**Exhibit 10.1**

 

**INTERDENT DEFERRED INCENTIVE**

**COMPENSATION RETIREMENT PLAN**

 

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**INTERDENTDEFERRED INCENTIVE COMPENSATION**

**RETIREMENTPLAN**

 

RECITALS

 

The InterDent Deferred Incentive CompensationRetirement Plan is adopted by the Company effective as of January 1, 2006, orif later, such date the Plan (as defined herein) is approved by the Company’sBoard of Directors. The Plan has been adopted primarily for the purpose ofproviding deferred compensation for a select group of management or highlycompensated employees of the Company and its related entities. Accordingly, itis intended that this Plan be exempt from the requirements of Parts II, III andIV of Title I of the Employee Retirement Income Security Act of 1974, asamended (“ERISA”), pursuant to Sections 201(2), 301(a)(3) and 401(a)(1) ofERISA. This Plan is intended to be a nonqualified deferred compensation plan. Furthermore,this Plan is intended to meet the requirements of section 409A of the Code (asdefined herein) and any regulations promulgated pursuant to section 409A.

 

**ARTICLE 1**

**DEFINITIONS**

 

1.1           401(K)EXCESS DEFERRAL means the amount over the limit of the Eligible Employee’s401(k) that shall be transferable to the Participant’s Account

 

1.2           ACCOUNTmeans the book entry account(s) established under the Plan for each Participant’sCompensation Deferrals, Employer Contributions and any contribution credits anddeemed income, gains and losses credited thereto or debited therefrom. Accountbalances shall be reduced by any distributions made to the Participant or theParticipant’s Beneficiary(ies) therefrom and any charges that may be imposed onsuch Account(s) pursuant to the terms of the Plan. Separate Subaccounts may beestablished to which shall be credited a Participant’s Compensation Deferralsfor each separate Plan Year, the Employer Contributions, if any, and the gainsand losses with respect thereto. Where Subaccounts have been established,Account shall refer to all of the Participants’ Subaccounts, collectively, asthe context may require.

 

1.3           BENEFICIARYmeans any person or persons so designated in accordance with the provisions ofSection 7.1.

 

1.4           BOARD****means the Board of Directors of the Company. If one or morecommittees have been appointed by the Board to determine eligibility under thePlan, Employer Contributions to be made to the Plan, or to exercise any otherCompany discretion with respect to such Plan, “Board” also means suchcommittee(s).

 

1.5           CHANGEOF CONTROL means (i) the current shareholders of the Company’s Parent as ofthe initial Effective Date shall cease for any reason to own at least 50% ormore of the voting power of the Company’s Parent; (ii) the acquisition (in anymanner) of shares of common stock or other voting securities of the Company’sParent having fifty percent (50%) or more of the outstanding voting power of theCompany’s Parent by any person or group of persons acting in concert, otherthan the current shareholders of the Company’s Parent, (iii) the sale, lease,assignment, or transfer of all or a material part of assets of the Company orthe Company’s Parent, (iv) a merger, consolidation or reorganization involvingthe Company or the Company’s Parent in which the Company or the Company’sParent is not the surviving corporation or which results in fifty percent (50%)or more of the outstanding voting power of the Company’s Parent being held ofrecord or beneficially by persons who are not shareholders of the Company’sParent on the initial Effective Date of this Plan, or (v) any person or groupof persons acting in concert (other than the shareholders of the Company’sParent on the initial Effective Date of this Plan) having the right to elect orappoint a majority of the directors of the Company’s Parent.

 

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1.6           CODEmeans the Internal Revenue Code of 1986 and the regulations thereunder, asamended from time to time.

 

1.7           COMMITTEEmeans the Administrative Committee composed of such individuals as may beappointed by the Board which shall function as the administrator of the Plan.

 

1.8           COMPANYmeans InterDent Service Corporation, a Washington corporation and any successororganization thereto.

 

1.9           COMPANY’SPARENT means InterDent, Inc., a Delaware corporation and any successororganization thereto.

 

1.10         COMPENSATIONmeans the total salary (non-bonus), and bonus paid by the Employer to anEligible Employee with respect to his or her performance of services for theEmployer (as determined by the Committee). Compensation shall also include any “PerformanceBased Compensation” as that term is defined under section 409A of the Code andany regulations thereunder.

 

1.11         COMPENSATIONDEFERRALS means the percentage or dollar amount of an Eligible Employee’sCompensation which the Eligible Employee elects to defer pursuant to Section3.1.

 

1.12         DESIGNATIONDATE means the date or dates as of which a designation of deemed investmentdirections by an individual pursuant to Section 4.3, or any change in a priordesignation of deemed investment directions by an individual pursuant toSection 4.3, shall become effective. The Designation Dates in any Plan Yearshall be determined by the Committee.

 

1.13         DISABILITYwill be determined to exist if the Participant is, by reason of any medicallydeterminable physical or mental impairment which can be expected to result indeath or can be expected to last for a continuous period of not less than 12months, eligible to receive income replacement benefits for a period of notless than 3 months under any disability benefit plan for covered Employees ofthe Employer, or, if the Participant does not participate in such plan, wouldhave been eligible to receive such benefits had the Participant participated insuch plan. If the Employer does not sponsor such a plan or discontinuessponsoring such a plan, Disability shall be determined by the Committee in itssole discretion.

 

1.14         EFFECTIVEDATE means the effective date of the Plan, which shall be January 1, 2006,or if later, the date the Plan is approved by the Board.

 

1.15         ELECTIONmeans the form on which a Participant (i) elects to make Compensation Deferralspursuant to Article 3, or (ii) elects a fixed payment date pursuant to Article5, or (iii) elects the method by which his or her Account will be distributedpursuant to Article 6. The Election shall be in such form, includingspecifically by electronic means, as may be prescribed by the Committee.

 

1.16         ELIGIBLEEMPLOYEE means, for any Plan Year (or applicable portion thereof), anemployee (or non-employee service provider) of the Employer who is a member ofthe select group of management or highly compensated employees as moreparticularly described in Article 2 and who has been designated by the****Committee, in its sole discretion, as eligible toparticipate in the Plan.

 

1.17         EMPLOYERmeans either the Company or any professional dental corporation affiliated withthe Company or subsidiary of the Company that has, with the consent of theCommittee, adopted this Plan for the benefit of its Eligible Employees asapplicable.

 

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1.18         EMPLOYERCONTRIBUTIONS means the amount, if any, of contributions awarded to aParticipant pursuant to Section 3.2.

 

1.19         ENTRYDATE means the first day of any Plan Year and, as to any Eligible Employee,the date which is thirty (30) days from the date on which such EligibleEmployee is first notified by the Committee of his or her eligibility toparticipate in the Plan. Notwithstanding the foregoing, for any individualfirst designated as an Eligible Employee on or before the Effective Date, hisor her Entry Date shall be the Effective Date.

