant may elect an In-Service
Distribution Date. Such election shall be made in the Participant’s Election and
Agreement and shall specify the portion or amount of the Participant’s Account
to be distributed on such In-Service Distribution Date. Subject to Section 4.3,
any election of an In-Service Distribution Date shall be irrevocable, both as to
the date of distribution and as to the amount of the distribution.

If a Participant elects an In-Service Distribution Date or a Subsequent Deferral
Election (as defined below) for less than 100% of his Account (determined as of
the In-Service Distribution Date or Subsequent Deferral Election, as
applicable), the balance of such Participant’s Account remaining after the
In-Service Distribution Date or Subsequent Deferral Election (as may be adjusted
pursuant to the Plan) shall be distributed in accordance with Section 7.1.

If a Participant has a Separation from Service prior to his In-Service
Distribution Date or Subsequent Deferral Election, his In-Service Distribution
Date or Subsequent Deferral Election shall not be given effect and distribution
of the Participant’s Account shall be made in accordance with Section 7.1.

4.3 Irrevocable Election. An Election and Agreement shall become binding and
irrevocable in all respects upon the execution of such Election and Agreement,
and shall remain in effect until modified by the Participant (a “Subsequent
Deferral Election”), provided that such Subsequent Deferral Election shall be
made by the Participant prior to the last permissible date

 

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for making such election. Notwithstanding the foregoing, a Participant may make
a Subsequent Deferral Election after the last permissible date for making such
election provided that:

(i) such Subsequent Deferral Election will not take effect until at least twelve
(12) months after the date on which the Subsequent Deferral Election is made;

(ii) the payment with respect to such Subsequent Deferral Election is deferred
for a period of not less than five (5) years from the date such payment would
otherwise have been paid (or, in the case of (a) a life annuity or
(b) installment payments treated as a single payment, five (5) years from the
date the first amount was scheduled to be paid); and

(iii) any Subsequent Deferral Election related to a payment to be made at a
specified time or pursuant to a fixed schedule is made not less than twelve
(12) months before the date the payment is scheduled to be paid (or, in the case
of (a) a life annuity or (b) installment payments treated as a single payment,
twelve (12) months before the date the first amount was scheduled to be paid).

 

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ARTICLE V

ACCOUNTS AND INVESTMENT EQUIVALENTS

5.1 Accounts. The Plan Committee shall maintain an Account for each Participant
and shall credit such Account with the amounts of Compensation deferred pursuant
to Article IV, the Company Match calculated pursuant to Section 5.2 and the
Investment Equivalents calculated pursuant to Section 5.3. Deferred Compensation
shall be credited to the Participant’s Account as of the earliest date such
Compensation would otherwise be due and payable.

5.2 Company Match. The Company Match for 1997 and subsequent years shall be the
lesser of the amounts described in (a) or (b) below:

(a) one half of the Compensation (other than annual bonus) deferred by the
Participant under this Plan for such year.

(b) Four percent (4%) of the Participant’s gross Compensation (other than annual
bonus) for the same such year as referenced in (a) above.

The Committee shall credit the Company Match to a Participant’s Account as of
the date deferred Compensation which is eligible for a Company Match is credited
to the Participant’s Account. Gross Compensation means Compensation which would
be payable but for a Participant’s election under this Plan, provided that for
purposes of calculating the annual limit on the Company Match, any bonus paid or
payable shall not be included in the Participant’s gross Compensation. The
Committee shall, if necessary, appropriately adjust the Participant’s Account as
of earliest of (1) the last day of the Plan Year, (2) the date of the
Participant’s Separation from Service, (3) an In-Service Distribution Date or
(4) such date that a determination is made that

 

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amounts credited under this Section 5.2 would need adjustment to properly
reflect the annual limit on the Company Match.

5.3 Investment Equivalents. On each Valuation Date, each Participant’s Account
shall be credited (or debited) with the appropriate Investment Equivalent. The
Investment Equivalent shall be calculated separately for each Investment Option
by determining the investment gain or loss which would have occurred if the
Participant’s Account had been invested in the Investment Option specified by
the Participant. In calculating the Investment Equivalents, amounts will be
considered invested as of the date such amounts are deemed credited to the
Participants’ Accounts under Sections 5.1 and 5.2.

