Exhibit 10.40

 

ZORAN CORPORATION

EXECUTIVE RETENTION AND SEVERANCE PLAN

Adopted November 8, 2002

 

1.                                      ESTABLISHMENT AND PURPOSE

 

1.1                                 ESTABLISHMENT.  THE ZORAN CORPORATION
EXECUTIVE RETENTION AND SEVERANCE PLAN (THE “PLAN”) IS HEREBY ESTABLISHED BY THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF ZORAN CORPORATION, EFFECTIVE
NOVEMBER 8, 2002 (THE “EFFECTIVE DATE”).

 

1.2                                 PURPOSE.  THE COMPANY DRAWS UPON THE
KNOWLEDGE, EXPERIENCE AND ADVICE OF ITS OFFICERS AND KEY EMPLOYEES IN ORDER TO
MANAGE ITS BUSINESS FOR THE BENEFIT OF THE COMPANY’S STOCKHOLDERS.  DUE TO THE
WIDESPREAD AWARENESS OF THE POSSIBILITY OF MERGERS, ACQUISITIONS AND OTHER
STRATEGIC ALLIANCES IN THE COMPANY’S INDUSTRY, THE TOPIC OF COMPENSATION AND
OTHER EMPLOYEE BENEFITS IN THE EVENT OF A CHANGE IN CONTROL IS AN ISSUE IN
COMPETITIVE RECRUITMENT AND RETENTION EFFORTS.  THE COMMITTEE RECOGNIZES THAT
THE POSSIBILITY OR PENDING OCCURRENCE OF A CHANGE IN CONTROL COULD LEAD TO
UNCERTAINTY REGARDING THE CONSEQUENCES OF SUCH AN EVENT AND COULD ADVERSELY
AFFECT THE COMPANY’S ABILITY TO ATTRACT, RETAIN AND MOTIVATE ITS OFFICERS AND
KEY EMPLOYEES.  THE COMMITTEE HAS THEREFORE DETERMINED THAT IT IS IN THE BEST
INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS TO PROVIDE FOR THE CONTINUED
DEDICATION OF ITS OFFICERS AND KEY EMPLOYEES NOTWITHSTANDING THE POSSIBILITY OR
OCCURRENCE OF A CHANGE IN CONTROL BY ESTABLISHING THIS PLAN TO PROVIDE
DESIGNATED OFFICERS AND KEY EMPLOYEES WITH ENHANCED FINANCIAL SECURITY IN THE
EVENT OF A CHANGE IN CONTROL.  THE PURPOSE OF THIS PLAN IS TO PROVIDE ITS
PARTICIPANTS WITH SPECIFIED COMPENSATION AND BENEFITS IN THE EVENT OF
TERMINATION OF EMPLOYMENT UNDER CIRCUMSTANCES SPECIFIED HEREIN UPON OR FOLLOWING
A CHANGE IN CONTROL.

 

2.             Definitions and Construction

 

2.1                                 DEFINITIONS.  WHENEVER USED IN THIS PLAN,
THE FOLLOWING TERMS SHALL HAVE THE MEANINGS SET FORTH BELOW:

 

(A)                                  “ANNUAL BONUS” MEANS AN AMOUNT EQUAL TO THE
GREATEST OF (1) THE AGGREGATE OF ALL BONUSES EARNED BY THE PARTICIPANT (WHETHER
OR NOT ACTUALLY PAID) UNDER THE TERMS OF THE PROGRAMS, PLANS OR AGREEMENTS
PROVIDING FOR SUCH BONUSES FOR THE FISCAL YEAR OF THE COMPANY IMMEDIATELY
PRECEDING THE FISCAL YEAR OF THE CHANGE IN CONTROL, (2) THE AGGREGATE OF ALL
BONUSES EARNED BY THE PARTICIPANT (WHETHER OR NOT ACTUALLY PAID) UNDER THE TERMS
OF THE PROGRAMS, PLANS OR AGREEMENTS PROVIDING FOR SUCH BONUSES FOR THE FISCAL
YEAR OF THE COMPANY IMMEDIATELY PRECEDING THE FISCAL YEAR OF THE PARTICIPANT’S
TERMINATION UPON A CHANGE IN CONTROL, OR (3) THE AGGREGATE OF ALL ANNUAL BONUSES
THAT WOULD BE EARNED BY THE PARTICIPANT AT THE TARGETED ANNUAL RATE (ASSUMING
ATTAINMENT OF 100% OF ALL APPLICABLE PERFORMANCE GOALS) UNDER THE TERMS OF THE
PROGRAMS, PLANS OR AGREEMENTS PROVIDING FOR SUCH BONUSES IN WHICH THE
PARTICIPANT WAS PARTICIPATING FOR THE FISCAL YEAR OF THE PARTICIPANT’S
TERMINATION UPON A CHANGE IN CONTROL.

 

(B)                                 “BASE SALARY RATE” MEANS A PARTICIPANT’S
MONTHLY BASE SALARY DETERMINED AT THE GREATER OF (1) THE PARTICIPANT’S MONTHLY
BASE SALARY RATE IN EFFECT IMMEDIATELY PRIOR TO THE PARTICIPANT’S TERMINATION
UPON A CHANGE IN CONTROL OR (2) THE PARTICIPANT’S MONTHLY BASE SALARY RATE IN
EFFECT IMMEDIATELY PRIOR TO THE APPLICABLE CHANGE IN CONTROL.  FOR THIS PURPOSE,
BASE SALARY DOES NOT INCLUDE ANY BONUSES, COMMISSIONS, FRINGE BENEFITS, CAR
ALLOWANCES, OTHER IRREGULAR PAYMENTS OR ANY OTHER COMPENSATION EXCEPT BASE
SALARY.

 

(C)                                  “BENEFIT PERIOD” MEANS (1) WITH RESPECT TO
A PARTICIPANT WHO IS THE CHIEF EXECUTIVE OFFICER, A PERIOD OF THIRTY-SIX (36)
MONTHS, (2) WITH RESPECT TO A PARTICIPANT WHO IS AN EXECUTIVE OFFICER (OTHER
THAN THE CHIEF EXECUTIVE OFFICER), A PERIOD OF EIGHTEEN (18) MONTHS, AND
(3) WITH RESPECT TO A PARTICIPANT WHO IS A KEY EMPLOYEE (OTHER THAN AN EXECUTIVE
OFFICER), A PERIOD OF NINE (9) MONTHS.

 

(D)                                 “BOARD” MEANS THE BOARD OF DIRECTORS OF THE
COMPANY.

 

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(E)                                  “CAUSE” MEANS THE OCCURRENCE OF ANY OF THE
FOLLOWING, AS DETERMINED IN GOOD FAITH BY A VOTE OF NOT LESS THAN TWO-THIRDS OF
THE ENTIRE MEMBERSHIP OF THE BOARD AT A MEETING OF THE BOARD CALLED AND HELD FOR
SUCH PURPOSE (AFTER REASONABLE NOTICE TO THE PARTICIPANT AND AN OPPORTUNITY FOR
THE PARTICIPANT, TOGETHER WITH THE PARTICIPANT’S COUNSEL, TO BE HEARD BEFORE THE
BOARD):

 

(1)                                  THE PARTICIPANT’S COMMISSION OF ANY ACT OF
FRAUD, EMBEZZLEMENT OR DISHONESTY;

 

(2)                                  THE PARTICIPANT’S UNAUTHORIZED USE OR
DISCLOSURE OF CONFIDENTIAL INFORMATION OR TRADE SECRETS OF ANY MEMBER OF THE
COMPANY GROUP; OR

 

(3)                                  THE PARTICIPANT’S INTENTIONAL MISCONDUCT
ADVERSELY AFFECTING THE BUSINESS OR AFFAIRS OF ANY MEMBER OF THE COMPANY GROUP.

 

(F)                                    “CHANGE IN CONTROL” MEANS, EXCEPT AS
OTHERWISE PROVIDED IN THE PARTICIPATION AGREEMENT APPLICABLE TO A GIVEN
PARTICIPANT, THE OCCURRENCE OF ANY OF THE FOLLOWING:

 

(1)                                  ANY “PERSON” (AS SUCH TERM IS USED IN
SECTIONS 13(D) AND 14(D) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE
“EXCHANGE ACT”)), OTHER THAN A TRUSTEE OR OTHER FIDUCIARY HOLDING SECURITIES OF
THE COMPANY UNDER AN EMPLOYEE BENEFIT PLAN OF THE COMPANY, BECOMES THE
“BENEFICIAL OWNER” (AS DEFINED IN RULE 13D-3 PROMULGATED UNDER THE EXCHANGE
ACT), DIRECTLY OR INDIRECTLY, OF SECURITIES OF THE COMPANY REPRESENTING MORE
THAN FIFTY PERCENT (50%) OF (I) THE OUTSTANDING SHARES OF COMMON STOCK OF THE
COMPANY OR (II) THE TOTAL COMBINED VOTING POWER OF THE COMPANY’S
THEN–OUTSTANDING SECURITIES ENTITLED TO VOTE GENERALLY IN THE ELECTION OF
DIRECTORS;

 

(2)                                  THE COMPANY IS PARTY TO A MERGER OR
CONSOLIDATION WHICH RESULTS IN THE HOLDERS OF THE VOTING SECURITIES OF THE
COMPANY OUTSTANDING IMMEDIATELY PRIOR THERETO FAILING TO RETAIN IMMEDIATELY
AFTER SUCH MERGER OR CONSOLIDATION DIRECT OR INDIRECT BENEFICIAL OWNERSHIP OF
MORE THAN FIFTY PERCENT (50%) OF THE TOTAL COMBINED VOTING POWER OF THE
SECURITIES ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS OF THE
COMPANY OR THE SURVIVING ENTITY OUTSTANDING IMMEDIATELY AFTER SUCH MERGER OR
CONSOLIDATION;

 

(3)                                  THE SALE OR DISPOSITION OF ALL OR
SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS OR CONSUMMATION OF ANY TRANSACTION
HAVING SIMILAR EFFECT (OTHER THAN A SALE OR DISPOSITION TO ONE OR MORE
SUBSIDIARIES OF THE COMPANY); OR

 

(4)                                  A CHANGE IN THE COMPOSITION OF THE BOARD
WITHIN ANY CONSECUTIVE TWO-YEAR PERIOD AS A RESULT OF WHICH FEWER THAN A
MAJORITY OF THE DIRECTORS ARE INCUMBENT DIRECTORS.