 

### **1.20**         GROSSMISCONDUCTmeans the (i) Participant’sconviction of a felony offense under state or federal law that causesdemonstrable harm to the Company, the Company’s Parent, any of the Company’saffiliated professional dental corporations, or the Company’s subsidiaries,(ii) the continued breach by Participant of any of the material provisions oftheir employment agreement for a period of thirty (30) days after writtennotice of such breach is given to Participant by the Company, (iii) Participanthaving acted with gross negligence or willful misconduct in connection with theperformance of his material duties, (iv) Participant having actedwillfully against the best interests of the Company, the Company’s Parent, anyof the Company’s affiliated professional dental corporations, or the Company’ssubsidiaries (and not with the belief that such action was in the best interestof the Company, the Company’s Parent, any of the Company’s affiliatedprofessional dental corporations, or the Company’s subsidiaries) or making anintentional misrepresentation against or to the Company, the Company’s Parent,any of the Company’s affiliated professional dental corporations, or theCompany’s subsidiaries or their respective employees, which act ormisrepresentation has a material adverse effect on the interests of the Company,the Company’s Parent, any of the Company’s affiliated professional dentalcorporations, or the Company’s subsidiaries that was reasonably foreseeable.

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1.21         OPENENROLLMENT PERIOD means such period as the Committee may specify which endsprior to the first day of each Plan Year, or, with respect to an EligibleEmployee who first becomes eligible to participate in the Plan during a PlanYear, ends within thirty (30) days of becoming an Eligible Employee. Notwithstandingthe foregoing, the Open Enrollment Period for deferrals of Performance BasedCompensation may end no later than six (6) months prior to the end of theperformance period for which services are to be rendered.

 

1.22         PARTICIPANTmeans an Eligible Employee who has elected to participate in the Plan byexecuting and submitting an Election to the Committee. A Participant shall alsomean an Eligible Employee for whom Employer Contributions are made, regardlessof whether such Eligible Employee has executed and submitted an Election.

 

1.23         PLANmeans this InterDent Deferred Incentive Compensation Retirement Plan, asamended from time to time.

 

1.24         PLANYEAR means the twelve (12) month period beginning on each January 1 andending on the following December 31.

 

1.25         RETIREMENTmeans the Participant’s termination of service with the Employer afterobtaining age sixty (60), or a combination of age and years of services equalingsixty (60) or more with a minimum age of fifty (50).

 

1.26         TRUSTmeans any trust, including a grantor trust within the meaning of subpart E,part I, subchapter J, chapter I, subtitle A of the Code, created by the Trustagreement, to hold Compensation Deferrals and Employer Contributions.

 

1.27         TRUSTEEmeans the trustee of the Trust described in Article 11.

 

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1.28         VALUATIONDATE means any business day on which the New York Stock Exchange is open,or such other date that the Committee, in its sole discretion, designates as aValuation Date.

 

1.29         YEAROF PARTICIPATION means the 12 consecutive month period measured by anEligible Employee’s date of entry into this Plan and anniversaries thereof.

 

1.30         YEAROF SERVICE means the 12 consecutive month period measured by an EligibleEmployee’s date of hire and anniversaries thereof.

 

**ARTICLE 2**

**ELIGIBILITYAND PARTICIPATION**

 

2.1           ELIGIBILITY.  AllDentists working for a Company-affiliated professional dental corporation,either as an Employee or a non-employee service provider as well as certain Companyand Company Parent Management-level Employees are eligible to participate inthe “Plan”. Eligible Individuals shall be notified as to their eligibility toparticipate in the Plan. Participation in the Plan is voluntary.

 

2.2           COMMENCEMENTOF PARTICIPATION.  An Eligible Employee may begin participationin the Plan upon any Entry Date, subject to the execution and submission of anElection pursuant to Article 3. In addition, participation of an EligibleEmployee who has not otherwise commenced participation in the Plan, shallcommence when an Employer Contribution is made to the Account of such EligibleEmployee pursuant to the provisions of Section 3.2.

 

2.3           CESSATIONOF PARTICIPATION.  Active participation in the Plan shall endwhen a Participant’s employment terminates for any reason or at such time as aParticipant is notified by the Committee, pursuant to Section 2.4, below,that he or she is no longer eligible to participate in the Plan. Upontermination of employment or eligibility, a Participant shall remain aninactive Participant in the Plan until the vested Account of the Participantunder this Plan has been paid in full.

 

2.4           CESSATIONOF ELIGIBILITY.  The Committee may at any time, in its solediscretion, notify any Participant that he or she is not eligible toparticipate in the Plan, or is not eligible for Employer Contributions in anyPlan Year.

 

**ARTICLE 3**

**CONTRIBUTIONSAND CREDITS**

 

3.1           PARTICIPANTCONTRIBUTIONS AND CREDITS.

 

(a)           CompensationDeferrals.  An Eligible Employee may elect to reduce his or herCompensation by the percentage or dollar amount set forth in an executedElection filed with the Committee, subject to the provisions of this Article 3.The Compensation Deferrals shall not be paid to the Participant, but shall bewithheld from the Participant’s Compensation and an amount equal to theCompensation Deferrals shall be credited to the Participant’s applicableAccount. Each Election to make Compensation Deferrals shall apply only toCompensation earned after the effective date of such Election.

 

(b)           401(K)Excess Deferrals. Should the annual maximum allowable 401(k) deferral limit forEligible Employees participating in the Company’s or the Company Parent’s 401(K)plan, be reduced during end-of-year discrimination testing, instead ofrefunding such excess balances to the Participant, a Participant may elect tohave such excess 401(k) contributions transferred into his or her Account. Anysuch transfer will not be a taxable event. A Participant shall be immediately vestedin any such transfer.

 

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(c)           Timingof Election.  The Election must be filed with the Committeeduring the Open Enrollment Period for the Plan Year to which such Electionapplies.

 

(d)           IrrevocableElection.  The Participant’s Election with respect to his or herCompensation Deferral is irrevocable for the rest of the Plan Year. Unlessincreased, decreased or terminated during any subsequent Open EnrollmentPeriod, an Election shall remain in effect until so changed by the Participantduring such subsequent Open Enrollment Period. Increases or decreases in theamount of Compensation a Participant elects to defer shall not be permittedduring the Plan Year.

 

(e)           Limitationon Compensation Deferrals.  A Participant’s Compensation DeferralElections shall be subject to the following:

 

(1)           AParticipant must defer a minimum of 1% of his or her Compensation each PlanYear. In the event the total amount deferred by a Participant in a Plan Year isless than the applicable minimum deferral amount, the Committee may, in itssole discretion, direct the Company to pay the amount deferred during that PlanYear to the Participant as soon as administratively feasible after the end ofthe Plan Year;

 

(2)           AParticipant may elect to defer up to a maximum of seventy five percent (75%) ofhis or her total Compensation.