5.4 Investment Options. The Investment Equivalent for each such Investment
Option shall be determined by the Plan Committee according to the methods
described below. The Plan Committee may add additional Investment Options by
adopting written rules which describe the method of determining the Investment
Equivalent on such Investment Options. Investment options available under the
Plan may include: (i) a government fund selected by the Plan Committee, which
seeks to invest primarily in debt issued by the United States government;
(ii) an equity fund selected by the Plan Committee, which seeks to invest
primarily in equity securities; and (iii) a balanced fund selected by the Plan
Committee, which seeks to invest primarily in both debt and equity securities,
the proportions of which may change from time to time. In addition, the Plan may
include an investment option under which investment gains and losses will be
determined according to the securities or funds specified by the Participant,
subject to restrictions established by the Plan Committee.

 

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Each Participant may designate the Investment Option(s) of his choice by so
electing on the form prescribed by the Plan Committee. Each Participant may
change his Investment Option(s) once per quarter at the time and upon such
notice as is required by the Plan Committee. The date upon which the
Participant’s Accounts shall be credited with Investment Equivalents
corresponding to the Participant’s new Investment Option(s) shall be determined
by the Plan Committee.

The Company has no obligation to invest any deferred Compensation in any
particular manner. All amounts under the Plan are subject to the creditors of
the Company; the Participants and Beneficiaries shall have no rights superior to
those of the unsecured creditors of the Company.

 

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ARTICLE VI

VESTING

The interest of a Participant in his benefits under the Plan shall be 100%
vested at all times, which means that it will not forfeit as a result of his
Separation from Service. However, a Participant’s right to be paid by the
Company remains subject to the claims of the general creditors of the Company.

 

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ARTICLE VII

BENEFITS

7.1 Amount of Benefits. The Participant (or his Beneficiary in the case of his
death) shall become entitled to payment of his Account upon the earlier of
(1) his In-Service Distribution Date or Subsequent Deferral Election, as
applicable, (2) a Separation from Service with the Company or (3) an
unforeseeable emergency or hardship as described in Section 7.3, and shall be
paid within thirty (30) days following the occurrence of such event.

7.2 Method of Payment. Benefit payments made to a Participant shall be made as a
single lump sum payable within thirty (30) days following the time of
entitlement to a benefit specified in Section 7.1.

7.3 Adjustment of Payments in Case of Unforeseeable Emergency or Hardship. While
it is the primary purpose of the Plan to provide funds for the years after
Participants are no longer able to render active service to the Company, it is
recognized that in the case of an unforeseeable emergency or hardship, it would
be in the best interests of Participants to permit a lump sum payment of
accelerated payments to be made to them. Accordingly, the Plan Committee, in its
sole discretion, may, upon written request of a Participant, provide for a
cancellation of such Participant’s deferral election in whole or in part, to
take account of and ameliorate an unforeseeable emergency or hardship affecting
him or any of his dependents, pursuant to the requirements of Section 409A of
the Code. An unforeseeable emergency or hardship shall be an event specified in
Treasury Regulation Section 1.401(k)-1(d)(3). If the Participant requesting such
a cancellation of a deferral election is a member of the Plan Committee, he
shall not

 

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participate in the decision of the Plan Committee concerning such payment. The
amount of any such cancellation of a deferral election shall not exceed the
lesser of:

(a) the amount necessary to take account of and ameliorate such unforeseeable
emergency or hardship or

(b) the entire amount of such Participant’s Account.

The remaining portion of such Participant’s Account, if any, shall be
distributed according to Sections 7.1 and 7.2 of this Plan prior to the
adjustment under this section. This section shall not be construed to allow
distribution under the Plan of amounts greater than those the Participant would
have otherwise received, if no adjustment under this section had been made.

7.4 Company’s Right to Withhold. The Company shall have the right to deduct from
any payment any federal, state or local taxes or deductions required by law to
be withheld with respect to such payments.

 

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ARTICLE VIII

ADMINISTRATION

8.1 The Plan Committee. The Plan Committee hereunder shall consist of three or
more persons appointed form time to time by the Compensation Committee. Any
member of the Plan Committee may resign by delivering a written resignation to
the Compensation Committee. Members of the Plan Committee shall not receive any
additional compensation for administration of the Plan.

8.2 Committee Action. The Plan Committee shall, for the purpose of administering
the Plan, choose a Secretary who may be, but is not required to be, a member of
the Plan Committee, who shall keep minutes of the Plan Committee’s proceedings
and all records and documents pertaining to the Plan Committee’s administration
of the Plan. A member of the Plan Committee shall not vote or act upon any
matter which relates solely to himself as a Participant in this Plan. The
Secretary may execute any certificate or other written direction on behalf of
the Plan Committee. Any act which this Plan authorizes or requires the Plan
Committee to do may be done by a majority of its members. The action of such
majority, expressed from time to time by a vote at a meeting or by unanimous
written consent of Plan Committee members without a meeting, shall constitute
the action of the Plan Committee.