 

(G)                                 “CHANGE IN CONTROL PERIOD” MEANS A PERIOD
COMMENCING UPON THE DATE OF THE CONSUMMATION OF A CHANGE IN CONTROL AND ENDING
ON THE DATE OCCURRING EIGHTEEN (18) MONTHS THEREAFTER.

 

(H)                                 “CHIEF EXECUTIVE OFFICER” MEANS THE
INDIVIDUAL WHO, IMMEDIATELY PRIOR TO THE CONSUMMATION OF A CHANGE IN CONTROL,
SERVES AS THE COMPANY’S CHIEF EXECUTIVE OFFICER AS APPOINTED BY THE BOARD.

 

(I)                                     “CODE” MEANS THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, OR ANY SUCCESSOR THERETO AND ANY APPLICABLE REGULATIONS
PROMULGATED THEREUNDER.

 

(J)                                     “COMMITTEE” MEANS THE COMPENSATION
COMMITTEE OF THE BOARD.

 

(K)                                  “COMPANY” MEANS ZORAN CORPORATION, A
DELAWARE CORPORATION, AND, FOLLOWING A CHANGE IN CONTROL, A SUCCESSOR THAT
AGREES TO ASSUME ALL OF THE TERMS AND PROVISIONS OF THIS PLAN OR A SUCCESSOR
WHICH OTHERWISE BECOMES BOUND BY OPERATION OF LAW TO THIS PLAN.

 

(L)                                     “COMPANY GROUP” MEANS THE GROUP
CONSISTING OF THE COMPANY AND EACH PRESENT OR FUTURE PARENT AND SUBSIDIARY
CORPORATION OR OTHER BUSINESS ENTITY THEREOF.

 

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(M)                               “DISABILITY” MEANS A PARTICIPANT’S PERMANENT
AND TOTAL DISABILITY WITHIN THE MEANING OF SECTION 22(E)(3) OF THE CODE.

 

(N)                                 “EXECUTIVE OFFICER” MEANS AN INDIVIDUAL WHO,
IMMEDIATELY PRIOR TO THE CONSUMMATION OF A CHANGE IN CONTROL, SERVES AS AN
EXECUTIVE OFFICER OF THE COMPANY APPOINTED BY THE BOARD.

 

(O)                                 “GOOD REASON” MEANS THE OCCURRENCE OF ANY OF
THE FOLLOWING CONDITIONS UPON OR FOLLOWING A CHANGE IN CONTROL, WITHOUT THE
PARTICIPANT’S INFORMED WRITTEN CONSENT, WHICH CONDITION(S) REMAIN(S) IN EFFECT
TEN (10) DAYS AFTER WRITTEN NOTICE TO THE COMPANY FROM THE PARTICIPANT OF SUCH
CONDITION(S):

 

(1)                                  ASSIGNMENT OF THE PARTICIPANT TO A POSITION
THAT IS NOT A SUBSTANTIVE FUNCTIONAL EQUIVALENT OF THE POSITION WHICH THE
PARTICIPANT OCCUPIED IMMEDIATELY PRIOR TO THE CHANGE IN CONTROL;

 

(2)                                  A DECREASE IN THE PARTICIPANT’S BASE SALARY
RATE OR A DECREASE IN THE PARTICIPANT’S TARGET BONUS AMOUNT (SUBJECT TO
APPLICABLE PERFORMANCE REQUIREMENTS WITH RESPECT TO THE ACTUAL AMOUNT OF BONUS
COMPENSATION EARNED BY THE PARTICIPANT);

 

(3)                                  ANY FAILURE BY THE COMPANY TO (I) CONTINUE
TO PROVIDE THE PARTICIPANT WITH THE OPPORTUNITY TO PARTICIPATE, ON TERMS NO LESS
FAVORABLE THAN THOSE IN EFFECT FOR THE BENEFIT OF ANY EMPLOYEE GROUP WHICH
CUSTOMARILY INCLUDES A PERSON HOLDING THE EMPLOYMENT POSITION OR A COMPARABLE
POSITION WITH THE COMPANY GROUP THEN HELD BY THE PARTICIPANT, IN ANY BENEFIT OR
COMPENSATION PLANS AND PROGRAMS, INCLUDING, BUT NOT LIMITED TO, THE COMPANY
GROUP’S LIFE, DISABILITY, HEALTH, DENTAL, MEDICAL, SAVINGS, PROFIT SHARING,
STOCK PURCHASE AND RETIREMENT PLANS, IF ANY, IN WHICH THE PARTICIPANT WAS
PARTICIPATING IMMEDIATELY PRIOR TO THE DATE OF THE CHANGE IN CONTROL, OR THEIR
EQUIVALENT, OR (II) PROVIDE THE PARTICIPANT WITH ALL OTHER FRINGE BENEFITS (OR
THEIR EQUIVALENT) FROM TIME TO TIME IN EFFECT FOR THE BENEFIT OF ANY EMPLOYEE
GROUP WHICH CUSTOMARILY INCLUDES A PERSON HOLDING THE EMPLOYMENT POSITION OR A
COMPARABLE POSITION WITH THE COMPANY GROUP THEN HELD BY THE PARTICIPANT;

 

(4)                                  THE RELOCATION OF THE PARTICIPANT’S WORK
PLACE FOR THE COMPANY GROUP TO A LOCATION THAT INCREASES THE REGULAR COMMUTE
DISTANCE BETWEEN THE PARTICIPANT’S RESIDENCE AND WORK PLACE BY MORE THAN THIRTY
(30) MILES (ONE-WAY), OR THE IMPOSITION OF TRAVEL REQUIREMENTS SUBSTANTIALLY
MORE DEMANDING OF THE PARTICIPANT THAN SUCH TRAVEL REQUIREMENTS EXISTING
IMMEDIATELY PRIOR TO THE CHANGE IN CONTROL; OR

 

(5)                                  ANY MATERIAL BREACH OF THIS PLAN BY THE
COMPANY WITH RESPECT TO THE PARTICIPANT.

 

The existence of Good Reason shall not be affected by the Participant’s
temporary incapacity due to physical or mental illness not constituting a
Disability.  The Participant’s continued employment shall not constitute consent
to, or a waiver of rights with respect to, any condition constituting Good
Reason hereunder.  For the purposes of any determination regarding the existence
of Good Reason hereunder, any claim by the Participant that Good Reason exists
shall be presumed to be correct unless the Company establishes to the Board that
Good Reason does not exist, and the Board, acting in good faith, affirms such
determination by a vote of not less than two-thirds of its entire membership.

 

(P)                                 “INCUMBENT DIRECTOR” MEANS A DIRECTOR WHO
EITHER (1) IS A MEMBER OF THE BOARD AS OF THE EFFECTIVE DATE, OR (2) IS ELECTED,
OR NOMINATED FOR ELECTION, TO THE BOARD WITH THE AFFIRMATIVE VOTES OF AT LEAST A
MAJORITY OF THE INCUMBENT DIRECTORS AT THE TIME OF SUCH ELECTION OR NOMINATION,
BUT (3) WAS NOT ELECTED OR NOMINATED IN CONNECTION WITH AN ACTUAL OR THREATENED
PROXY CONTEST RELATING TO THE ELECTION OF DIRECTORS OF THE COMPANY.

 

(Q)                                 “KEY EMPLOYEE” MEANS AN INDIVIDUAL, OTHER
THAN AN EXECUTIVE OFFICER, WHO, IMMEDIATELY PRIOR TO THE CONSUMMATION OF A
CHANGE IN CONTROL, IS EMPLOYED BY THE COMPANY GROUP AND HAS BEEN DESIGNATED BY
THE BOARD OR THE COMMITTEE AS ELIGIBLE TO PARTICIPATE IN THE PLAN.

 

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(R)                                    “OPTION” MEANS ANY OPTION TO PURCHASE
SHARES OF THE CAPITAL STOCK OF THE COMPANY OR OF ANY OTHER MEMBER OF THE COMPANY
GROUP GRANTED TO A PARTICIPANT BY THE COMPANY OR ANY OTHER COMPANY GROUP MEMBER,
WHETHER GRANTED BEFORE OR AFTER A CHANGE IN CONTROL.

 

(S)                                  “PARTICIPANT” MEANS EACH EXECUTIVE OFFICER
AND EACH KEY EMPLOYEE DESIGNATED BY THE COMMITTEE TO PARTICIPATE IN THE PLAN,
PROVIDED SUCH INDIVIDUAL HAS EXECUTED A PARTICIPATION AGREEMENT.