 

(3)           TheCompensation Deferrals elected by the Participant shall be reduced by theamount(s), if any, which may be necessary, in the Committee’s sole and absolutediscretion: (i) to satisfy all applicable income and employment taxeswithholding and FICA contributions; (ii) to pay all contributions elected bythe Participant pursuant to any other Company benefit plan which would requiresuch compensation to be taken into account under such plan; and (iii) tosatisfy all garnishments or other amounts required to be withheld by applicablelaw or court order.

 

(f)            NoWithdrawal.  Except as provided in Section 5.2 below, amountscredited to a Participant’s Account may not be withdrawn by a Participant andshall be paid only in accordance with the provisions of this Plan andapplicable Participant Election.

 

(g)           Vesting.  AParticipant shall at all times be 100% vested in all Participant Contribution amountscredited to his or her Compensation Deferral Account.

 

3.2           EMPLOYERCONTRIBUTIONS AND CREDITS.

 

(a)           EmployerContributions.  Apart from Participant Compensation DeferralContributions, the Board shall retain the right to make contributions for anyParticipant under this Plan at the times and in the amount(s) designated by theEmployer, in its sole discretion. Amounts so credited will be considered aParticipant’s “Employer Contributions.”  SeeAddendum A for specific details related to Employer Contributions.

 

(b)           Vesting.  EmployerContributions shall be vested to Participants over a vesting schedule set forthin Addendum A. See Addendum A for all specific details related to Vesting. Notwithstandingthe preceding sentence, in the event of a Participant’s Disability, Retirementor death, provided that at the time of such Participant’s Disability,Retirement or death the Participant was employed by the Employer, theParticipant shall become one hundred percent (100%) vested in all EmployerContributions. Any Participant that terminates employment with the Employer forany reason other than Disability, Retirement or death prior to full vestingshall irrevocably forfeit the portion not vested. The Committee shall have thediscretion to reinstate any such forfeitures if the Participant later becomesre-employed by the Employer.

 

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(c)           Forfeituresfor Misconduct.  If a Participant separates from service with theEmployer as a result of the Participant’s Gross Misconduct, as determined bythe Committee, the Participant shall forfeit all amounts allocated to his orher Employer Contribution Account(s) under this Section 3 (regardless of thevesting of such amounts). Such forfeitures shall be retained by the Employer. Notwithstandingany provision of the Plan to the contrary, this Section 3.2(c) shall only beenforceable to the extent authorized by applicable law.

 

**ARTICLE 4**

**ALLOCATIONOF FUNDS**

 

4.1           ALLOCATIONOF DEEMED EARNINGS OR LOSSES ON ACCOUNTS.  Subject to Section4.3, each Participant shall have the right to direct the Committee as to howamounts in his or her Account shall be deemed to be invested. Subject to suchlimitations as may from time to time be required by law, imposed by theCommittee or the Trustee or contained elsewhere in the Plan, and subject tosuch operating rules and procedures as may be imposed from time to time by theCommittee, prior to the date on which a direction will become effective, the Participantshall have the right to direct the Committee as to how amounts in his or herCompensation Deferral Account shall be deemed to be invested. The Committeemay, but is not required to, invest assets held by the Company on behalf of theParticipant pursuant to the deemed investment directions the Committee hasproperly received from the Participant or instead may choose to invest in companyowned life insurance (COLI) as a means of funding any Plan Distributions basedon a Participant’s underlying investments and/or associated investment gains orlosses related to a Participant’s deemed investment directions, and may utilizethe Trust for the same in its discretion.

 

As of each Valuation Date, the Participant’sAccount will be credited or debited to reflect the Participant’s deemedinvestments. The Participant’s Account will be credited or debited with theincrease or decrease in the realizable net asset value of the designated deemedinvestments, as follows. As of each Valuation Date, an amount equal to the netincrease or decrease in realizable net asset value (as determined by theCommittee) of each deemed investment option within the Account since thepreceding Valuation Date shall be allocated among all Participants’ Accountsdeemed to be invested in that investment option in accordance with the ratiowhich the portion of the Account of each Participant which is deemed to beinvested within that investment option, determined as provided herein, bears tothe aggregate of all amounts deemed to be invested within that investmentoption.

 

4.2           ACCOUNTINGFOR DISTRIBUTIONS.  As of the date of any distribution hereunder,the distribution made hereunder to the Participant or his or her Beneficiary orBeneficiaries shall be charged to such Participant’s Account. Such amountsshall be charged on a pro rata basis against the investments of the Plan inwhich the Participant’s Account is deemed to be invested.

 

4.3           DEEMEDINVESTMENT DIRECTIONS OF PARTICIPANTS.  Subject to suchlimitations as may from time to time be required by law, imposed by theEmployer or the Trustee or contained elsewhere in the Plan, and subject to suchoperating rules and procedures as may be imposed from time to time by theEmployer, prior to and effective for each Designation Date, each Participantmay communicate to the Employer a direction (in accordance with (a), below) asto how his or her Account should be deemed to be invested among such categoriesof deemed investments as may be made available by the Employer hereunder. Suchdirection shall designate the percentage (in any whole percent multiples) ofeach portion of the Participant’s Account which is requested to be deemed to beinvested in such categories of deemed investments, and shall be subject to thefollowing rules:

 

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(a)           Anyinitial or subsequent deemed investment direction shall be in writing, on aform supplied by and filed with the Committee, and/or, as required or permittedby the Committee, shall be by written designation and/or electronictransmission designation. A designation shall be effective as of theDesignation Date next following the date the direction is received and acceptedby the Committee on which it would be reasonably practicable for the Committeeto effect the designation. The Participant may, if permitted by the Committee,make a deemed investment direction for his or her existing Account balance asof the Designation Date and a separate deemed investment direction forcontribution credits occurring after the Designation Date.

 

(b)           Allamounts credited to the Participant’s Account shall be deemed to be invested inaccordance with the then effective deemed investment direction, and as of theDesignation Date with respect to any new deemed investment direction, all or aportion of the Participant’s Account at that date shall be reallocated amongthe designated deemed investment funds according to the percentages specifiedin the new deemed investment direction unless and until a subsequent deemedinvestment direction shall be filed and become effective. An electionconcerning deemed investment choices shall continue indefinitely as provided inthe Participant’s most recent Election, or other form specified by theCommittee.

 

(c)           Ifthe Employer receives an initial or revised deemed investment direction whichit deems to be incomplete, unclear or improper, the Participant’s investmentdirection then in effect shall remain in effect (or, in the case of adeficiency in an initial deemed investment direction, the Participant shall bedeemed to have filed no deemed investment direction) until the next DesignationDate, unless the Employer provides for, and permits the application of,corrective action prior thereto.

 

(d)           Ifthe Employer possesses (or is deemed to possess as provided in (c), above) atany time directions as to the deemed investment of less than all of aParticipant’s Account, the Participant shall be deemed to have directed thatthe undesignated portion of the Participant’s Account be deemed to be uninvested.Or, in its discretion, the Employer may direct such undesignated portion of theAccount to be deemed to be invested in a money market, fixed income or similarfund made available under the Plan as determined by the Employer.

