exv10w1



 





Exhibit 10.1




ULTRATECH, INC.




LONG-TERM INCENTIVE COMPENSATION PLAN




AS AMENDED AND RESTATED JANUARY 28, 2008




ARTICLE I




NAME AND PURPOSE




          1.01 Purpose. Ultratech, Inc. a corporation duly organized and existing under the
laws of State of Delaware (the “Corporation”), established the Ultratech, Inc. Long-Term Incentive
Compensation Plan (the “Plan”) in order to provide the Corporation’s executive officers and other
select key employees with the opportunity to earn additional incentive compensation contingent upon
the Corporation’s attainment of pre-established performance objectives and their completion of
designated service periods. The purpose of this January 2008 amendment and restatement is to bring
the provisions of the Plan into documentary compliance with the applicable requirements of the
final Treasury Regulations under Section 409A of the Internal Revenue Code of 19856, as amended
(the “Code”)




          1.02 General. The benefits provided under the Plan shall be paid, as they become due,
from the Corporation’s general assets. The interest of each participant (and his or her
beneficiary) in any benefits that become payable under the Plan shall be no greater than that of an
unsecured creditor of the Corporation.




ARTICLE II




ADMINISTRATION OF THE PLAN




          2.01 Plan Administrator. The Plan shall be administered by the Compensation Committee
of the Board, and the Compensation Committee acting in such capacity shall hereinafter be referred
to as the Plan Administrator. As Plan Administrator, the Compensation Committee shall have full
power and authority to administer the Plan and select the Eligible Employees who are to participate
in the Plan.




          2.02 Authority. The interpretation and construction of any provision of the Plan and
the adoption of rules and regulations for plan administration shall be made by the Plan
Administrator. Decisions of the Plan Administrator shall be final and binding on all parties who
have an interest in the Plan, including (without limitation) all decisions relating to an
individual’s eligibility for participation in the Plan, his or her entitlement to benefits
hereunder and the amount of any such benefit entitlement. The Plan Administrator shall also have
the discretionary





 









 







authority to determine whether the involuntary termination of any Participant’s Employee
status constitutes a Termination for Cause (pursuant to the criteria set forth in Section 3.16),
and such determination shall be final and binding on the Participant for purposes of such
Participant’s benefit entitlement (if any) under the Plan.




ARTICLE III




DEFINITIONS




          3.01 “Account” shall mean the account maintained for each Participant on the
Corporation’s books and records with respect to the portion of each Long-Term Incentive Bonus
requiring an additional period of vesting Service beyond the Performance Year to which that bonus
relates.




          3.02 “Board” shall mean the Corporation’s Board of Directors.




          3.03 “Change in Control” shall mean a change in ownership or control of the
Corporation effected through any of the following transactions:





          (i) a merger or consolidation in which the Corporation is not the surviving
entity and in which securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation’s outstanding securities are transferred to
person or persons different from the persons holding those securities immediately
prior to such merger or consolidation,




          (ii) the sale, transfer or other disposition of all or substantially all of the
assets of the Corporation in complete liquidation or dissolution of the Corporation,




          (iii) any reverse merger in which the Corporation is the surviving entity but
in which securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporation’s outstanding securities are transferred to person
or persons different from the persons holding those securities immediately prior to
such merger,




          (iv) the acquisition, directly or indirectly by any person or related group of
persons (other than the Corporation or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Corporation), of
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of
securities possessing more than fifty percent (50%) of the total combined voting
power of the Corporation’s outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation’s stockholders, or



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          (v) a change in the composition of the Board over a period of twelve (12)
consecutive months or less such that a majority of the Board members ceases, by
reason of one or more contested elections for Board membership, to be comprised of
individuals who either (A) have been Board members continuously since the beginning
of such period or (B) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in clause
(A) who were still in office at the time the Board approved such election or
nomination.



          3.04 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.




          3.05 “Corporation” shall mean Ultratech, Inc. and any successor or assignee
corporation, whether by way of merger, acquisition or other reorganization.




          3.06 “Disability or Disabled” shall mean the Participant’s inability to engage in any
substantial gainful employment by reason of any physical or medical impairment which is expected to
result in death or continue for a period of twelve (12) consecutive months or more.