 

(T)                                    “PARTICIPATION AGREEMENT” MEANS AN
AGREEMENT TO PARTICIPATE IN THE ZORAN CORPORATION EXECUTIVE RETENTION AND
SEVERANCE PLAN IN THE FORM ATTACHED HERETO AS EXHIBIT A OR IN SUCH OTHER FORM AS
THE COMMITTEE MAY APPROVE FROM TIME TO TIME; PROVIDED, HOWEVER, THAT, AFTER A
PARTICIPATION AGREEMENT HAS BEEN ENTERED INTO BETWEEN A PARTICIPANT AND THE
COMPANY, IT MAY BE MODIFIED ONLY BY A SUPPLEMENTAL WRITTEN AGREEMENT EXECUTED BY
BOTH THE PARTICIPANT AND THE COMPANY.  THE TERMS OF SUCH FORMS OF PARTICIPATION
AGREEMENT NEED NOT BE IDENTICAL WITH RESPECT TO EACH PARTICIPANT.  FOR EXAMPLE,
A PARTICIPATION AGREEMENT MAY LIMIT THE DURATION OF A PARTICIPANT’S
PARTICIPATION IN THE PLAN OR MAY MODIFY THE DEFINITION OF “CHANGE IN CONTROL”
WITH RESPECT TO A PARTICIPANT.

 

(U)                                 “RELEASE” MEANS A GENERAL RELEASE OF ALL
KNOWN AND UNKNOWN CLAIMS AGAINST THE COMPANY AND ITS AFFILIATES AND THEIR
STOCKHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS
SUBSTANTIALLY IN THE APPROPRIATE FORM ATTACHED HERETO AS EXHIBIT B, WITH ANY
MODIFICATIONS THERETO DETERMINED BY LEGAL COUNSEL TO THE COMPANY TO BE NECESSARY
OR ADVISABLE TO COMPLY WITH APPLICABLE LAW OR TO ACCOMPLISH THE INTENT OF
SECTION 8 HEREOF.

 

(V)                                 “RESTRICTED STOCK” MEANS ANY SHARES OF THE
CAPITAL STOCK OF THE COMPANY OR OF ANY OTHER MEMBER OF THE COMPANY GROUP GRANTED
TO A PARTICIPANT BY THE COMPANY OR ANY OTHER COMPANY GROUP MEMBER OR ACQUIRED
UPON THE EXERCISE OF AN OPTION, WHETHER SUCH SHARES ARE GRANTED OR ACQUIRED
BEFORE OR AFTER A CHANGE IN CONTROL, INCLUDING ANY SHARES ISSUED IN EXCHANGE FOR
ANY SUCH SHARES BY A SUCCESSOR OR ANY OTHER MEMBER OF THE COMPANY GROUP.

 

(W)                               “SUBSTANTIVE FUNCTIONAL EQUIVALENT” MEANS AN
EMPLOYMENT POSITION OCCUPIED BY A PARTICIPANT AFTER A CHANGE IN CONTROL THAT:

 

(1)                                  IS IN A SUBSTANTIVE AREA OF COMPETENCE
(SUCH AS, ACCOUNTING, EXECUTIVE MANAGEMENT, FINANCE, HUMAN RESOURCES, MARKETING,
SALES AND SERVICE, OR OPERATIONS, ETC.) THAT IS CONSISTENT WITH THE
PARTICIPANT’S EXPERIENCE AND NOT MATERIALLY DIFFERENT FROM THE POSITION OCCUPIED
BY THE PARTICIPANT IMMEDIATELY PRIOR TO THE CHANGE IN CONTROL;

 

(2)                                  ALLOWS THE PARTICIPANT TO SERVE IN A ROLE
AND PERFORM DUTIES THAT ARE FUNCTIONALLY EQUIVALENT TO THOSE PERFORMED
IMMEDIATELY PRIOR TO THE CHANGE IN CONTROL (SUCH AS BUSINESS UNIT EXECUTIVE WITH
PROFIT AND LOSS RESPONSIBILITY, PRODUCT LINE MANAGER, MARKETING STRATEGIST,
GEOGRAPHIC SALES MANAGER, EXECUTIVE OFFICER, ETC.); AND

 

(3)                                  DOES NOT OTHERWISE CONSTITUTE A MATERIAL,
ADVERSE CHANGE IN THE PARTICIPANT’S RESPONSIBILITIES OR DUTIES, AS MEASURED
AGAINST THE PARTICIPANT’S RESPONSIBILITIES OR DUTIES PRIOR TO THE CHANGE IN
CONTROL, CAUSING IT TO BE OF MATERIALLY LESSER RANK OR RESPONSIBILITY WITHIN THE
COMPANY OR AN EQUIVALENT BUSINESS UNIT OF ITS PARENT.

 

(X)                                   “SUCCESSOR” MEANS ANY SUCCESSOR IN
INTEREST TO SUBSTANTIALLY ALL OF THE BUSINESS AND/OR ASSETS OF THE COMPANY.

 

(Y)                                 “TERMINATION UPON A CHANGE IN CONTROL” MEANS
THE OCCURRENCE OF ANY OF THE FOLLOWING EVENTS:

 

(1)                                  TERMINATION BY THE COMPANY GROUP OF THE
PARTICIPANT’S EMPLOYMENT FOR ANY REASON OTHER THAN CAUSE DURING THE CHANGE IN
CONTROL PERIOD; OR

 

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(2)                                  THE PARTICIPANT’S RESIGNATION FOR GOOD
REASON DURING THE CHANGE IN CONTROL PERIOD FROM ALL CAPACITIES IN WHICH THE
PARTICIPANT IS THEN RENDERING SERVICE TO THE COMPANY GROUP;

 

provided, however, that Termination Upon a Change in Control shall not include
any termination of the Participant’s employment which is (i) for Cause, (ii) a
result of the Participant’s death or Disability, or (iii) a result of the
Participant’s voluntary termination of employment other than for Good Reason.

 

2.2                                 CONSTRUCTION.  CAPTIONS AND TITLES CONTAINED
HEREIN ARE FOR CONVENIENCE ONLY AND SHALL NOT AFFECT THE MEANING OR
INTERPRETATION OF ANY PROVISION OF THE PLAN.  EXCEPT WHEN OTHERWISE INDICATED BY
THE CONTEXT, THE SINGULAR SHALL INCLUDE THE PLURAL AND THE PLURAL SHALL INCLUDE
THE SINGULAR.  USE OF THE TERM “OR” IS NOT INTENDED TO BE EXCLUSIVE, UNLESS THE
CONTEXT CLEARLY REQUIRES OTHERWISE.

 

3.             Eligibility

 

The Board or Committee shall designate those Executive Officers and Key
Employees who shall be eligible to become Participants in the Plan.

 

4.             Treatment of Options Upon a Change in Control

 

Notwithstanding any provision to the contrary contained in any agreement
evidencing an Option granted to a Participant, in the event of a Change in
Control in which the surviving, continuing, successor, or purchasing corporation
or other business entity or parent thereof, as the case may be (the “Acquiring
Corporation”), does not assume the Company’s rights and obligations under the
then-outstanding Options held by the Participant or substitute for such Options
substantially equivalent options for the Acquiring Corporation’s stock, then the
vesting and exercisability of each such Option shall be accelerated in full
effective immediately prior to but conditioned upon the consummation of the
Change in Control.

 

5.             Severance Benefits

 

In the event of a Participant’s Termination Upon a Change in Control and
provided that the Participant has executed and not revoked a Release at the time
of such Termination Upon a Change in Control, the Participant shall be entitled
to receive, in addition to all compensation and benefits earned by the
Participant through the date of the Participant’s termination of employment, the
following severance payments and benefits:

 

5.1                                 SALARY AND BONUS.  SUBJECT TO SECTION 6,
WITHIN THIRTY (30) DAYS FOLLOWING THE LATER OF THE PARTICIPANT’S TERMINATION OF
EMPLOYMENT OR THE LAST DAY FOLLOWING THE PARTICIPANT’S EXECUTION OF THE RELEASE
ON WHICH THE PARTICIPANT MAY, BY ITS TERMS, REVOKE SUCH RELEASE, THE COMPANY
SHALL PAY TO THE PARTICIPANT IN A LUMP SUM CASH PAYMENT AN AMOUNT EQUAL TO THE
SUM OF (A) THE PARTICIPANT’S BASE SALARY RATE MULTIPLIED BY THE NUMBER OF MONTHS
IN THE BENEFIT PERIOD APPLICABLE TO THE PARTICIPANT AND (B) THE PARTICIPANT’S
ANNUAL BONUS MULTIPLIED BY A RATIO, THE NUMERATOR OF WHICH IS THE NUMBER OF
MONTHS IN THE BENEFIT PERIOD APPLICABLE TO THE PARTICIPANT AND THE DENOMINATOR
OF WHICH IS TWELVE (12).