 

(e)           Eachreference in this Section to a Participant shall be deemed to include, whereapplicable, a reference to a Beneficiary.

 

**ARTICLE 5**

**ENTITLEMENTTO BENEFITS**

 

5.1           FIXEDPAYMENT DATES; TERMINATION OF EMPLOYMENT.  During the OpenEnrollment Period of each Plan Year and on his or her Election a Participantmay select a fixed payment date for the payment of amounts (or a portion ofamounts) credited to his or her Account during the Plan Year for which theParticipant Election is effective, which will be valued and payable accordingto the provisions of Article 6. Such fixed payment dates may be postponed tolater dates so long as elections to so postpone the dates are made by theParticipant at least twelve (12) months prior to the date on which thedistribution was originally scheduled to be made, the election will not takeeffect until at least twelve (12) months after the date on which the electionis made, and the new postponed distribution date is at least five (5) yearsfrom the originally scheduled date. Notwithstanding the foregoing, in no eventshall any such fixed payment date be accelerated to a date earlier than thatinitially selected by the Participant.

 

A Participant who selectsa fixed payment date for amounts credited to his or her Account during a PlanYear shall receive payment of such vested amounts at the earlier of such fixedpayment date (as postponed, if applicable) or his or her termination ofemployment with the Employer.

 

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Any fixed payment dateelected by a Participant as provided above must be a date no earlier than theJanuary 1 of the second calendar year after the calendar year for which theelection is effective.

 

If a Participant does notmake an election as provided above for any particular amounts hereunder, andthe Participant terminates employment with the Employer for any reason, otherthan reaching Retirement, the Participant’s vested Account at the date of suchtermination shall be valued and payable in a single lump sum as soon aspracticable after such termination according to the provisions of Article 6.

 

5.2           HARDSHIPDISTRIBUTIONS.  In the event of an unforeseeable emergency of theParticipant, as hereinafter defined, the Participant may apply to the Committeefor the distribution of all or any part of his or her vested Account. TheCommittee shall consider the circumstances of each such case, and the bestinterests of the Participant and his or her family, and shall have the right,in its sole discretion, if applicable, to allow such distribution, or, ifapplicable, to direct a distribution of part of the amount requested, or torefuse to allow any distribution. Upon a finding of unforeseeable emergency,the Committee shall make the appropriate distribution to the Participant fromamounts under the Participant’s vested Account. In no event shall the aggregateamount of the distribution exceed either the full value of the Participant’svested Account or the amount determined by the Committee to be necessary toalleviate the Participant’s financial hardship (which financial hardship may beconsidered to include any taxes due because of the distribution occurringbecause of this Section) caused by the unforeseeable emergency, and which isnot reasonably available from other resources of the Participant. For purposesof this Section, the value of the Participant’s vested Account shall bedetermined as of the date of the distribution. “Unforeseeable Emergency” means(a) a severe financial hardship to the Participant resulting from an illness oraccident of the Participant or of a dependent (as defined in Code section152(a)) of the Participant, (b) loss of the Participant’s property due tocasualty, or (c) other similar extraordinary and unforeseeable circumstancesarising as a result of events beyond the control of the Participant, each asdetermined to exist by the Committee. A distribution may be made under thisSection only with the written consent of the Committee.

 

5.3           RE-EMPLOYMENTOF RECIPIENT.  If a Participant receiving installmentdistributions by virtue of an entitlement due to termination of employmentafter reaching Retirement is re-employed by the Employer, the remainingdistributions due to the Participant shall be suspended until such time as theParticipant (or his or her Beneficiary) once again becomes eligible forbenefits under Section 5.1, at which time such installment distributions shallcommence, subject to the limitations and conditions contained in this Plan.

 

5.4           LIMITATIONON DISTRIBUTIONS TO COVERED EMPLOYEES.  Notwithstanding any otherprovision of this Plan, in the event that the Participant is a “coveredemployee” as that term is defined in Section 162(m)(3) of the Code, or would bea covered employee if amounts were distributed in accordance with his or herdistribution election or hardship withdrawal, the maximum amount which may bedistributed from the Participant’s Account in any Plan Year shall not exceedone million dollars ($1,000,000) less the amount of compensation paid to theParticipant in such Plan Year which is not “performance-based” (as defined inCode Section 162(m)(4)(C) which amount shall be reasonably determined by theCommittee at the time of the proposed distribution. Any amount which is notdistributed to the Participant in a Plan Year as a result of this limitationshall be distributed to the Participant in the next Plan Year, subject tocompliance with the foregoing limitations set forth in this Section 5.4. Duringany such delay in payment, unpaid amounts shall continue to be credited (ordebited) with deemed investment income, gains and losses under Article 4. Notwithstandingthe foregoing, distribution of a Participant’s Account shall be made withoutregard to the deductibility limitation of Code section 162(m) if the time fordistribution is accelerated pursuant to Section 9.3 or Section 10.3.

 

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### **5.5**           Deduction Limitation on Withdrawal and Payments.  If the Employerdetermines in good faith that there is a reasonable likelihood that any amountpaid to a Participant for a taxable year of the Employer would not bedeductible by the Employer solely by reason of the limitation under Section162(m) of the Code, then to the extent deemed necessary by the Employer toensure that the entire amount of any distribution to the Participant pursuantto this Plan is deductible, the Employer may defer all or any portion of adistribution under this Plan. Any amounts deferred pursuant to this limitationshall continue to be credited/debited with additional amounts in accordancewith Article 4. The amounts so deferred and amounts credited thereon shall bedistributed to the Participant or his or her beneficiary (in the event of theParticipant’s death) at the earliest possible date, as determined by theEmployer in good faith, on which the deductibility of compensation paid orpayable to the Participant for the taxable year of the Employer during whichthe distribution is made will not be limited by Section 162(m) of the Code, orif earlier, the date that is twenty-four (24) months following the date onwhich the distribution was first distributable to the Participant pursuant tothe provisions of this Plan.

 

**ARTICLE 6**

**DISTRIBUTIONOF BENEFITS**

 

6.1           AMOUNT.  Thevalue of the Participant’s (or his or her Beneficiary’s) distribution shall beequal to the vested value of the Participant’s Account as of the Valuation Dateor such other date as the Committee may specify, each as adjusted for ParticipantCompensation Deferrals, Employer Contributions, and/or withdrawals which havebeen subsequently credited thereto or made therefrom prior to the distributiondate.

 

6.2           TIMINGOF DISTRIBUTION.  Subject to the Participant having satisfied allapplicable tax withholding obligations, distributions shall be paid (or,payments shall commence in installments) as soon as practicable after the earlierof:

 

(a)           Thefixed payment date designated by the Participant; or

 

(b)           Thedate as soon as administratively feasible following the Participant’stermination of employment with the Employer, death, or Disability.