          3.07 “Eligible Employee” shall mean each executive officer of the Corporation and any
other key employee of the Corporation or any Parent or Subsidiary who the Plan Administrator deems
essential to the growth and financial success of the Corporation.




          3.08 “Employee” shall mean any person in the employ of the Corporation or any Parent
or Subsidiary, subject to control and direction of the employer entity as to both the work to be
performed and the manner and method of performance.




          3.09 “Involuntary Termination” shall mean the termination of Employee status by
reason of:




               (i) the Employee’s discharge or dismissal by the Corporation or any Parent or Subsidiary for
any reason other than a Termination for Cause, or



               (ii) the Employee’s death or Disability.



          3.10 “Long-Term Incentive Bonus” shall mean the bonus to which the Participant may
become entitled with respect to a particular Performance Period on the basis of the Corporation’s
attainment of the Performance Milestones which the Plan Administrator establishes for that
Performance Period.




          3.11 “1934 Act” shall mean the Securities Exchange of 1934, as amended.




          3.12 “Parent” shall mean any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation, provided each corporation in the unbroken chain
(other than the Corporation) owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one of the other
corporations in such chain.




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          3.13 “Participant” shall mean each Eligible Employee who participates in the Plan.




          3.14 “Performance Milestones” shall mean one or more specific performance objectives
which the Plan Administrator designates for the Corporation to attain in a particular Performance
Period in order for each Participant to become entitled to a Long-Term Incentive Bonus for that
Performance Period. Without limiting the generality of the foregoing, Performance Milestones may be
based on one or more of the following financial criteria: (1) return on total stockholder equity;
(2) earnings per share of Common Stock; (3) net income or operating income (before or after taxes);
(4) earnings before interest, taxes, depreciation and amortization; (5) earnings before interest,
taxes, depreciation, amortization and charges for stock-based compensation, (6) sales or revenue
targets; (7) return on assets, capital or investment; (8) cash flow; (9) market share; (10) cost
reduction goals; (11) budget comparisons and (12) measures of customer satisfaction. In addition,
such Performance Milestones may be tied to the attainment of specified levels of the Corporation’s
performance under one or more of the financial criteria described above relative to the performance
of other entities and may also be based on the performance of any of the Corporation’s business
units or divisions or any Parent or Subsidiary.




          3.15 “Performance Period” shall mean the period coincidental with each fiscal year of
the Corporation over which the Corporation must attain the Performance Milestones which the Plan
Administrator has established for that period.




          3.16 “Retirement” shall mean the Participant’s termination of Employee status (other
than a Termination for Cause) on or after his or her attainment of age sixty five (65).




          3.17 “Separation from Service” shall mean the Participant’s cessation of Employee
status by reason of his or her death, retirement or termination of employment. The Participant
shall be deemed to have terminated employment for such purpose at such time as the level of his or
her bona fide services to be performed as an Employee (or as a consultant or independent
contractor) permanently decreases to a level that is not more than twenty percent (20%) of the
average level of services he or she rendered as an Employee during the immediately preceding
thirty-six (36) months (or such shorter period for which he or she may have rendered such
services). Solely for purposes of determining when a Separation from Service occurs, Participant
will be deemed to continue in “Employee” status for so long as he or she remains in the employ of
one or more members of the Employer Group, subject to the control and direction of the employer
entity as to both the work to be performed and the manner and method of performance. “Employer
Group” means the Corporation and any Parent or Subsidiary and any other corporation or business
controlled by, controlling or under common control with, the Corporation, as determined in
accordance with Sections 414(b) and (c) of the Code and the Treasury Regulations thereunder, except
that in applying Sections 1563(1), (2) and (3) for purposes of determining the controlled group of
corporations under Section 414(b), the phrase “at least 50 percent” shall be used instead of “at
least 80 percent” each place the latter phrase




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appears in such sections and in applying Section 1.414(c)-2 of the Treasury Regulations for
purposes of determining trades or businesses that are under common control for purposes of Section
414(c), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place
the latter phrase appears in Section 1.4.14(c)-2 of the Treasury Regulations. Any such
determination as to Separation from Service, however, shall be made in accordance with the
applicable standards of the Treasury Regulations issued under Section 409A of the Code.