 

5.2                                 HEALTH AND LIFE INSURANCE BENEFITS.  FOR THE
PERIOD COMMENCING IMMEDIATELY FOLLOWING THE PARTICIPANT’S TERMINATION OF
EMPLOYMENT AND CONTINUING FOR THE DURATION OF THE BENEFIT PERIOD APPLICABLE TO
THE PARTICIPANT, THE COMPANY SHALL ARRANGE TO PROVIDE THE PARTICIPANT AND HIS OR
HER DEPENDENTS WITH HEALTH (INCLUDING MEDICAL AND DENTAL) AND LIFE INSURANCE
BENEFITS SUBSTANTIALLY SIMILAR TO THOSE PROVIDED TO THE PARTICIPANT AND HIS OR
HER DEPENDENTS IMMEDIATELY PRIOR TO THE DATE OF SUCH TERMINATION OF EMPLOYMENT
(WITHOUT GIVING EFFECT TO ANY REDUCTION IN SUCH BENEFITS CONSTITUTING GOOD
REASON).  SUCH BENEFITS SHALL BE PROVIDED TO THE PARTICIPANT AT THE SAME PREMIUM
COST TO THE PARTICIPANT AND AT THE SAME COVERAGE LEVEL AS IN EFFECT AS OF THE
PARTICIPANT’S TERMINATION OF EMPLOYMENT (WITHOUT GIVING EFFECT TO ANY REDUCTION
IN SUCH BENEFITS CONSTITUTING GOOD REASON); PROVIDED, HOWEVER, THAT THE
PARTICIPANT SHALL BE SUBJECT TO ANY CHANGE IN THE PREMIUM COST AND/OR LEVEL OF
COVERAGE APPLICABLE GENERALLY TO ALL EMPLOYEES HOLDING THE POSITION OR
COMPARABLE POSITION WITH THE COMPANY WHICH THE PARTICIPANT HELD IMMEDIATELY
PRIOR TO THE CHANGE IN CONTROL.  THE COMPANY MAY SATISFY ITS OBLIGATION TO
PROVIDE A CONTINUATION OF HEALTH INSURANCE BENEFITS BY PAYING THAT PORTION OF
THE PARTICIPANT’S PREMIUMS REQUIRED UNDER THE CONSOLIDATED OMNIBUS BUDGET
RECONCILIATION ACT (“COBRA”) THAT EXCEED THE AMOUNT OF PREMIUMS THAT THE

 

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PARTICIPANT WOULD HAVE BEEN REQUIRED TO PAY FOR CONTINUING COVERAGE HAD HE OR
SHE CONTINUED IN EMPLOYMENT.  IF THE COMPANY IS NOT REASONABLY ABLE TO CONTINUE
SUCH COVERAGE UNDER THE COMPANY’S BENEFIT PLANS, THE COMPANY SHALL PROVIDE
SUBSTANTIALLY EQUIVALENT COVERAGE UNDER OTHER SOURCES OR WILL REIMBURSE THE
PARTICIPANT FOR PREMIUMS (IN EXCESS OF THE PARTICIPANT’S PREMIUM COST DESCRIBED
ABOVE) INCURRED BY THE PARTICIPANT TO OBTAIN HIS OR HER OWN SUCH COVERAGE.  IF
THE PARTICIPANT BECOMES ELIGIBLE TO RECEIVE SUCH COVERAGE UNDER ANOTHER
EMPLOYER’S BENEFIT PLANS DURING THE APPLICABLE BENEFIT PERIOD, THE PARTICIPANT
SHALL REPORT SUCH ELIGIBILITY TO THE COMPANY, AND THE COMPANY’S OBLIGATIONS
UNDER THIS SECTION 5.2 SHALL BE SECONDARY TO THE COVERAGE PROVIDED BY SUCH OTHER
EMPLOYER’S PLANS.  FOR THE BALANCE OF ANY PERIOD IN EXCESS OF THE APPLICABLE
BENEFIT PERIOD DURING WHICH THE PARTICIPANT IS ENTITLED TO CONTINUATION COVERAGE
UNDER COBRA, THE PARTICIPANT SHALL BE ENTITLED TO MAINTAIN COVERAGE FOR HIMSELF
OR HERSELF AND THE PARTICIPANT’S ELIGIBLE DEPENDENTS AT THE PARTICIPANT’S OWN
EXPENSE.

 

5.3                                 ACCELERATION OF VESTING OF OPTIONS, CASH
INCENTIVE PROGRAM AND RESTRICTED STOCK; EXTENSION OF OPTION EXERCISE PERIOD. 
NOTWITHSTANDING ANY PROVISION TO THE CONTRARY CONTAINED IN ANY AGREEMENT
EVIDENCING AN OPTION OR SHARES OF RESTRICTED STOCK GRANTED TO A PARTICIPANT, THE
VESTING AND EXERCISABILITY OF EACH OF THE PARTICIPANT’S OUTSTANDING OPTIONS AND
THE VESTING OF THE PARTICIPANT’S CASH INCENTIVE PROGRAM AND SHARES OF RESTRICTED
STOCK SHALL BE ACCELERATED IN FULL EFFECTIVE AS OF THE DATE OF THE PARTICIPANT’S
TERMINATION OF EMPLOYMENT SO THAT EACH OPTION AND SHARE OF RESTRICTED STOCK HELD
BY THE PARTICIPANT SHALL BE IMMEDIATELY EXERCISABLE AND FULLY VESTED. 
FURTHERMORE, THE OPTION, TO THE EXTENT UNEXERCISED ON THE DATE ON WHICH THE
PARTICIPANT’S EMPLOYMENT TERMINATED, MAY BE EXERCISED BY THE PARTICIPANT (OR THE
PARTICIPANT’S GUARDIAN OR LEGAL REPRESENTATIVE) AT ANY TIME PRIOR TO THE LATER
OF THE DATE SPECIFIED IN THE AGREEMENT EVIDENCING SUCH OPTION OR THE EXPIRATION
OF ONE (1) YEAR AFTER THE DATE ON WHICH THE PARTICIPANT’S EMPLOYMENT TERMINATED,
BUT IN ANY EVENT NO LATER THAN THE DATE OF EXPIRATION OF THE OPTION’S TERM AS
SET FORTH IN THE AGREEMENT EVIDENCING SUCH OPTION.

 

5.4                                 INDEMNIFICATION; INSURANCE.

 

(A)                                  IN ADDITION TO ANY RIGHTS A PARTICIPANT MAY
HAVE UNDER ANY INDEMNIFICATION AGREEMENT PREVIOUSLY ENTERED INTO BETWEEN THE
COMPANY AND SUCH PARTICIPANT (A “PRIOR INDEMNITY AGREEMENT”), FROM AND AFTER THE
DATE OF THE PARTICIPANT’S TERMINATION OF EMPLOYMENT, THE COMPANY SHALL INDEMNIFY
AND HOLD HARMLESS THE PARTICIPANT AGAINST ANY COSTS OR EXPENSES (INCLUDING
ATTORNEYS’ FEES), JUDGMENTS, FINES, LOSSES, CLAIMS, DAMAGES OR LIABILITIES
INCURRED IN CONNECTION WITH ANY CLAIM, ACTION, SUIT, PROCEEDING OR
INVESTIGATION, WHETHER CIVIL, CRIMINAL, ADMINISTRATIVE OR INVESTIGATIVE, BY
REASON OF THE FACT THAT THE PARTICIPANT IS OR WAS A DIRECTOR, OFFICER, EMPLOYEE
OR AGENT OF THE COMPANY GROUP, OR IS OR WAS SERVING AT THE REQUEST OF THE
COMPANY GROUP AS A DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF ANOTHER CORPORATION,
PARTNERSHIP, JOINT VENTURE, TRUST OR OTHER ENTERPRISE, WHETHER ASSERTED OR
CLAIMED PRIOR TO, AT OR AFTER THE DATE OF THE PARTICIPANT’S TERMINATION OF
EMPLOYMENT, TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, AND THE
COMPANY SHALL ALSO ADVANCE FEES AND EXPENSES (INCLUDING ATTORNEYS’ FEES) AS
INCURRED BY THE PARTICIPANT TO THE FULLEST EXTENT PERMITTED UNDER APPLICABLE
LAW.  IN THE EVENT OF A CONFLICT BETWEEN THE PROVISIONS OF A PRIOR INDEMNITY
AGREEMENT AND THE PROVISIONS OF THIS PLAN, THE PARTICIPANT MAY ELECT WHICH
PROVISIONS SHALL GOVERN.

 

(B)                                 FOR A PERIOD OF SIX (6) YEARS FROM AND AFTER
THE DATE OF TERMINATION OF EMPLOYMENT OF A PARTICIPANT WHO WAS AN OFFICER AND/OR
DIRECTOR OF THE COMPANY AT ANY TIME PRIOR TO SUCH TERMINATION OF EMPLOYMENT, THE
COMPANY SHALL MAINTAIN A POLICY OF DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE
FOR THE BENEFIT OF SUCH PARTICIPANT WHICH PROVIDES HIM OR HER WITH COVERAGE NO
LESS FAVORABLE THAN THAT PROVIDED FOR THE COMPANY’S CONTINUING OFFICERS AND
DIRECTORS.

 

6.             Federal Excise Tax Under Section 4999 of the Code

 

6.1                                 EXCESS PARACHUTE PAYMENT.  IN THE EVENT THAT
ANY PAYMENT OR BENEFIT RECEIVED OR TO BE RECEIVED BY THE PARTICIPANT PURSUANT TO
THIS PLAN OR OTHERWISE (COLLECTIVELY, THE “PAYMENTS”) WOULD SUBJECT THE
PARTICIPANT TO ANY EXCISE TAX PURSUANT TO SECTION 4999 OF THE CODE (THE “EXCISE
TAX”) DUE TO THE CHARACTERIZATION OF SUCH PAYMENTS AS AN EXCESS PARACHUTE
PAYMENT UNDER SECTION 280G OF THE CODE, THEN, NOTWITHSTANDING THE OTHER
PROVISIONS OF THIS PLAN, THE AMOUNT OF SUCH PAYMENTS WILL NOT EXCEED THE AMOUNT
WHICH PRODUCES THE GREATEST AFTER-TAX BENEFIT TO THE PARTICIPANT.