8.3 Rights and Duties. Subject to the limitations of this Plan, the Plan
Committee shall be charged with the general administration of this Plan and the
responsibility for carrying out its provisions, and shall have powers necessary
to accomplish those purposes, including, but not by way of limitation, the
following:

(a) To construe, interpret and administer the Plan;

 

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(b) To determine the Investment Equivalents;

(c) To make any other determinations required by this Plan which are not
explicitly made the authority of another person or persons by this Plan;

(d) To compute and certify the amount of benefits payable to Participants;

(e) To authorize all payments pursuant to the Plan;

(f) To determine the necessity for and the amount of any hardship adjustment
pursuant to Section 7.3 of this Plan;

(g) To maintain all the necessary records for the administration of the Plan;

(h) To make and publish rules for the administration, interpretation and
regulation of the Plan; and

(i) To communicate to each Participant annually, as soon as practicable after
the close of each Plan Year, the value of his Account.

All actions taken and all determinations made by the Plan Committee and the Plan
Committee’s calculation of benefits payable to Participants shall be conclusive.
In performing its duties, the Plan Committee shall be entitled to rely on
information, opinions, reports or statements prepared or presented by:
(i) officers or employees of the Company whom the Plan Committee believes to be
reliable and competent as to such matters; and (ii) counsel (who may be counsel
to the Company), independent accountants and other persons as to matters which
the Plan Committee believes to be within such persons’ professional or expert
competence. The Plan Committee shall be fully protected with respect to any
action taken or omitted by it in good faith pursuant to the advice of such
persons.

8.4 Indemnity and Liability. All expenses of the Plan Committee shall be paid by
the Company and the Company shall furnish the Plan Committee with such clerical
and other

 

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assistance as is necessary in the performance of its duties. No member of the
Plan Committee shall be liable for any act or omission of any other member of
the Plan Committee nor for any act or omission on his own part, excepting only
his own willful misconduct or gross negligence. To the extent permitted by law,
the Company shall indemnify and save harmless each member of the Plan Committee
against any and all expenses and liabilities arising out of his membership on
the Plan Committee, excepting only expenses and liabilities arising out of his
own willful misconduct or gross negligence, as determined by the Board of
Directors.

 

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ARTICLE IX

AMENDMENT AND TERMINATION

9.1 Amendments. The Compensation Committee shall have the right to amend this
Plan in whole or in part from time to time by resolutions, and to amend or
cancel any amendments; provided, however, that no action under this section
shall cancel or otherwise adversely affect in any way any Participant’s rights
with respect to amounts previously allocated to any Participant’s Account. Such
amendments shall be stated in an instrument in writing, certified in the same
manner and at the time therein set forth, and all Participants shall be bound
thereby upon receipt of notice thereof.

9.2 Discontinuance of Plan. It is the expectation of the Company that this Plan
shall be continued indefinitely, but continuance of this Plan is not assumed as
a contractual obligation of the Company. In the event that the Board of
Directors decides to discontinue and terminate this Plan, it shall notify the
Plan Committee of its action in an instrument in writing, certified in the same
manner as this Plan, and this Plan shall be terminated at the time therein set
forth, and all Participants shall be bound thereby; provided, however, that no
action under this section shall cancel or affect in any way any Participant’s
rights with respect to amounts previously allocated to any Participant’s
Account. Upon such termination or discontinuance, the Plan Committee in its sole
discretion may elect to immediately pay or commence to pay benefits to all
Participants in a lump sum or in the manner (if any) previously elected by such
Participants provided that such termination or discontinuance occurs:

(1) within twelve (12) months of a corporate dissolution taxed under Section 331
of the Code, or with the approval of a bankruptcy court

 

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pursuant to 11 U.S.C. §503(b)(1)(A), provided that the amounts deferred under
the Plan are included in the Participants’ gross incomes in the later of the
following years (or, if earlier, the taxable year in which the amount is
actually or constructively received):

(ii) the calendar year in which the Plan termination and liquidation occurs;

(iii) the first calendar year in which the amount is no longer subject to a
substantial risk of forfeiture; or

(iv) the first calendar year in which the payment is administratively
practicable;

(2) pursuant to irrevocable action by the Company within the thirty (30) days
preceding or the twelve (12) months following a change in control event (as
defined in Treasury Regulation §1.409A-3(i)(5)); provided, however, that all
agreements, methods, programs, and other arrangements sponsored by the Company
immediately after the time of the change in control event that can be aggregated
with the Plan pursuant to Treasury Regulation §1.409A-1(c)(2)(i) are terminated
with respect to each Participant who experienced the change in control event, so
that under the terms of the termination and liquidation, all such participants
are required to receive all amounts of compensation deferred under the
termination agreements, methods, programs, and other arrangements within