          3.18 “Service” shall mean Participant’s performance of services for the Corporation
(or any Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of
directors or a consultant or independent advisor. For purposes of this Agreement, Participant shall
be deemed to cease Service immediately upon the occurrence of the either of the following events:
(i) Participant no longer performs services in any of the foregoing capacities for the Corporation
(or any Parent or Subsidiary) or (ii) the entity for which Participant performs such services
ceases to remain a Parent or Subsidiary of the Corporation, even though Participant may
subsequently continue to perform services for that entity. Service as an Employee shall not be
deemed to cease during a period of military leave, sick leave or other personal leave approved by
the Corporation; provided, however, that the following special provisions shall be in effect for
any such leave:





          (i) Should the period of such leave (other than a disability leave) exceed six
(6) months, then Participant shall be deemed to cease Service and to incur a
Separation from Service upon the expiration of the initial six (6)-month period of
that leave, unless Participant retains a right to re-employment under applicable law
or by contract with the Corporation (or any Parent or Subsidiary).




          (ii) Should the period of a disability leave exceed twenty-nine (29) months,
then Participant shall be deemed to cease Service and to incur a Separation from
Service upon the expiration of the initial twenty-nine (29)-month period of that
leave, unless Participant retains a right to re-employment under applicable law or
by contract with the Corporation (or any Parent or Subsidiary). For such purpose,
a disability leave shall be a leave of absence due to any medically determinable
physical or mental impairment that can be expected to result in death or to last for
a continuous period of not less than six (6) months and causes Participant to be
unable to perform the duties of his or her position of employment with the
Corporation (or any Parent or Subsidiary) or any substantially similar position of
employment.




          (iii) Except to the extent otherwise required by law or expressly authorized by
the Plan Administrator or by the Corporation’s written policy on leaves of absence,
no Service credit shall be given for vesting purposes for any period Participant is
on a leave of absence.



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          3.19 “Subsidiary” shall mean any corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation, provided each corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.




          3.20 “Termination for Cause” shall mean shall mean the termination of the
Participant’s Service by the Corporation (or any Parent or Subsidiary) for one or more of the
following reasons:





          (iv) the Participant’s repeated failure to perform the essential duties and
responsibilities of his or her position with the Corporation (or any Parent or
Subsidiary) other than by reason of his or her Disability;




          (v) the Participant’s commission of any act that constitutes gross misconduct
and is injurious to the Corporation or any Parent or Subsidiary;




          (vi) the Participant’s conviction of or pleading guilty or nolo contendere to
any felony involving theft, embezzlement, dishonesty or moral turpitude;




          (vii) the Participant’s commission of any act of fraud against, or the
misappropriation of property belonging to, the Corporation or any Parent or
Subsidiary;




          (viii) the Participant’s commission of any act of dishonesty in connection with
his or her duties and responsibilities as an employee of the Corporation (or any
Parent or Subsidiary) that is intended to result in his or her personal enrichment
or the personal enrichment of his or her family or others; or




          (ix) the Participant’s material breach of any employment agreement he or she
may have at the time with the Corporation or any other agreement between the
Participant and the Corporation or any Parent or Subsidiary.



ARTICLE IV




PARTICIPATION




          4.01 Eligibility Rules. The Plan Administrator shall have absolute discretion in
selecting the Eligible Employees who are to participate in each Performance Period implemented
under the Plan. The initial Participants for each Performance Period shall be selected not later
than the ninetieth (90th) day after the commencement date of that Performance Period. The Plan
Administrator may select additional Participants for the Performance Period after such ninetieth
(90th) day; provided, however, that the Plan Administrator may, in its sole




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discretion, pro-rate the Long-Term Incentive Bonus which the Participant may earn for that
Performance Period to reflect his or her actual period of Service during that Performance Period.




          4.02 Cessation of Participation. The Plan Administrator shall have complete discretion
to exclude one or more individuals from Participant status for one or more subsequent Performance
Periods implemented under the Plan. If any individual is excluded from Participant status for one
or more Performance Periods, then such individual shall not be entitled to any Long-Term Incentive
Bonus for those Performance Periods. However, such individual shall continue to vest, during his or
her period of continued Service, in any unvested Long-Term Incentive Bonuses credited to his or her
Account.