 

6.3           METHODOF DISTRIBUTION.  In advance of each Plan Year a Participantshall have the right to determine how that year’s deferral is to bedistributed. The Participant will have this option annually during the openenrollment period. Account shall be paid in one of the following methods, asspecified in his or her Election:

 

(a)           Asingle lump sum payment;

 

(b)           Insubstantially equal yearly installments over a period of years not to exceed 10years

 

(c)           If,and only if, the Participant’s employment was terminated as result ofRetirement, and if elected by the Participant in his or her most recenteffective Election, in annual installment payments of substantially equalamounts over a period of up to ten (10) years.

 

(d)           AParticipant may amend his or her Election so as to select installments upontermination as a result of Retirement by filing an amended Election provided,however, that such Election to so change to installment distributions uponRetirement is made by the Participant at least twelve (12) months prior to thedate of termination as a result of Retirement, the election will not takeeffect until at least twelve (12) months after the date on which the electionis made, and the new postponed distribution date is at least five (5) yearsfrom the original termination date as a result of Retirement. Notwithstandingthe foregoing, in no event shall any such distribution date be accelerated to adate earlier than that initially selected by the Participant.

 

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(e)           TheEmployer (or its designee) may establish from time to time limitations on theParticipant’s ability to select the time and method of payment of his Accountbased upon the amount in the Participant’s Account. Unless and until changed bythe Employer (or its designee), any Account that has a total vested balance ofless than $5,000 at the time of distribution shall be paid in a lump sumregardless of an election by the Participant to be paid in installments.

 

**ARTICLE 7**

**BENEFICIARIES;PARTICIPANT DATA**

 

7.1           DESIGNATIONOF BENEFICIARIES.  Each Participant from time to time maydesignate any person or persons (who may be named contingently or successively)to receive such benefits as may be payable under the Plan upon or after theParticipant’s death, and such designation may be changed from time to time bythe Participant by filing a new designation. Each designation will revoke allprior designations by the same Participant, shall be in a form prescribed bythe Employer, and will be effective only when filed in writing with theEmployer during the Participant’s lifetime.

 

In the absence of a valid Beneficiarydesignation, or if, at the time any benefit payment is due to a Beneficiary,there is no living Beneficiary validly named by the Participant, the Employershall pay any such benefit payment to the Participant’s spouse, if then living,but otherwise to the Participant’s then living descendants, if any, perstirpes, but, if none, to the Participant’s estate. In determining the existenceor identity of anyone entitled to a benefit payment, the Employer may relyconclusively upon information supplied by the Participant’s personalrepresentative, executor or administrator. If a question arises as to theexistence or identity of anyone entitled to receive a benefit payment asaforesaid, or if a dispute arises with respect to any such payment, then,notwithstanding the foregoing, the Employer, in its sole discretion, maydistribute such payment to the Participant’s estate without liability for anytax or other consequences which might flow therefrom, or may take such otheraction as the Employer deems to be appropriate.

 

7.2           INFORMATIONTO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES; INABILITY TO LOCATEPARTICIPANTS OR BENEFICIARIES.  Any communication, statement ornotice addressed to a Participant or to a Beneficiary at his or her last postoffice address as shown on the Employer’s records shall be binding on theParticipant or Beneficiary for all purposes of the Plan. The Committee shall notbe obliged to search for any Participant or Beneficiary beyond the sending ofnotice to such last known address. If the Committee notifies any Participant orBeneficiary that he or she is entitled to an amount under the Plan and theParticipant or Beneficiary fails to claim such amount or make his or herlocation known to the Committee within three (3) years thereafter, then, exceptas otherwise required by law, if the location of one or more of the next of kinof the Participant is known to the Committee, the Committee may directdistribution of such amount to any one or more or all of such next of kin, andin such proportions as the Committee determines. If the location of none of theforegoing persons can be determined, the Committee shall have the right todirect that the amount payable shall be deemed to be a forfeiture, except thatthe dollar amount of the forfeiture, unadjusted for deemed gains or losses inthe interim, shall be paid by the Committee if a claim for the benefitsubsequently is made by the Participant or the Beneficiary to whom it waspayable. If a benefit payable to an unlocated Participant or Beneficiary issubject to escheat pursuant to applicable state law, the Committee shall not beliable to any person for any payment made in accordance with such law.

 

**ARTICLE 8**

**ADMINISTRATION**

 

8.1           COMMITTEEPOWERS AND RESPONSIBILITIES.  The Committee shall have thecomplete control of the administration of the Plan herein set forth with allthe powers

 

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necessary to enable it to properly carry out its duties in that respect.Not in limitation, but in amplification of the foregoing, the Committee shallhave the power and authority to:

 

(a)           Construethe trust agreement to determine all questions that shall arise as to theinterpretations of the Plan’s provisions including determination of whichindividuals are Eligible Employees and the determination of the amountscredited to a Participant’s Account, and the appropriate timing and method ofdistributions.

 

(b)           Adoptsuch rules of procedure and regulations as in its opinion may be necessary forthe proper and efficient administration of the Plan and as are consistent withthe Plan.

 

(c)           Implementthe Plan in accordance with its terms and the rules and regulations adopted asabove.

 

(d)           Appointany persons or firms, or otherwise act to secure specialized advice orassistance, as it deems necessary or desirable in connection with theadministration and operation of the Plan, and the Committee shall be entitledto rely conclusively upon, and shall be fully protected in any action oromission taken by it in good faith reliance upon, the advice or opinion of suchfirms or persons. The Committee may authorize one or more persons to executeany certificate or document on behalf of the Company, an Employer or theCommittee, in which event any person notified by the Committee of suchauthorization shall be entitled to accept and conclusively rely upon any suchcertificate or document executed by such person as representing action by theCommittee until such notified person shall have been notified of the revocationof such authority.

 

(e)           Subjectto Article 9 hereof, adopt amendments to the Plan document which are deemednecessary or desirable to facilitate administration of the Plan and/or to bringthe Plan into compliance with all applicable laws and regulations, providedthat the Committee shall not have the authority to adopt any Plan amendmentthat will result in substantially increased costs to the Company unless suchamendment is either expressly authorized by the Board or contingent uponratification by the Board before becoming effective.

 

(f)            Select,review and retain or change any deemed investment fund under the Plan.

 

(g)           Compileand maintain all records it determines to be necessary, appropriate orconvenient in connection with the administration of the Plan.

 

(h)           Directthe investment of the assets of the Trust.

 

(i)            Reviewthe performance of the Trustee and any other advisor or service provider to thePlan.

 

(j)            Takesuch other action as may be necessary or appropriate to the management andinvestment of the Plan assets and administration of the Plan.

 

8.2           UNIFORMITYOF DISCRETIONARY ACTS.  Whenever in the administration oroperation of the Plan discretionary actions by the Employer are required orpermitted, such actions shall be consistently and uniformly applied to allpersons similarly situated, and no such action shall be taken which shalldiscriminate in favor of any particular person or group of persons.