 

6.2                                 DETERMINATION BY ACCOUNTANTS.  UPON THE
OCCURRENCE OF ANY EVENT (THE “EVENT”) THAT WOULD GIVE RISE TO ANY PAYMENTS
PURSUANT TO THIS PLAN, THE COMPANY SHALL PROMPTLY REQUEST A DETERMINATION IN

 

6

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WRITING TO BE MADE WITHIN THIRTY (30) DAYS OF THE DATE OF THE EVENT BY
INDEPENDENT PUBLIC ACCOUNTANTS (THE “ACCOUNTANTS”) SELECTED BY THE COMPANY AND
REASONABLY ACCEPTABLE TO THE PARTICIPANT OF THE AMOUNT AND TYPE OF SUCH PAYMENTS
WHICH WOULD PRODUCE THE GREATEST AFTER-TAX BENEFIT TO THE PARTICIPANT.  FOR THE
PURPOSES OF SUCH DETERMINATION, THE ACCOUNTANTS MAY RELY ON REASONABLE, GOOD
FAITH INTERPRETATIONS CONCERNING THE APPLICATION OF SECTIONS 280G AND 4999 OF
THE CODE.  THE COMPANY AND THE PARTICIPANT SHALL FURNISH TO THE ACCOUNTANTS SUCH
INFORMATION AND DOCUMENTS AS THE ACCOUNTANTS MAY REASONABLY REQUEST IN ORDER TO
MAKE THEIR REQUIRED DETERMINATION.  THE COMPANY SHALL BEAR ALL FEES AND EXPENSES
THE ACCOUNTANTS MAY REASONABLY CHARGE IN CONNECTION WITH THEIR SERVICES
CONTEMPLATED BY THIS SECTION.  IN THE EVENT THAT THE REPORT OF THE ACCOUNTANTS
IS NOT RECEIVED WITHIN THIRTY (30) DAYS FOLLOWING THE PARTICIPANT’S TERMINATION
UPON CHANGE IN CONTROL, THE COMPANY SHALL PAY TO THE PARTICIPANT THE CASH
SEVERANCE BENEFITS REQUIRED BY SECTION 5.1 ABOVE (SUBJECT TO ANY REDUCTION
NECESSARY TO PRODUCE THE GREATEST AFTER-TAX BENEFIT TO THE PARTICIPANT) WITHIN
TEN (10) DAYS OF THE DATE OF THE ACCOUNTANTS’ REPORT OF THEIR DETERMINATION.

 

7.             Conflict in Benefits; Noncumulation of Benefits

 

7.1                                 EFFECT OF PLAN.  THE TERMS OF THIS PLAN,
WHEN ACCEPTED BY A PARTICIPANT PURSUANT TO AN EXECUTED PARTICIPATION AGREEMENT,
SHALL SUPERSEDE ALL PRIOR ARRANGEMENTS, WHETHER WRITTEN OR ORAL, AND
UNDERSTANDINGS REGARDING THE SUBJECT MATTER OF THIS PLAN AND SHALL BE THE
EXCLUSIVE AGREEMENT FOR THE DETERMINATION OF ANY PAYMENTS AND BENEFITS DUE TO
THE PARTICIPANT UPON THE EVENTS DESCRIBED IN SECTIONS 4, 5 AND 6.

 

7.2                                 NONCUMULATION OF BENEFITS.  EXCEPT AS
EXPRESSLY PROVIDED IN A WRITTEN AGREEMENT BETWEEN A PARTICIPANT AND THE COMPANY
ENTERED INTO AFTER THE DATE OF SUCH PARTICIPANT’S PARTICIPATION AGREEMENT AND
WHICH EXPRESSLY DISCLAIMS THIS SECTION 7.2 AND IS APPROVED BY THE BOARD OR THE
COMMITTEE, THE TOTAL AMOUNT OF PAYMENTS AND BENEFITS THAT MAY BE RECEIVED BY THE
PARTICIPANT AS A RESULT OF THE EVENTS DESCRIBED IN SECTIONS 4, 5 AND 6 PURSUANT
TO (A) THE PLAN, (B) ANY AGREEMENT BETWEEN THE PARTICIPANT AND THE COMPANY OR
(C) ANY OTHER PLAN, PRACTICE OR STATUTORY OBLIGATION OF THE COMPANY, SHALL NOT
EXCEED THE AMOUNT OF PAYMENTS AND BENEFITS PROVIDED BY THIS PLAN UPON SUCH
EVENTS (PLUS ANY PAYMENTS AND BENEFITS PROVIDED PURSUANT TO AN AGREEMENT
EVIDENCING AN OPTION, CASH INCENTIVE PROGRAM OR AWARD OF RESTRICTED STOCK, AS
DESCRIBED IN SECTION 4, OR A PRIOR INDEMNITY AGREEMENT, AS DESCRIBED IN SECTION
5.3(A)), AND THE AGGREGATE AMOUNTS PAYABLE UNDER THIS PLAN SHALL BE REDUCED TO
THE EXTENT OF ANY EXCESS (BUT NOT BELOW ZERO).

 

8.             Exclusive Remedy

 

The payments and benefits provided by Section 5 and Section 6 (plus any payments
and benefits provided pursuant to an agreement evidencing an Option, Cash
Incentive Program or award of Restricted Stock, as described in Section 4, or a
Prior Indemnity Agreement, as described in Section 5.3(a)), if applicable, shall
constitute the Participant’s sole and exclusive remedy for any alleged injury or
other damages arising out of the cessation of the employment relationship
between the Participant and the Company in the event of the Participant’s
Termination Upon a Change in Control.  The Participant shall be entitled to no
other compensation, benefits, or other payments from the Company as a result of
any Termination Upon a Change in Control with respect to which the payments and
benefits described in Section 5 and Section 6 (plus any payments and benefits
provided pursuant to an agreement evidencing an Option, Cash Incentive Program
or award of Restricted Stock, as described in Section 4, or a Prior Indemnity
Agreement, as described in Section 5.3(a)), if applicable, have been provided to
the Participant, except as expressly set forth in this Plan or, subject to the
provisions of Sections 7.2, in a duly executed employment agreement between
Company and the Participant.

 

9.             Proprietary and Confidential Information

 

The Participant agrees to continue to abide by the terms and conditions of the
confidentiality and/or proprietary rights agreement between the Participant and
the Company.

 

10.           Nonsolicitation

 

If the Company performs its obligations to deliver the payments and benefits set
forth in Section 5 and Section 6 (plus any payments and benefits provided
pursuant to an agreement evidencing an Option, Cash

 

7

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Incentive Program or award of Restricted Stock, as described in Section 4, or a
Prior Indemnity Agreement, as described in Section 5.3(a)), then for a period
equal to the Benefit Period applicable to a Participant following the
Participant’s Termination Upon a Change in Control, the Participant shall not,
directly or indirectly, recruit, solicit or invite the solicitation of any
employees of the Company to terminate their employment relationship with the
Company.

 

11.           No Contract of Employment

 

Neither the establishment of the Plan, nor any amendment thereto, nor the
payment of any benefits shall be construed as giving any person the right to be
retained by the Company, a Successor or any other member of the Company Group. 
Except as otherwise established in an employment agreement between the Company
and a Participant, the employment relationship between the Participant and the
Company is an “at-will” relationship.  Accordingly, either the Participant or
the Company may terminate the relationship at any time, with or without cause,
and with or without notice except as otherwise provided by Section 14.  In
addition, nothing in this Plan shall in any manner obligate any Successor or
other member of the Company Group to offer employment to any Participant or to
continue the employment of any Participant which it does hire for any specific
duration of time.

 

12.           Arbitration

 

12.1                           DISPUTES SUBJECT TO ARBITRATION.  ANY CLAIM,
DISPUTE OR CONTROVERSY ARISING OUT OF THIS PLAN, THE INTERPRETATION, VALIDITY OR
ENFORCEABILITY OF THIS PLAN OR THE ALLEGED BREACH THEREOF SHALL BE SUBMITTED BY
THE PARTIES TO BINDING ARBITRATION BY THE AMERICAN ARBITRATION ASSOCIATION;
PROVIDED, HOWEVER, THAT (A) THE ARBITRATOR SHALL HAVE NO AUTHORITY TO MAKE ANY
RULING OR JUDGMENT THAT WOULD CONFER ANY RIGHTS WITH RESPECT TO TRADE SECRETS,
CONFIDENTIAL AND PROPRIETARY INFORMATION OR OTHER INTELLECTUAL PROPERTY; AND (B)
THIS ARBITRATION PROVISION SHALL NOT PRECLUDE THE PARTIES FROM SEEKING LEGAL AND
EQUITABLE RELIEF FROM ANY COURT HAVING JURISDICTION WITH RESPECT TO ANY DISPUTES
OR CLAIMS RELATING TO OR ARISING OUT OF THE MISUSE OR MISAPPROPRIATION OF
INTELLECTUAL PROPERTY.  JUDGMENT MAY BE ENTERED ON THE AWARD OF THE ARBITRATOR
IN ANY COURT HAVING JURISDICTION.

 

12.2                           SITE OF ARBITRATION.  THE SITE OF THE ARBITRATION
PROCEEDING SHALL BE IN SANTA CLARA, CALIFORNIA OR ANY OTHER SITE MUTUALLY AGREED
TO BY THE COMPANY AND THE PARTICIPANT.