ARTICLE V




LONG-TERM INCENTIVE BONUSES




          5.01 Timing and Nature of Awards. The Plan Administrator shall have complete
discretion to implement one or more Performance Periods under the Plan. The Plan Administrator
shall, within the first ninety (90) days of each Performance Period, establish the specific
Performance Milestones which must be attained for that Performance Period. For each Performance
Milestone, the Plan Administrator may set threshold, target and above-target levels of attainment.
The Plan Administrator shall then establish for each Participant varying dollar levels for the
Long-Term Incentive Bonus to which he or she may become entitled for that Performance Period based
on the level at which each Performance Milestone is actually attained. Such varying dollar levels
may be tied to a percentage or multiple of the annual rate of base salary in effect for the
Participant for the applicable Performance Period.




          5.02 Service Requirement. A Participant shall not become entitled to a Long-Term
Incentive Bonus for a particular Performance Period unless the Participant continues in Service
through the completion of that Performance Period or the Participant ceases Service in that
Performance Period by reason of Retirement or Involuntary Termination (other than Termination for
Cause). Should the Participant cease Service for any other reason prior the completion of the
Performance Period, then he or she shall not be entitled to any Long-Term Incentive Bonus for that
Performance Period.




          5.03 Determination of Bonus Amount. Within the first seventy-five (75) days following
the completion of the Performance Period, the Plan Administrator shall, on the basis of the
Corporation’s audited financial statements for the fiscal year coincident with that Performance
Period, determine the actual level of attainment of each Performance Milestone established for that
Performance Period and shall then measure that level of attainment against the threshold level, the
target level and the above-target level of attainment established for that Performance Milestone.
To the extent the actual level of attainment for any Performance Milestone is at a point between
two of the levels established by the Plan Administrator, the dollar amount of the portion of each
Long-Term Incentive Bonus tied to that Performance Milestone shall be pro-rated between the two
points on a straight-line basis. On the basis of the foregoing measurements, the Plan Administrator
shall determine the actual Long-Term Incentive Bonus for




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each Participant entitled to a Long-Term Incentive Bonus for the Performance Period, subject
to the pro-rated bonus provisions of Section 5.05 for certain Participants who ceased Service prior
to the completion of that Performance Period. In no event, however, shall any Long-Term Incentive
Bonus be earned with respect to a particular Performance Milestone if the actual level of
attainment of that Performance Milestone is below the threshold level set for that milestone.




          5.04 Change in Control. Should a Change in Control transaction be consummated after
the first ninety (90) days of the Performance Period but prior to the completion of that
Performance Period, then the Performance Period shall terminate upon the consummation of that
Change in Control. In such event, the actual Long-Term Incentive Bonus for each Participant
entitled under Section 5.02 to a bonus for that Performance Period shall be in the dollar amount
set by the Plan Administrator for attainment of each Performance Milestone at the target level,
subject to the pro-rated bonus provisions of Section 5.05 for certain Participants who ceased
Service prior to the completion of that abbreviated Performance Period.




          5.05 Pro-Rated Bonus. The provisions of Sections 5.03 and 5.04 governing the
determination of the actual Long-Term Incentive Bonus for each Participant entitled under Section
5.02 to such bonus shall be modified in accordance with the provisions of this Section 5.05 should
the Participant cease Service prior to the completion of the applicable Performance Period by
reason of an Involuntary Termination prior to attainment of age sixty-five (65). Such Participant
shall only be entitled to a pro-rated Long-Term Incentive Bonus in a dollar amount determined by
multiplying the actual Long-Term Incentive Bonus to which he or she would have been entitled under
Section 5.03 or Section 5.04 (as the case may be), on the basis of the attained level of
performance for the Performance Period, had he or she continued in Service through the last day of
that Performance Period first by (i) the percentage of that Long-Term Incentive Bonus which is not
subject to the Service vesting and deferred payment provisions of Section 6.01 and then by (ii) a
fraction, the numerator of which is the number of days such Participant remained in Service during
the Performance Period and the denominator of which is the total number of days in that Performance
Period. The Long-Term Incentive Bonus with respect to a Participant who ceases Service during a
Performance Period by reason of Retirement or by reason of an Involuntary Termination at or after
the attainment of age sixty-five (65) shall not be subject to pro-ration pursuant to the clause
(ii) fraction in the preceding sentence and shall be calculated in accordance with Section 5.03 as
if the Participant had continued in Service through the completion of that Performance Period;
provided, however, that such Participant shall not be entitled to the Deferred Portion of such
bonus (as calculated under Article VI), unless he or she continues in Service through the
completion of the applicable Performance Period.