 

8.3           LITIGATION.  Exceptas may be otherwise required by law, in any action or judicial proceedingaffecting the Plan, no Participant or Beneficiary shall be entitled to anynotice

 

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or service of process, and any final judgment entered in such actionshall be binding on all persons interested in, or claiming under, the Plan.

 

8.4           INDEMNIFICATION.  Tothe extent permitted by law, the Company shall indemnify each member of theCommittee, and any other employee or member of the Board with duties under thePlan, against losses and expenses (including any amount paid in settlement)reasonably incurred by such person in connection with any claims against suchperson by reason of such person’s conduct in the performance of duties underthe Plan, except in relation to matters as to which such person has actedfraudulently or in bad faith in the performance of duties. Notwithstanding theforegoing, the Company shall not indemnify any person for any expense incurredthrough any settlement or compromise of any action unless the Company consentsin writing to the settlement or compromise.

 

8.5           CLAIMSPROCEDURE.

 

(a)           InitialClaim.  A Participant or Beneficiary who believes he or she isentitled to any Benefit (a “Claimant”) under this Plan may file a claim withthe Committee. The Committee shall review the claim itself or appoint anindividual or an entity to review the claim.

 

(i)            BenefitClaim.  The Claimant shall be notified within ninety days afterthe claim is filed whether the claim is allowed or denied, unless the Claimantreceives written notice from the Committee or from an appointee of theCommittee before the end of the ninety day period stating that specialcircumstances require an extension of the time for decision. Any such extensionwill not extend beyond one hundred eighty days after the day the claim isfiled.

 

(ii)           Mannerand Content of Denial of Initial Claims.  If the PlanAdministrator denies a claim, it must provide to the Claimant, in writing or byelectronic communication:

 

(A)          Thespecific reasons for the denial;

 

(B)           Areference to the Plan provision or insurance contract provision upon which thedenial is based;

 

(C)           Adescription of any additional information or material that the Claimant mustprovide in order to perfect the claim;

 

(D)          Anexplanation of why such additional material or information is necessary;

 

(E)           Noticethat the Claimant has a right to request a review of the claim denial andinformation on the steps to be taken if the Claimant wishes to request a reviewof the claim denial; and

 

(F)           Astatement of the participant’s right to bring a civil action under ERISA§502(a) following a denial on review of the initial denial.

 

(b)           ReviewProcedures.

 

(i)            BenefitClaims.  A request for review of a denied claim must be made inwriting to the Plan Committee within sixty days after receiving notice ofdenial. The decision upon review will be made within sixty days after the PlanCommittee’s receipt of a request for review, unless special circumstancesrequire an extension of time for processing, in which case a decision will berendered not later than one hundred twenty days after receipt of a request forreview. A notice of such an extension must be provided to the Claimant withinthe

 

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initial sixty day period and must explain the special circumstances andprovide an expected date of decision.

 

The reviewer shall affordthe Claimant an opportunity to review and receive, without charge, all relevantdocuments, information and records and to submit issues and comments in writingto the Plan Committee. The reviewer shall take into account all comments,documents, records and other information submitted by the Claimant relating tothe claim regardless of whether the information was submitted or considered inthe initial benefit determination.

 

(ii)           Mannerand Content of Notice of Decision on Review.  Upon completion ofits review of an adverse initial claim determination, the Plan Committee willgive the Claimant, in writing or by electronic notification, a noticecontaining:

 

(A)          itsdecision;

 

(B)           thespecific reasons for the decision;

 

(C)           therelevant Plan provisions or insurance contract provisions on which its decisionis based;

 

(D)          astatement that the Claimant is entitled to receive, upon request and withoutcharge, reasonable access to, and copies of, all documents, records and otherinformation in the Plan’s files which is relevant to the Claimant’s claim forbenefits;

 

(E)           astatement describing the Claimant’s right to bring an action for judicialreview under ERISA §502(a); and

 

(F)           ifan internal rule, guideline, protocol or other similar criterion was reliedupon in making the adverse determination on review, a statement that a copy ofthe rule, guideline, protocol or other similar criterion will be providedwithout charge to the Claimant upon request.

 

(c)           Calculationof Time Periods.  For purposes of the time periods specified inthis Section 8.5, the period of time during which a benefit determination isrequired to be made begins at the time a claim is filed in accordance with thePlan procedures without regard to whether all the information necessary to makea decision accompanies the claim. If a period of time is extended due to aClaimant’s failure to submit all information necessary, the period for makingthe determination shall be tolled from the date the notification is sent to theClaimant until the date the Claimant responds.

 

(d)           Failureof Plan to Follow Procedures.  If the Plan fails to follow theclaims procedures required by this Section 8.5, a Claimant shall be deemed tohave exhausted the administrative remedies available under the Plan and shallbe entitled to pursue any available remedy under ERISA section 502(a) on thebasis that the Plan has failed to provide a reasonable claims procedure thatwould yield a decision on the merits of the claim. If the Claimant fails tofollow the claims procedures required by this Section 8.5, the Claimant shallnot be entitled to pursue any further legal action, claim or remedy until suchtime as the Claimant, to the extent applicable, exhausts the administrativeremedies available under the Plan.

 

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**ARTICLE 9**

**AMENDMENT**

 

9.1           RIGHTTO AMEND.  The Committee or the Company, by action of the Board,shall have the right to amend the Plan, at any time and with respect to anyprovisions hereof, and all parties hereto or claiming any interest hereundershall be bound by such amendment; provided, however, that no such amendmentshall deprive a Participant or a Beneficiary of a right accrued hereunder priorto the date of the amendment unless such an amendment is required by applicablelaw or deemed necessary to preserve the preferred tax treatment of the Plan.

 

9.2           AMENDMENTSTO ENSURE PROPER CHARACTERIZATION OF PLAN.  Notwithstanding theprovisions of Section 9.1, the Plan may be amended by the Committee or theCompany, by action of its Board, at any time, retroactively if required, iffound necessary, in the opinion of the Committee or the Board, in order toensure that the Plan is characterized as a “top-hat” plan of deferredcompensation maintained for a select group of management or highly compensatedemployees as described under ERISA sections 201(2), 301(a)(3), and 401(a)(1),and to conform the Plan to the provisions and requirements of any applicablelaw (including specifically Section 409A of the Code, and other applicableportions of ERISA and the Code). No such amendment shall be consideredprejudicial to any interest of a Participant or a Beneficiary hereunder.

 

9.3           CHANGESIN LAW AFFECTING TAXABILITY.

 

(a)           Operation.  ThisSection shall become operative upon the enactment of any change in applicablestatutory law or the promulgation by the Internal Revenue Service of a finalregulation or other pronouncement having the force of law, which statutory law,as changed, or final regulation or pronouncement, as promulgated, would causeany Participant to include in his or her federal gross income amounts accruedby the Participant under the Plan on a date (an “Early Taxation Event”) priorto the date on which such amounts are made available to him or her hereunder.