 

12.3                           COSTS AND EXPENSES BORNE BY COMPANY.  ALL COSTS
AND EXPENSES OF ARBITRATION, INCLUDING BUT NOT LIMITED TO REASONABLE ATTORNEYS’
FEES AND OTHER COSTS REASONABLY INCURRED BY THE PARTICIPANT IN CONNECTION WITH
AN ARBITRATION IN ACCORDANCE WITH THIS SECTION 12, SHALL BE PAID BY THE
COMPANY.  NOTWITHSTANDING THE FOREGOING, IF THE PARTICIPANT INITIATES THE
ARBITRATION, AND THE ARBITRATOR FINDS THAT THE PARTICIPANT’S CLAIMS WERE TOTALLY
WITHOUT MERIT OR FRIVOLOUS, THEN THE PARTICIPANT SHALL BE RESPONSIBLE FOR THE
PARTICIPANT’S OWN ATTORNEYS’ FEES AND COSTS.

 

13.           Successors and Assigns

 

13.1                           SUCCESSORS OF THE COMPANY.  THE COMPANY SHALL
REQUIRE ANY SUCCESSOR OR ASSIGN (WHETHER DIRECT OR INDIRECT, BY PURCHASE,
MERGER, CONSOLIDATION OR OTHERWISE) TO ALL OR SUBSTANTIALLY ALL OF THE BUSINESS
AND/OR ASSETS OF THE COMPANY, EXPRESSLY, ABSOLUTELY AND UNCONDITIONALLY TO
ASSUME AND AGREE TO PERFORM THIS PLAN IN THE SAME MANNER AND TO THE SAME EXTENT
THAT THE COMPANY WOULD BE REQUIRED TO PERFORM IT IF NO SUCH SUCCESSION OR
ASSIGNMENT HAD TAKEN PLACE.  FAILURE OF THE COMPANY TO OBTAIN SUCH AGREEMENT
SHALL BE A MATERIAL BREACH OF THIS PLAN AND SHALL ENTITLE THE PARTICIPANT TO
RESIGN FOR GOOD REASON AND TO RECEIVE THE BENEFITS PROVIDED UNDER THIS PLAN IN
THE EVENT OF TERMINATION UPON A CHANGE IN CONTROL.

 

13.2                           ACKNOWLEDGMENT BY COMPANY.  IF, AFTER A CHANGE IN
CONTROL, THE COMPANY FAILS TO REASONABLY CONFIRM THAT IT HAS PERFORMED THE
OBLIGATION DESCRIBED IN SECTION 13.1 WITHIN THIRTY (30) DAYS AFTER WRITTEN
NOTICE FROM THE PARTICIPANT, SUCH FAILURE SHALL BE A MATERIAL BREACH OF THIS
PLAN AND SHALL ENTITLE THE PARTICIPANT TO RESIGN FOR GOOD REASON AND TO RECEIVE
THE BENEFITS PROVIDED UNDER THIS PLAN IN THE EVENT OF TERMINATION UPON A CHANGE
IN CONTROL.

 

8

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13.3                           HEIRS AND REPRESENTATIVES OF PARTICIPANT.  THIS
PLAN SHALL INURE TO THE BENEFIT OF AND BE ENFORCEABLE BY THE PARTICIPANT’S
PERSONAL OR LEGAL REPRESENTATIVES, EXECUTORS, ADMINISTRATORS, SUCCESSORS, HEIRS,
DISTRIBUTEES, DEVISES, LEGATEES OR OTHER BENEFICIARIES.  IF THE PARTICIPANT
SHOULD DIE WHILE ANY AMOUNT WOULD STILL BE PAYABLE TO THE PARTICIPANT HEREUNDER
(OTHER THAN AMOUNTS WHICH, BY THEIR TERMS, TERMINATE UPON THE DEATH OF THE
PARTICIPANT) IF THE PARTICIPANT HAD CONTINUED TO LIVE, THEN ALL SUCH AMOUNTS,
UNLESS OTHERWISE PROVIDED HEREIN, SHALL BE PAID IN ACCORDANCE WITH THE TERMS OF
THIS PLAN TO THE EXECUTORS, PERSONAL REPRESENTATIVES OR ADMINISTRATORS OF THE
PARTICIPANT’S ESTATE.

 

14.           Notices

 

14.1                           GENERAL.  FOR PURPOSES OF THIS PLAN, NOTICES AND
ALL OTHER COMMUNICATIONS PROVIDED FOR HEREIN SHALL BE IN WRITING AND SHALL BE
DEEMED TO HAVE BEEN DULY GIVEN WHEN PERSONALLY DELIVERED OR WHEN MAILED BY
UNITED STATES CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY OVERNIGHT COURIER,
POSTAGE PREPAID, AS FOLLOWS:

 

(A)                                  IF TO THE COMPANY:

 

Zoran Corporation

3112 Scott Boulevard

Santa Clara, California 95054

Attention: President

 

(B)                                 IF TO THE PARTICIPANT, AT THE HOME ADDRESS
WHICH THE PARTICIPANT MOST RECENTLY COMMUNICATED TO THE COMPANY IN WRITING.

 

Either party may provide the other with notices of change of address, which
shall be effective upon receipt.

 

14.2                           NOTICE OF TERMINATION.  ANY TERMINATION BY THE
COMPANY OF THE PARTICIPANT’S EMPLOYMENT DURING THE CHANGE IN CONTROL PERIOD OR
ANY RESIGNATION BY THE PARTICIPANT DURING THE CHANGE IN CONTROL PERIOD SHALL BE
COMMUNICATED BY A NOTICE OF TERMINATION OR RESIGNATION TO THE OTHER PARTY HERETO
GIVEN IN ACCORDANCE WITH SECTION 14.1.  SUCH NOTICE SHALL INDICATE THE SPECIFIC
TERMINATION PROVISION IN THIS PLAN RELIED UPON, SHALL SET FORTH IN REASONABLE
DETAIL THE FACTS AND CIRCUMSTANCES CLAIMED TO PROVIDE A BASIS FOR TERMINATION
UNDER THE PROVISION SO INDICATED, AND SHALL SPECIFY THE TERMINATION DATE.

 

15.           Termination and Amendment of Plan

 

This Plan and/or any Participation Agreement executed by a Participant may not
be terminated with respect to such Participant without the written consent of
the Participant.  This Plan and/or any Participation Agreement executed by a
Participant may be modified, amended or superseded with respect to such
Participant only by a supplemental written agreement between the Participant and
the Company.

 

16.           Miscellaneous Provisions

 

16.1                           UNFUNDED OBLIGATION.  ANY AMOUNTS PAYABLE TO
PARTICIPANTS PURSUANT TO THE PLAN ARE UNFUNDED OBLIGATIONS.  THE COMPANY SHALL
NOT BE REQUIRED TO SEGREGATE ANY MONIES FROM ITS GENERAL FUNDS, OR TO CREATE ANY
TRUSTS, OR ESTABLISH ANY SPECIAL ACCOUNTS WITH RESPECT TO SUCH OBLIGATIONS.  THE
COMPANY SHALL RETAIN AT ALL TIMES BENEFICIAL OWNERSHIP OF ANY INVESTMENTS,
INCLUDING TRUST INVESTMENTS, WHICH THE COMPANY MAY MAKE TO FULFILL ITS PAYMENT
OBLIGATIONS HEREUNDER.  ANY INVESTMENTS OR THE CREATION OR MAINTENANCE OF ANY
TRUST OR ANY PARTICIPANT ACCOUNT SHALL NOT CREATE OR CONSTITUTE A TRUST OR
FIDUCIARY RELATIONSHIP BETWEEN THE BOARD OR THE COMPANY AND A PARTICIPANT, OR
OTHERWISE CREATE ANY VESTED OR BENEFICIAL INTEREST IN ANY PARTICIPANT OR THE
PARTICIPANT’S CREDITORS IN ANY ASSETS OF THE COMPANY.

 

16.2                           NO DUTY TO MITIGATE; OBLIGATIONS OF COMPANY.  A
PARTICIPANT SHALL NOT BE REQUIRED TO MITIGATE THE AMOUNT OF ANY PAYMENT OR
BENEFIT CONTEMPLATED BY THIS PLAN BY SEEKING EMPLOYMENT WITH A NEW EMPLOYER OR
OTHERWISE, NOR SHALL ANY SUCH PAYMENT OR BENEFIT (EXCEPT FOR BENEFITS TO THE
EXTENT DESCRIBED IN SECTION 5.2) BE REDUCED BY ANY COMPENSATION OR BENEFITS THAT
THE PARTICIPANT MAY RECEIVE FROM EMPLOYMENT BY ANOTHER

 

9

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EMPLOYER.  EXCEPT AS OTHERWISE PROVIDED BY THIS PLAN, THE OBLIGATIONS OF THE
COMPANY TO MAKE PAYMENTS TO THE PARTICIPANT AND TO MAKE THE ARRANGEMENTS
PROVIDED FOR HEREIN ARE ABSOLUTE AND UNCONDITIONAL AND MAY NOT BE REDUCED BY ANY
CIRCUMSTANCES, INCLUDING WITHOUT LIMITATION ANY SET-OFF, COUNTERCLAIM,
RECOUPMENT, DEFENSE OR OTHER RIGHT WHICH THE COMPANY MAY HAVE AGAINST THE
PARTICIPANT OR ANY THIRD PARTY AT ANY TIME.

 

16.3                           NO REPRESENTATIONS.  BY EXECUTING A PARTICIPATION
AGREEMENT, THE PARTICIPANT ACKNOWLEDGES THAT IN BECOMING A PARTICIPANT IN THE
PLAN, THE PARTICIPANT IS NOT RELYING AND HAS NOT RELIED ON ANY PROMISE,
REPRESENTATION OR STATEMENT MADE BY OR ON BEHALF OF THE COMPANY WHICH IS NOT SET
FORTH IN THIS PLAN.