          5.06 Vesting and Payment. The actual Long-Term Incentive Bonus to which each
Participant becomes entitled pursuant to the foregoing provisions of this Article V shall be
subject to the vesting and payment provisions of Article VI, and no Long-Term Incentive Bonus shall
be paid to a Participant until the vesting and payment requirements of Article VI are satisfied.




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ARTICLE VI




VESTING AND PAYMENT OF LONG-TERM INCENTIVE BONUSES




          6.01 Vesting. The Plan Administrator may, in its sole discretion at the time the
Performance Milestones for the Performance Period are established, impose an additional Service
vesting requirement with respect to a portion (not to exceed fifty percent (50%)) of the Long-Term
Incentive Bonus to which each Participant becomes entitled for that Performance Period. Such
portion shall be hereinafter referred to as the Deferred Portion and shall be subject to the
following provisions:




               (i) The Deferred Portion shall be credited to each Participant’s Account as of the date the
remaining portion of his or her Long-Term Incentive Bonus is paid in accordance with Section 6.02.



               (ii) The Deferred Portion shall vest in a series of successive equal annual installments upon
the Participant’s completion of each additional year of Service over the period of years (not to
exceed three (3) years) designated by the Plan Administrator and measured from the first day of the
Corporation’s fiscal year immediately following the Performance Period to which that Deferred
Portion relates.



               (iii) The Deferred Portion shall vest in full on an accelerated basis upon the Participant’s
continuation in Service through the consummation of a Change in Control or any earlier cessation of
the Participant’s Service by reason of Retirement or Involuntary Termination (other than a
Termination for Cause), provided that in each instance the Participant continues in Service at
least through the end of the Performance Period to which that Deferred Portion relates.



               (iv) During the period the Deferred Portion is credited to the Participant’s Account, that
portion shall earn interest, compounded annually, at the per annum rate determined from time to
time by the Plan Administrator. In the absence of any such determination by the Plan Administrator,
the per annum rate shall be the prime rate in effect from time to time, as such rate is quoted in
The Wall Street Journal.



               (v) As the Deferred Portion vests in one or more installments, each vested installment will be
paid to the Participant (or his or her estate) on the fifteenth (15th) day following such vesting
date or as soon after that scheduled payment date as administratively practicable, but in no event
later than the later of the close of the calendar year in which that schedule payment date occurs
or the fifteenth (15th) day of the third calendar month following such scheduled payment date.



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               (vi) Notwithstanding anything to the contrary in subparagraphs (i) through (v) above, should
the Participant satisfy the age requirement for Retirement prior to the any installment vesting
date in effect for his or her Deferred Portion, then each such post-Retirement age installment
shall be paid on the fifteenth (15th) day following the earlier of (a) the applicable vesting date
for that installment had the Participant not attained Retirement age or (b) the date of his or her
Separation from Service, or as soon after the earlier of those two dates as administratively
practicable, but in no event later than the later of the close of the calendar year in which that
earlier date occurs or the fifteenth (15th) day of the third (3rd) calendar month following that
earlier date.



          6.02 Current Payment. The portion of the Participant’s Long-Term Incentive Bonus
which is not subject to the vesting and deferred payment provisions of Section 6.01 shall be paid
to the Participant in accordance with the following requirements:





          (i) for a full Performance Period coincidental with the Corporation’s fiscal
year, the payment shall be made during the period beginning on the first business
day of the succeeding fiscal year and ending on the fifteenth (15th) day of the
third calendar month in that succeeding fiscal year or such later date as may be
required for administrative purposes, but not later than the last day of that
succeeding fiscal year.