 

(b)           AffectedRight or Feature Nullified.  Notwithstanding any other Section ofthis Plan to the contrary (but subject to subsection (c), below), as of anEarly Taxation Event, the feature or features of this Plan that would cause theEarly Taxation Event shall be null and void, to the extent, and only to theextent, required to prevent the Participant from being required to include inhis or her federal gross income amounts accrued by the Participant under thePlan prior to the date on which such amounts are made available to him or herhereunder. If only a portion of a Participant’s Account is impacted by thechange in the law, then only such portion shall be subject to this Section,with the remainder of the Account not so affected being subject to such rightsand features as if the law were not changed. If the law only impacts Participantswho have a certain status with respect to the Employer, then only suchParticipants shall be subject to this Section.

 

(c)           TaxDistribution.  If an Early Taxation Event is earlier than thedate on which the statute, regulation or pronouncement giving rise to the EarlyTaxation Event is enacted or promulgated, as applicable (i.e., if the change inthe law is retroactive), there shall be distributed to each Participant, assoon as practicable following such date of enactment or promulgation, the amountsthat became taxable on the Early Taxation Event.

 

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**ARTICLE 10**

**TERMINATION**

 

10.1         EMPLOYER’SRIGHT TO TERMINATE OR SUSPEND PLAN.  The Employer reserves theright to terminate the Plan and/or its obligation to make further credits toPlan Accounts, by action of its Board of Directors. The Employer also reservesthe right to suspend the operation of the Plan for a fixed or indeterminateperiod of time, by action of its Board of Directors.

 

10.2         SUSPENSIONOF DEFERRALS.  In the event of a suspension of the Plan, theEmployer shall continue all aspects of the Plan, other than CompensationDeferrals and Employer Contributions, during the period of the suspension, inwhich event payments hereunder will continue to be made during the period ofthe suspension in accordance with Articles 5 and 6.

 

10.3         ALLOCATIONAND DISTRIBUTION.  This Section shall become operative on acomplete termination of the Plan. The provisions of this Section also shallbecome operative in the event of a partial termination of the Plan, asdetermined by the Employer, but only with respect to that portion of the Planattributable to the Participants to whom the partial termination is applicable.Upon the effective date of any such event, notwithstanding any other provisionsof the Plan, no persons who were not theretofore Participants shall be eligibleto become Participants, the value of the interest of all Participants andBeneficiaries shall be determined and, after deduction of estimated expenses inliquidating and, if applicable, paying Plan benefits, paid to them as soon asis practicable after such termination.

 

10.4         SUCCESSORTO EMPLOYER.  Any corporation or other business organizationwhich is a successor to the Employer by reason of a Change Of Control of theEmployer shall have the right to become a party to the Plan by adopting thesame by resolution of the entity’s board of directors or other appropriategoverning body. If, within ninety (90) days from the effective date of such ChangeOf Control such new entity does not become a party hereto, as above provided,the Plan automatically shall be terminated, and the provisions of Section 10.3shall become operative.

 

**ARTICLE 11**

**THE TRUST**

 

11.1         ESTABLISHMENTOF TRUST.  The Employer, in its sole and absolute discretion, willestablish an irrevocable Trust with a qualified trustee pursuant to such termsand conditions as are set forth in a Trust agreement to be entered into betweenthe Employer and such trustee (the Trustee). Or, the Employer will cause to bemaintained one or more separate subaccounts in an existing Trust maintainedwith the Trustee with respect to one or more other plans of the Employer, whichsubaccount or subaccounts represent Participants’ interests in the Plan. TheEmployer shall have the discretion to make contributions to such Trust thatcorrespond to credits to Participants’ Accounts and/or to invest Trust assetsin a manner that corresponds to Participants’ selected deemed investments inorder to provide a source of funds with which the Employer shall pay Planbenefits as they become due. Alternatively, the Employer may contribute certainproceeds from any company owned life insurance established for the purposes ofthis Plan into such Trust.

 

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Any amounts held in aTrust established under this Section shall be the sole property of the Employerand may not be held as collateral security for fulfillment of the Employer’sobligation under the Plan. Any such Trust shall be intended to be treated as a “grantortrust” under the Code and the establishment of the Trust or the utilization ofany existing Trust for Plan benefits, as applicable, shall not be intended tocause any Participant to realize current income on amounts contributed thereto,and the Trust shall be so interpreted. Any such funds will be subject to theclaims of all bankruptcy or insolvency creditors of the Employer or the Company’sParent as provided in the Trust agreement, and no Participant or Beneficiarywill have any vested interest or secured or preferred position with respect tosuch funds or have any claims against the Employer or the Company’s Parent hereunderexcept as a general creditor.

 

Once funds have beencontributed to the Trust, other than by court order to facilitate payment ofclaims by any potential bankruptcy or insolvency creditors of the Employer orthe Company’s Parent, the Employer or the Company’s Parent cannot access thefunds other than to make Distributions as directed by the Plan Participants. Further,the Employer or the Company’s Parent will not collateralize or borrow againstthe assets in the Trust for any purpose other than for the benefit of theTrust.

 

**ARTICLE 12**

**MISCELLANEOUS**

 

12.1         LIMITATIONSON LIABILITY OF EMPLOYER.  Neither the establishment of the Plannor any modification thereof, nor the creation of any account under the Plan,nor the payment of any benefits under the Plan shall be construed as giving toany Participant or other person any legal or equitable right against theEmployer or the Company’s Parent, or any officer or employer thereof except asprovided by law or by any Plan provision. The Employer and the Company’s Parentdo not in any way guarantee any Participant’s Account from loss ordepreciation, whether caused by poor investment performance of a deemedinvestment or the inability to realize upon an investment due to an insolvencyaffecting an investment vehicle or any other reason. In no event shall theEmployer, the Company’s Parent, or any successor, employee, officer, directoror stockholder of the Employer or the Company’s Parent, be liable to any personon account of any claim arising by reason of the provisions of the Plan or ofany instrument or instruments implementing its provisions, or for the failureof any Participant, Beneficiary or other person to be entitled to anyparticular tax consequences with respect to the Plan, or any credit ordistribution hereunder.

 

12.2         CONSTRUCTION.  Thelaws of the state of California shall govern, control and determine allquestions of law arising with respect to the Plan and the interpretation andvalidity of its respective provisions, except where those laws are preempted bythe laws of the United States. Participation under the Plan will not give anyParticipant neither the right to be retained in the service of the Employer norany right or claim to any benefit under the Plan unless such right or claim hasspecifically accrued hereunder.

 

The Plan is intended tobe and at all times shall be interpreted and administered so as to qualify asan unfunded deferred compensation plan, and no provision of the Plan shall beinterpreted so as to give any individual any right in any assets of theEmployer or the Company’s Parent which right is greater than the rights of ageneral unsecured creditor of the Employer or the Company’s Parent.