 

16.4                           WAIVER.  NO WAIVER BY THE PARTICIPANT OR THE
COMPANY OF ANY BREACH OF, OR OF ANY LACK OF COMPLIANCE WITH, ANY CONDITION OR
PROVISION OF THIS PLAN BY THE OTHER PARTY SHALL BE CONSIDERED A WAIVER OF ANY
OTHER CONDITION OR PROVISION OR OF THE SAME CONDITION OR PROVISION AT ANOTHER
TIME.

 

16.5                           CHOICE OF LAW.  THE VALIDITY, INTERPRETATION,
CONSTRUCTION AND PERFORMANCE OF THIS PLAN SHALL BE GOVERNED BY THE SUBSTANTIVE
LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO ITS CONFLICT OF LAW
PROVISIONS.

 

16.6                           VALIDITY.  THE INVALIDITY OR UNENFORCEABILITY OF
ANY PROVISION OF THIS PLAN SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF
ANY OTHER PROVISION OF THIS PLAN, WHICH SHALL REMAIN IN FULL FORCE AND EFFECT.

 

16.7                           BENEFITS NOT ASSIGNABLE.  EXCEPT AS OTHERWISE
PROVIDED HEREIN OR BY LAW, NO RIGHT OR INTEREST OF ANY PARTICIPANT UNDER THE
PLAN SHALL BE ASSIGNABLE OR TRANSFERABLE, IN WHOLE OR IN PART, EITHER DIRECTLY
OR BY OPERATION OF LAW OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, BY
EXECUTION, LEVY, GARNISHMENT, ATTACHMENT, PLEDGE OR IN ANY OTHER MANNER, AND NO
ATTEMPTED TRANSFER OR ASSIGNMENT THEREOF SHALL BE EFFECTIVE.  NO RIGHT OR
INTEREST OF ANY PARTICIPANT UNDER THE PLAN SHALL BE LIABLE FOR, OR SUBJECT TO,
ANY OBLIGATION OR LIABILITY OF SUCH PARTICIPANT.

 

16.8                           TAX WITHHOLDING.  ALL PAYMENTS MADE PURSUANT TO
THIS PLAN WILL BE SUBJECT TO WITHHOLDING OF APPLICABLE INCOME AND EMPLOYMENT
TAXES.

 

16.9                           CONSULTATION WITH LEGAL AND FINANCIAL ADVISORS. 
BY EXECUTING A PARTICIPATION AGREEMENT, THE PARTICIPANT ACKNOWLEDGES THAT THIS
PLAN CONFERS SIGNIFICANT LEGAL RIGHTS, AND MAY ALSO INVOLVE THE WAIVER OF RIGHTS
UNDER OTHER AGREEMENTS; THAT THE COMPANY HAS ENCOURAGED THE PARTICIPANT TO
CONSULT WITH THE PARTICIPANT’S PERSONAL LEGAL AND FINANCIAL ADVISORS; AND THAT
THE PARTICIPANT HAS HAD ADEQUATE TIME TO CONSULT WITH THE PARTICIPANT’S ADVISORS
BEFORE EXECUTING THE PARTICIPATION AGREEMENT.

 

17.           Agreement

 

By executing a Participation Agreement, the Participant acknowledges that the
Participant has received a copy of this Plan and has read, understands and is
familiar with the terms and provisions of this Plan.  This Plan shall constitute
an agreement between the Company and the Participant executing a Participation
Agreement.

 

IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the
foregoing Plan was duly adopted by the Committee on November 8, 2002.

 

 

 

 

10

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EXHIBIT A

 

 

FORM OF

 

AGREEMENT TO PARTICIPATE IN THE

 

ZORAN CORPORATION

 

EXECUTIVE RETENTION AND SEVERANCE PLAN

 

11

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AGREEMENT TO PARTICIPATE IN THE

ZORAN CORPORATION

EXECUTIVE RETENTION AND SEVERANCE PLAN

Adopted November 8, 2002

 

In consideration of the benefits provided by the Zoran Corporation Executive
Retention and Severance Plan (the “Plan”), the undersigned employee of Zoran
Corporation (the “Company”) and the Company agree that, as of the date written
below, the undersigned shall become a Participant in the Plan and shall be fully
bound by and subject to all of its provisions.  All references to a
“Participant” in the Plan shall be deemed to refer to the undersigned.

 

The undersigned employee acknowledges that the Plan confers significant legal
rights and may also constitute a waiver of rights under other agreements with
the Company; that the Company has encouraged the undersigned to consult with the
undersigned’s personal legal and financial advisors; and that the undersigned
has had adequate time to consult with the undersigned’s advisors before
executing this agreement.

 

The undersigned employee acknowledges that he or she has received a copy of the
Plan and has read, understands and is familiar with the terms and provisions of
the Plan.  The undersigned employee further acknowledges that (1) by accepting
the arbitration provision set forth in Section 12 of the Plan, the undersigned
is waiving any right to a jury trial in the event of any dispute covered by such
provision and (2) except as otherwise established in an employment agreement
between the Company and the undersigned, the employment relationship between the
undersigned and the Company is an “at-will” relationship.

 

 

Executed on

 

 

 

 

 

 

 

 

 

 

PARTICIPANT

 

 

 

 

 

 

 

 

 

Signature

 

 

 

 

 

 

 

 

 

Name Printed

 

 

 

 

 

 

 

 

 

Address

 

 

 

 

 

 

 

 

 

 

ZORAN CORPORATION

 

 

 

 

 

By:

 

 

 

 

 

 

Title:

 

 

12

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EXHIBIT B

 

 

FORMS OF

 

GENERAL RELEASE OF CLAIMS

 

13

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GENERAL RELEASE OF CLAIMS

[Age 40 and over]

 

This Agreement is by and between [Employee Name] (“Employee”) and [Zoran
Corporation or successor that agrees to assume the Executive Retention and
Severance Plan following a Change in Control] (the “Company”).  This Agreement
will become effective on the eighth (8th) day after it is signed by Employee
(the “Effective Date”), provided that the Company has signed this Agreement and
Employee has not revoked this Agreement (by written notice to [Company Contact
Name] at the Company) prior to that date.

 

RECITALS

 

A.                                   Employee was employed by the Company as of
                      ,              .

 

B.                                     Employee and the Company entered into an
Agreement to Participate in the Zoran Corporation Executive Retention and
Severance Plan (such agreement and plan being referred to herein as the “Plan”)
effective as of                      ,               wherein Employee is
entitled to receive certain benefits in the event of a Termination Upon a Change
in Control (as defined by the Plan), provided Employee signs and does not revoke
a Release (as defined by the Plan).

 

C.                                     A Change in Control (as defined by the
Plan) has occurred as a result of [briefly describe change in control]

 

D.                                    Employee’s employment is being terminated
as a result of a Termination Upon a Change in Control.  Employee’s last day of
work and termination are effective as of                      ,              . 
Employee desires to receive the payments and benefits provided by the Plan by
executing this Release.

 

NOW, THEREFORE, the parties agree as follows:

 

1.                                       Commencing on the Effective Date, the
Company shall provide Employee with the applicable payments and benefits set
forth in the Plan in accordance with the terms of the Plan.  Employee
acknowledges that the payments and benefits made pursuant to this paragraph are
made in full satisfaction of the Company’s obligations under the Plan.  Employee
further acknowledges that Employee has been paid all wages and accrued, unused
vacation that Employee earned during his or her employment with the Company.

 

2.                                       Employee and Employee’s successors
release the Company, its respective subsidiaries, stockholders, investors,
directors, officers, employees, agents, attorneys, insurers, legal successors
and assigns of and from any and all claims, actions and causes of action,
whether now known or unknown, which Employee now has, or at any other time had,
or shall or may have against those released parties based upon or arising out of
any matter, cause, fact, thing, act or omission whatsoever directly related to
Employee’s employment by the Company or the termination of such employment and
occurring or existing at any time up to and including the Effective Date,
including, but not limited to, any claims of breach of written contract,
wrongful termination, retaliation, fraud, defamation, infliction of emotional
distress, or national origin, race, age, sex, sexual orientation, disability or
other discrimination or harassment under the Civil Rights Act of 1964, the Age
Discrimination In Employment Act of 1967, the Americans with Disabilities Act,
the Fair Employment and Housing Act or any other applicable law. 
Notwithstanding the foregoing, this release shall not apply to any right of the
Employee pursuant to Section 5.4 of the Plan or pursuant to a Prior Indemnity
Agreement (as such term is defined by the Plan).

 

3.                                       Employee acknowledges that he or she
has read Section 1542 of the Civil Code of the State of California, which states
in full:

 

A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.

 

Employee waives any rights that Employee has or may have under Section 1542 and
comparable or similar provisions of the laws of other states in the United
States to the full extent that he or she may lawfully waive such

 

14

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rights pertaining to this general release of claims, and affirms that Employee
is releasing all known and unknown claims that he or she has or may have against
the parties listed above.

 

4.                                       Employee and the Company acknowledge
and agree that they shall continue to be bound by and comply with the terms and
obligations under the following agreements: (i) any proprietary rights or
confidentiality agreements between the Company and Employee, (ii) the Plan,
(iii) any Prior Indemnity Agreement (as such term is defined by the Plan) to
which Employee is a party, and (iv) any stock option, stock grant, stock
purchase or Cash Incentive Program (as described in Section 4 of the Plan)
agreements between the Company and Employee.

 

5.                                       This Agreement shall be binding upon,
and shall inure to the benefit of, the parties and their respective successors,
assigns, heirs and personal representatives.