          (ii) for an abbreviated Performance Period under Section 5.04, the payment
shall be made within sixty (60) days after the effective date of the Change in
Control transaction triggering that abbreviated Performance Period.



          6.03 Withholding Taxes. The Corporation shall collect all federal, state and local
income, employment and other payroll taxes (including FICA taxes) required to be withheld from the
Participant’s Long-Term Incentive Bonus, as and when those taxes become due under applicable law.
The Corporation shall collect such taxes through tax withholdings from the Long-Term Incentive
Bonus or other wages and earnings payable to the Participant or by any other means acceptable to
the Corporation.




ARTICLE VII




SPECIAL PROVISIONS




          7.01 Special Provisions for Select Participants. Unless the Plan Administrator
specifically determines otherwise for one or more Long-Term Incentive Bonuses, the terms and
provisions of the Plan, including (without limitation) the eligibility and participation provisions
of Sections 4.01 and 4.02, the pro-ration provisions of Sections 5.02 and 5.05 applicable to
Participants who cease Service prior to the completion of the applicable Performance Period and the
vesting provisions of Section 6.01 shall each be subject to modification and revision to the extent
the Participant is at the time a party to a written employment agreement with the Corporation which
provides more favorable terms and provisions governing his or her bonus entitlement and/or the
vesting of such bonus, and those




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more favorable terms and provisions shall supersede any terms and provisions to the contrary
set forth in the Plan, including (without limitation) the specific sections indicated above.
Appendix I to the Plan sets forth the Participants who are currently parties to written employment
agreements and the provisions of their employment agreements which shall supersede provisions to
the contrary in the Plan.




ARTICLE VIII




MISCELLANEOUS




          8.01 Plan Effective Date. The Plan shall become effective immediately upon approval
by the Compensation Committee of the Board, and the Plan Administrator may, upon such approval,
implement the Plan for the Performance Period coincidental with the Corporation’s 2006 fiscal year.




          8.02 Deferred Commencement Date. Notwithstanding any provision to the
contrary in the Plan, no distribution which becomes due and payable by reason of the Participant’s
Separation from Service status shall be made to a Participant prior to the earlier of (i) the first
day of the seventh (7th) month following the date of such Separation from Service or (ii) the date
of Participant’s death, if Participant is deemed at the time of such Separation from Service to be
a specified employee under Section 1.409A-1(i) of the Treasury Regulations issued under Code
Section 409A, as determined by the Plan Administrator in accordance with consistent and uniform
standards applied to all other Code Section 409A arrangements of the Corporation, and such delayed
commencement is otherwise required in order to avoid a prohibited distribution under Code Section
409A(a)(2). All payments deferred by reason of this Section 8.02 shall be paid in a lump sum on the
first day of the seventh (7th) month following the date of Participant’s Separation from Service
or, if earlier, the first day of the month immediately following the date the Corporation receives
proof of Participant’s death.




          8.03 Benefit Limit. In the event any payment to which Participant becomes entitled
under the Plan would otherwise constitute a parachute payment under Code Section 280G, then that
payment shall, except as otherwise provided in attached Schedule I, be subject to reduction to the
extent necessary to assure that such payment will be limited to the greater of (i) the dollar
amount which can be paid to the Participant without triggering a parachute payment under Code
Section 280G or (ii) the dollar amount of that payment which provides the Participant with the
greatest after-tax amount after taking into account any excise tax the Participant may incur under
Code Section 4999 with respect to such payment and any other benefits or payments to which the
Participant may be entitled in connection with any change in control or ownership of the
Corporation or the subsequent termination of the Participant’s Service.




          8.04 Benefits Not Funded. The obligation to pay each Participant’s Long-Term
Incentive Bonus, including (without limitation) the portion credited to his or her Account
hereunder, shall at all times be an unfunded and unsecured obligation of the Corporation. The




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Corporation shall not have any obligation to establish any trust, escrow arrangement or other
fiduciary relationship for the purpose of segregating funds for the payment of the Long-Term
Incentives Bonuses which become payable under the Plan, nor shall the Corporation be under any
obligation to invest any portion of its general assets in mutual funds, stocks, bonds, securities
or other similar investments in order to accumulate funds for the satisfaction of its respective
obligations under the Plan. The Participant (or his or her beneficiary) shall look solely and
exclusively to the general assets of the Corporation for the payment of his or her Long-Term
Incentive Bonus, including (without limitation) the portion credited to his or her Account
hereunder.