 

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twelve (12) months of the date the Company irrevocably takes all necessary
action to terminate and liquidate the agreements, methods, programs, and other
arrangements; or

(3) at any time, provided that:

(i) the termination does not occur proximate to a downturn in the financial
health of the Company;

(ii) the Company terminates and liquidates all agreements, methods, programs,
and other arrangements that would be aggregated with the Plan pursuant to
Treasury Regulation §1.409A-1(c);

(iii) all payments in liquidation of the Plan are made after twelve (12) months
but before twenty-four (24) months of the date the Company takes all necessary
action to irrevocably terminate and liquidate the Plan other than payments that
would be payable under the terms of the Plan if the action to terminate and
liquidate the Plan had not occurred (the “Plan Termination Date”); and

(iv) the Company does not adopt a new plan that would be aggregated with any
terminated and liquidated plan under Treasury Regulation §1.409A-1(c) at any
time within three (3) years following the Plan Termination Date.

 

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ARTICLE X

MISCELLANEOUS

10.1 Receipt or Release. Any payment to any Participant or Beneficiary in
accordance with the provisions of this Plan shall, to the extent thereof, be in
full satisfaction of all claims against the Plan Committee, the Compensation
Committee and the Company, and, to the extent permitted by law, the Plan
Committee may require such Participant, as a condition precedent to such
payment, to execute a receipt and release to such effect.

10.2 Limitation on Participants’ Rights. Participation in this Plan shall not
give any Participant the right to be retained in the employ of the Company or
any rights or interest other than as herein provided. The employment rights of
any Participant or other Employee shall not be enlarged, guaranteed or affected
by reason of any of the provisions of this Plan. The Company reserves the right
to dismiss any Participant without any liability for any claim against the
Company under this Plan, except for payment of vested benefits to the extent
expressly provided herein. This Plan shall create only a contractual obligation
on the part of the Company as to such amounts and shall not be construed as
creating a trust or any fiduciary relationship. This Plan, in and of itself, has
no assets and no assets or funds of the Company shall be set aside or otherwise
segregated to satisfy the obligations created hereunder. Participants or
Beneficiaries shall have only the rights of general unsecured creditors of the
Company with respect to amounts credited and benefits payable, if any, on their
Accounts.

10.3 Beneficiaries. A Participant shall designate in writing, on forms
prescribed by and filed with the Committee, a Beneficiary or Beneficiaries to
receive any payments payable after his death and may at any time amend or revoke
any such designation; provided, however, that if a

 

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person other than the Participant’s spouse is designated as a Beneficiary, the
Participant’s spouse must sign a statement specifically approving such
designation. If no Beneficiary designation is in effect at the time of a
Participant’s death, or in the absence of a spousal approval as hereinabove
provided, payments hereunder shall be made to his personal representative. Any
payments which would have been payable to any Participant if he had lived shall
be paid to the Participant’s designated Beneficiaries (or, in the absence of any
such designation, to his personal representative) according to Section 7.2.

10.4 Benefits Not Assignable; Obligations Binding Upon Successors. Benefits of a
Participant under this Plan shall not be assignable or transferable and any
purported transfer, assignment, pledge or other encumbrance or attachment of any
payments or benefits under this plan, other than by operation of law or pursuant
to Section 10.3, shall not be permitted or recognized. Obligations of the
Company under this Plan shall be binding upon successors of the Company.

10.5 Forfeiture. Any payment or distribution to a Participant or Beneficiary
under the Plan shall be deemed made when mailed by normal first class mail to
the last known mailing address of the Participant or Beneficiary. Any Company
check used to make a payment pursuant to this Plan which is not cashed within
three years shall be cancelled and the Company shall have no further obligation
to the Participant or Beneficiary. Neither the Plan Committee, the Compensation
Committee nor the Company shall have any duty to give notice that amounts are
payable under the Plan to any person other than the Participant.

10.6 California Law Governs; Severability. The validity of this Plan or any of
its provisions shall be construed, administered and governed in all respects
under and by the laws of the State of California to the extent such laws are not
preempted by federal law. If any provisions of this

 

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instrument shall be held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions hereof shall continue to be fully
effective.

10.7 Gender. The masculine pronoun and adjective shall be deemed to include the
feminine, unless a different meaning is plainly required by the context.

10.8 Headings Not Part of Plan. Headings and subheadings in this Plan are
inserted for reference only and are not to be considered in the construction of
the provisions hereof.