 

6.                                       The parties agree that any and all
disputes that both (i) arise out of the Plan, the interpretation, validity or
enforceability of the Plan or the alleged breach thereof and (ii) relate to the
enforceability of this Agreement or the interpretation of the terms of this
Agreement shall be subject to binding arbitration pursuant to Section 12 of the
Plan.

 

7.                                       The parties agree that any and all
disputes that (i) do not arise out of the Plan, the interpretation, validity or
enforceability of the Plan or the alleged breach thereof and (ii) relate to the
enforceability of this Agreement, the interpretation of the terms of this
Agreement or any of the matters herein released or herein described shall be
subject to binding arbitration, to the extent permitted by law, in Santa Clara,
California or any other cite mutually agreed to by the Company and Employee,
before the American Arbitration Association, as provided in this paragraph.  The
parties agree to and hereby waive their rights to jury trial as to such matters
to the extent permitted by law; provided however, that (a) the arbitrator shall
have no authority to make any ruling or judgment that would confer any rights
with respect to trade secrets, confidential and proprietary information or other
intellectual property; and (b) this arbitration provision shall not preclude the
parties from seeking legal and equitable relief from any court having
jurisdiction with respect to any disputes or claims relating to or arising out
of the misuse or misappropriation of intellectual property.  The Company shall
bear the costs of the arbitrator, forum and filing fees and each party shall
bear its own respective attorney fees and all other costs, unless otherwise
provided by law and awarded by the arbitrator.

 

8.                                       This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior negotiations and agreements, whether written or oral, with
the exception of any agreements described in paragraph 4 of this Agreement. 
This Agreement may not be modified or amended except by a document signed by an
authorized officer of the Company and Employee.  If any provision of this
Agreement is deemed invalid, illegal or unenforceable, such provision shall be
modified so as to make it valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not in any way be affected.

 

EMPLOYEE UNDERSTANDS THAT EMPLOYEE SHOULD CONSULT WITH AN ATTORNEY PRIOR TO
SIGNING THIS AGREEMENT AND THAT EMPLOYEE IS GIVING UP ANY LEGAL CLAIMS EMPLOYEE
HAS AGAINST THE PARTIES RELEASED ABOVE BY SIGNING THIS AGREEMENT.  EMPLOYEE
FURTHER UNDERSTANDS THAT EMPLOYEE MAY HAVE UP TO 45 DAYS TO CONSIDER THIS
AGREEMENT, THAT EMPLOYEE MAY REVOKE IT AT ANY TIME DURING THE 7 DAYS AFTER
EMPLOYEE SIGNS IT, AND THAT IT SHALL NOT BECOME EFFECTIVE UNTIL THAT 7-DAY
PERIOD HAS PASSED.  EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE IS SIGNING THIS
AGREEMENT KNOWINGLY, WILLINGLY AND VOLUNTARILY IN EXCHANGE FOR THE COMPENSATION
AND BENEFITS DESCRIBED IN PARAGRAPH 1.

 

Dated:

 

 

 

 

[Employee Name]

 

 

 

 

 

[Company]

 

 

 

 

Dated:

 

 

By:

 

 

15

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GENERAL RELEASE OF CLAIMS

[Under age 40]

 

This Agreement is by and between [Employee Name] (“Employee”) and [Zoran
Corporation or successor that agrees to assume the Executive Retention and
Severance Plan following a Change in Control] (the “Company”).  This Agreement
is effective on the day it is signed by Employee (the “Effective Date”).

 

RECITALS

 

A.                                   Employee was employed by the Company as of
                      ,              .

 

B.                                     Employee and the Company entered into an
Agreement to Participate in the Zoran Corporation Executive Retention and
Severance Plan (such agreement and plan being referred to herein as the “Plan”)
effective as of                       ,              wherein Employee is
entitled to receive certain benefits in the event of a Termination Upon a Change
in Control (as defined by the Plan), provided Employee signs a Release (as
defined by the Plan).

 

C.                                     A Change in Control (as defined by the
Plan) has occurred as a result of [briefly describe change in control]

 

D.                                    Employee’s employment is being terminated
as a result of a Termination Upon a Change in Control.  Employee’s last day of
work and termination are effective as of                       ,              
(the “Termination Date”).  Employee desires to receive the payments and benefits
provided by the Plan by executing this Release.

 

NOW, THEREFORE, the parties agree as follows:

 

1.                                       Commencing on the Effective Date, the
Company shall provide Employee with the applicable payments and benefits set
forth in the Plan in accordance with the terms of the Plan.  Employee
acknowledges that the payments and benefits made pursuant to this paragraph are
made in full satisfaction of the Company’s obligations under the Plan.  Employee
further acknowledges that Employee has been paid all wages and accrued, unused
vacation that Employee earned during his or her employment with the Company.

 

2.                                       Employee and Employee’s successors
release the Company, its respective subsidiaries, stockholders, investors,
directors, officers, employees, agents, attorneys, insurers, legal successors
and assigns of and from any and all claims, actions and causes of action,
whether now known or unknown, which Employee now has, or at any other time had,
or shall or may have against those released parties based upon or arising out of
any matter, cause, fact, thing, act or omission whatsoever directly related to
Employee’s employment by the Company or the termination of such employment and
occurring or existing at any time up to and including the Termination Date,
including, but not limited to, any claims of breach of written contract,
wrongful termination, retaliation, fraud, defamation, infliction of emotional
distress, or national origin, race, age, sex, sexual orientation, disability or
other discrimination or harassment under the Civil Rights Act of 1964, the Age
Discrimination In Employment Act of 1967, the Americans with Disabilities Act,
the Fair Employment and Housing Act or any other applicable law. 
Notwithstanding the foregoing, this release shall not apply to any right of the
Employee pursuant to Sections 5.4 of the Plan or pursuant to a Prior Indemnity
Agreement (as such terms are defined by the Plan).

 

3.                                       Employee acknowledges that he or she
has read Section 1542 of the Civil Code of the State of California, which states
in full:

 

A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.

 

Employee waives any rights that Employee has or may have under Section 1542 and
comparable or similar provisions of the laws of other states in the United
States to the full extent that he or she may lawfully waive such rights
pertaining to this general release of claims, and affirms that Employee is
releasing all known and unknown claims that he or she has or may have against
the parties listed above.

 

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4.                                       Employee and the Company acknowledge
and agree that they shall continue to be bound by and comply with the terms and
his obligations under the following agreements: (i) any proprietary rights or
confidentiality agreements between the Company and Employee, (ii) the Plan,
(iii) any Prior Indemnity Agreement (as such term is defined by the Plan) to
which Employee is a party, and (iv) any stock option, stock grant, stock
purchase or Cash Incentive Program (as described in Section 4 of the Plan)
agreements between the Company and Employee.

 

5.                                       This Agreement shall be binding upon,
and shall inure to the benefit of, the parties and their respective successors,
assigns, heirs and personal representatives.

 

6.                                       The parties agree that any and all
disputes that both (i) arise out of the Plan, the interpretation, validity or
enforceability of the Plan or the alleged breach thereof and (ii) relate to the
enforceability of this Agreement or the interpretation of the terms of this
Agreement shall be subject to binding arbitration pursuant to Section 12 of the
Plan.

 

7.                                       The parties agree that any and all
disputes that (i) do not arise out of the Plan, the interpretation, validity or
enforceability of the Plan or the alleged breach thereof and (ii) relate to the
enforceability of this Agreement, the interpretation of the terms of this
Agreement or any of the matters herein released or herein described shall be
subject to binding arbitration, to the extent permitted by law, in Santa Clara,
California or any other cite mutually agreed to by the Company and Employee,
before the American Arbitration Association, as provided in this paragraph.  The
parties agree to and hereby waive their rights to jury trial as to such matters
to the extent permitted by law; provided however, that (a) the arbitrator shall
have no authority to make any ruling or judgment that would confer any rights
with respect to trade secrets, confidential and proprietary information or other
intellectual property; and (b) this arbitration provision shall not preclude the
parties from seeking legal and equitable relief from any court having
jurisdiction with respect to any disputes or claims relating to or arising out
of the misuse or misappropriation of intellectual property.  The Company shall
bear the costs of the arbitrator, forum and filing fees and each party shall
bear its own respective attorney fees and all other costs, unless otherwise
provided by law and awarded by the arbitrator.

 

8.                                       This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior negotiations and agreements, whether written or oral, with
the exception of any agreements described in paragraph 4 of this Agreement. 
This Agreement may not be modified or amended except by a document signed by an
authorized officer of the Company and Employee.  If any provision of this
Agreement is deemed invalid, illegal or unenforceable, such provision shall be
modified so as to make it valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not in any way be affected.

 

EMPLOYEE UNDERSTANDS THAT EMPLOYEE SHOULD CONSULT WITH AN ATTORNEY PRIOR TO
SIGNING THIS AGREEMENT AND THAT EMPLOYEE IS GIVING UP ANY LEGAL CLAIMS EMPLOYEE
HAS AGAINST THE PARTIES RELEASED ABOVE BY SIGNING THIS AGREEMENT.  EMPLOYEE
ACKNOWLEDGES THAT EMPLOEE IS SIGNING THIS AGREEMENT KNOWINGLY, WILLINGLY AND
VOLUNTARILY IN EXCHANGE FOR THE COMPENSATION AND BENEFITS DESCRIBED IN
PARAGRAPH 1.

 

 

Dated:

 

 

 

 

[Employee Name]

 

 

 

 

 

[Company]

 

 

 

 

Dated:

 

 

By:

 

 

17

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