 

12.3         SPENDTHRIFTPROVISION.  No amount payable to a Participant or a Beneficiaryunder the Plan will, except as otherwise specifically provided by law, besubject in any manner to anticipation, alienation, attachment, garnishment,sale, transfer, assignment (either at law or in equity), levy, execution,pledge, encumbrance, charge or any other legal or equitable process, and anyattempt to do so will be void; nor will any benefit be in any manner liable foror subject to the debts, contracts, liabilities, engagements or torts of theperson entitled thereto. Further, (i) the withholding of taxes from Planbenefit payments, (ii) the recovery under the Plan of

 

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overpayments of benefits previously made to a Participant orBeneficiary, (iii) if applicable, the transfer of benefit rights from the Planto another plan, or (iv) the direct deposit of benefit payments to an accountin a banking institution (if not actually part of an arrangement constitutingan assignment or alienation) shall not be construed as an assignment oralienation.

 

In the event that anyParticipant’s or Beneficiary’s benefits hereunder are garnished or attached byorder of any court, the Employer or Trustee may bring an action or adeclaratory judgment in a court of competent jurisdiction to determine theproper recipient of the benefits to be paid under the Plan. During the pendencyof said action, any benefits that become payable shall be held as credits tothe Participant’s or Beneficiary’s Account or, if the Employer or Trusteeprefers, paid into the court as they become payable, to be distributed by thecourt to the recipient as the court deems proper at the close of said action.

 

12.4         TAXWITHHOLDING.  Distribution and withdrawal payments under thisPlan shall be subject to all applicable withholding requirements for state andfederal income taxes and to any other federal, state or local taxes that may beapplicable to such payments. The Employer shall have the right, but not theobligation, to deduct from any distribution from the Plan, that amount equal toall or any part of the federal, state, local and foreign taxes, if any,required by law to be withheld by the Employer with respect to suchdistributions. Alternatively or in addition, in its discretion, the Employer shallhave the right to require a Participant, through payroll withholding, cashpayment or otherwise, to make adequate provision for any such tax withholdingobligations of the Company arising in connection with any distribution from thePlan. The Trustee shall have no obligation to distribute amounts form the Trustuntil the Employer’s tax withholding obligations have been satisfied by theParticipant.

 

12.5         NOEMPLOYMENT AGREEMENT.  Nothing contained herein shall beconstrued as conferring upon any Participant the right to continue in theemploy of the Employer or the Company’s Parent as an employee.

 

12.6         ATTORNEY’SFEES.  If the Employer, the Participant, any Beneficiary, anybeneficiary under an insurance policy purchased under the Trust, and/or asuccessor in interest to any of the foregoing, brings legal action to enforceany of the provisions of this Plan, the prevailing party in such legal actionshall be reimbursed by the other party, the prevailing party’s costs of suchlegal action including, without limitation, reasonable fees of attorneys,accountants and similar advisors and expert witnesses.

 

12.7         GOVERNINGLAW.  This Plan shall be construed in accordance with andgoverned by any applicable provisions of ERISA and the laws of the State of California.

 

12.8         ENTIREAGREEMENT.  This Plan constitutes the entire understanding andagreement with respect to the subject matter contained herein, and there are noagreements, understandings, restrictions, representations or warranties amongany Participant and the Employer other than those as set forth or provided forherein.

 

12.9         SEVERABILITY.  Ifany provision of this Plan is determined, by the Committee or any governmentalagency or court decision, to be unenforceable or invalid under any applicablelaw, such unenforceability or invalidity shall not render this Planunenforceable or invalid as a whole, and such provision shall be changed andinterpreted by the Committee, in its sole discretion, so as to best accomplishthe objectives of such unenforceable or invalid provision within the limits ofapplicable law or applicable court decisions.

 

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IN WITNESSWHEREOF, this Plan has been adopted effective as of the Effective Date.

 
|                   | InterDent Service  Corporation |
|------------------------|--------------------------------|
|                   |                           |
|                   |                           |
| Dated: January 1, 2006 | By:                            | /s/ Robert Hill |

 

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ADDENDUM A

 

(a) EmployerContributions.  Employer Contributions will be made to affiliateddentists (whether employees or non-employee service providers) quarterly basedon their achievement of predetermined performance goals and will be vested tothe participant based on the schedule provided in the Vesting section of thisAddendum. These performance goals will be reviewed annually, and may be revisedaccordingly. For each affiliated dentist that produces a minimum of $120,000 ofAdjusted Production Revenue per calendar quarter, their Employer will make acontribution equal to five percent (5%) multiplied by that affiliated dentist’squarterly Adjusted Production Revenue-based gross wages into their Plan account.Adjusted Production Revenue is defined as all production based revenue directlyattributable to Participant, generated at an Employer-affiliated office, lessany sales adjustments (direct or accrued), as commonly displayed on Companyinformation systems, and as used to calculate Participant’s regular paycheckfrom Employer, specifically excluding all revenue generated from capitatedrevenue sources. Only affiliated dentists are eligible for such Employer Contributions– no management, or non-production-revenue-generating affiliated dentists areeligible for an Employer Contribution.

 

Participants must beemployed or under contract to provide dental services with Employer at the timeEmployer Contributions are made to be entitled to such Employer Contribution,which will then vest as provided in the Vesting section.

 

(b) Vesting.  ParticipantCompensation Deferrals are one hundred percent (100%) vested at all times toParticipant. Employer Contributions shall be vested to Participants over athree year class vesting schedule. Vesting will occur at the Plan Year end date.For example:

 
| ** **                 | ** ** | **Vested % at date** | ** ** |
|----------------------------|------------|-------------------------------------|------------|
| **Contribution Year** | ** ** | **12/31/2007**                      | ** ** | **12/31/2008** | ** ** | **12/31/2009** | ** ** | **12/31/2010** | ** ** | **12/31/2011** | ** ** |
| 2006                       |       | 33                                  | %          | 33 | % | 34 | % |   |   |   |   |
| 2007                       |       |                                |       | 33 | % | 33 | % | 34 | % |   |   |
| 2008                       |       |                                |       |   |   | 33 | % | 33 | % | 34 | % |

 

Participants must beemployed or under contract to provide dental services with Employer at the timethe Employer Contributions are vested in order for any Employer Contribution tobecome vested. Should an affiliated dentist’s employment or contract withEmployer, especially in the case of a non-employee service provider, terminate,then that affiliated dentist or service provider will forfeit any unvestedEmployer Contributions in their Plan account at that time.

 

Until such amounts arevested, the Committee will direct such deemed investment into a moderateallocation investment. While this deemed investment is a balanced, more conservativeselection, there is still risk involved and there is no guarantee as to capitalpreservation. Once vested, the Participant shall have the right to direct theCommittee as to how such vested amounts should be subsequently deemed to be invested.

 

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