10.9 Section 409A. For purposes of this Plan, each amount to be paid or benefit
to be provided shall be construed as a separate identified payment for purposes
of Section 409A of the Code. Notwithstanding any provision to the contrary in
this Plan, to the extent necessary to avoid the imposition of taxes under
Section 409A of the Code, no payment or distribution under this Plan that
becomes payable by reason of the Participant’s termination of employment or
service with the Company will be made to the Participant unless the
Participant’s termination of employment or service constitutes a “separation
from service” (as such term is defined in Treasury Regulations issued under
Section 409A of the Code). In addition, no such payment or distribution will be
made to the Participant prior to the earlier of (i) the expiration of the six
(6)-month period measured from the date of the Participant’s “separation from
service” (as such term is defined in Treasury Regulations issued under
Section 409A of the Code) or (ii) the date of the Participant’s death, if the
Participant is deemed at the time of such separation from service to be a “key
employee” within the meaning of that term under Section 416(i) of the Code and
such delayed commencement is otherwise required in order to avoid the imposition
of taxes under Section 409A of the Code. As soon as practicable following the
earlier of (i) or (ii), but in no event later than ten (10) days following the
expiration of the six-month period (or if the payment

 

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is being made following the Participant’s death, no later than sixty (60) days
following the date of death), all payments and benefits deferred pursuant to
this section (whether they would have otherwise been payable in a single sum or
in installments in the absence of such deferral) shall be paid or reimbursed to
the Participant in a lump sum, and any remaining payments due under this Plan
will be paid in accordance with the normal payment dates specified for them
herein. It is intended that this Plan shall comply with the provisions of
Section 409A of the Code so as not to subject any Participant to the payment of
additional taxes and interest under Section 409A of the Code. In furtherance of
this intent, this Plan shall be interpreted, operated, and administered in a
manner consistent with these intentions, and to the extent that any rules,
regulations or other guidance issued under Section 409A of the Code would result
in any Participant being subject to payment of additional income taxes or
interest under Section 409A of the Code, the Company shall amend this Plan to
the extent necessary to avoid the application of such taxes or interest to the
extent permitted by Section 409A of the Code.

10.10 Non-Qualified Plan Status and ERISA. The Plan is intended to be a plan
that is not qualified within the meaning of Section 401(a) of the Code. The Plan
“is unfunded and is maintained by an employer primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3)
and 401(a)(1). The Plan shall be administered and interpreted to the extent
possible in a manner consistent with the intent described in the preceding
sentence.

10.11 Claims Procedures. If a Participant, Beneficiary or other person
(hereafter, “Claimant”) does not receive timely payment of any benefits which he
or she believes are due and payable under the Plan, he or she may make a claim
for benefits to the Plan Committee. The claim for benefits must be in writing
and addressed to the Company or Plan Committee. The Plan

 

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Committee shall notify the Claimant whether such claim shall be granted or
denied within 90 days after the Plan Committee initially received the benefit
claim. However, if special circumstances require an extension of time for
processing the claim, the Plan Committee will furnish notice of the extension to
the Claimant prior to the termination of the initial 90-day period and such
extension may not exceed one additional, consecutive 90-day period. Any notice
of a denial of benefits should include the following: the specific reason or
reasons for the adverse determination; reference to the specific Plan provisions
on which the determination was based; a description of any additional material
or information necessary for the Claimant to perfect his claim and an
explanation of why such material or information is necessary; a description of
the Plan’s review procedures; and a statement that the Participant is entitled
to receive, upon request and free of charge, reasonable access to, and copies
of, all documents, records, and other information relevant to the claim. If
notice of the denial of a claim is not furnished in accordance with this
Section 10.11, the claim shall be deemed denied and the Claimant shall be
permitted to exercise his right to review pursuant to Section 10.12.

10.12 Appeals of Denied Claims. Each Claimant whose claim for benefits has been
denied may file a written appeal for a review of his claim by the Plan
Committee. The request for review must be filed by the Claimant within 60 days
after he or she received the notice denying his claim. The decision of the Plan
Committee will be communicated to the Claimant within 60 days after receipt of a
request for appeal. The notice shall set forth the basis for the Plan
Committee’s decision. If there are special circumstances which require an
extension of time for completing the review, the Plan Committee’s decision may
be rendered not later than 120 days after receipt of a request for appeal. If
notice of the decision on the review is not furnished in

 

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accordance with this Section 10.12, the claim shall be deemed denied and the
Participant shall be permitted to exercise his right to a legal remedy.

 

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