          8.05 No Employment Right. Neither the action of the Corporation in establishing or
maintaining the Plan, nor any action taken under the Plan by the Plan Administrator, nor any
provision of the Plan itself shall be construed so as to grant any person the right to remain in
the Service of the Corporation for any period of specific duration, and the Participant shall at
all times remain an Employee at will and may accordingly be discharged at any time, with or without
cause and with or without advance notice of such discharge.




          8.06 Amendment/Termination. The Board may at any time amend the provisions of the
Plan to any extent and in any manner the Board shall deem advisable, and such amendment shall
become effective at the time of such Board action, subject to any stockholder approval requirements
under Code Section 162(m), to the extent the Plan is intended to comply with such Code section, or
any other applicable law or regulation or the listing regulations of any securities exchange on
which the Corporation’s common stock is at the time traded. The Board may also at any time
terminate the Plan in whole or in part. However, no such plan amendment or plan termination
authorized by the Board shall adversely affect the benefits of Participants accrued to date under
the Plan or otherwise reduce the then outstanding balances credited to their Accounts or otherwise
adversely affect the vesting provisions in effect for those Accounts or modify the distribution
provisions in effect for those Accounts in contravention of the applicable limitations and
restrictions of Code Section 409A governing the acceleration or subsequent deferral of
distributions and payments hereunder.




          8.07 .Applicable Law. The provisions of the Plan shall also be construed,
administered and governed by the laws of the State of California without resort to its
conflict-of-laws provisions. If any provision of this Plan shall be held by a court of competent
jurisdiction to be invalid or unenforceable, the remaining provisions of the Plan shall continue in
full force and effect.




          8.08 Satisfaction of Claims. Any payment made to a Participant or his or her legal
representative, beneficiary or estate in accordance with the terms of this Plan shall to the
extent thereof be in full satisfaction of all claims with respect to that payment which such person
may have against the Plan, the Plan Administrator (or its designate) or the Corporation (or any
Parent or Subsidiary), any of whom may require the Participant or his or her legal representative,
beneficiary or estate, as a condition precedent to such payment, to execute a receipt and release
in such form as shall be determined by the Plan Administrator.







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          8.09 Alienation of Benefits. No person entitled to benefits under the Plan shall have any
right to transfer, assign, alienate, pledge, hypothecate or otherwise encumber his or her interest
in such benefits prior to actual receipt of those benefits. The benefits payable under the Plan
shall not, prior to actual payment, be subject to seizure or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant or any other person and
shall not, to the maximum extent permitted by law, be transferable by operation of law in the event
of the bankruptcy or insolvency of the Participant or any other person.




          8.10 Successors and Assigns. The obligation of the Corporation to make the payments
required hereunder shall be binding upon the successors and assigns of the Corporation, whether by
merger, consolidation, acquisition or other reorganization.




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APPENDIX I




AS REVISED EFFECTIVE JANUARY 28, 2008




PARTICIPANTS COVERED BY SECTION 7.01




     The following participants have current employment agreements with the Corporation which
provide more favorable bonus entitlement and vesting provisions than those set forth in the Plan:



          Art Zafiropoulo — Employment Agreement dated November 24, 2003




          Bruce Wright — Employment Agreement dated November 24, 2003




     Accordingly, the provisions governing the Long-Term Incentive Bonus for each of those
individuals are hereby modified in the following respects:



     1. The definition of Disability or Disabled in Section 3.06 of the Plan is hereby replaced
with the definition of Disability or Disabled in Section 5.1 of the applicable Employment
Agreement.



     2. The definition of Involuntary Termination in Section 3.09 of the Plan is hereby modified by
the addition of new subparagraph (ii) to read as follows:



          (iii) the Employee’s termination of Employee status for Good Reason, as that term is defined
in Section 7.2.1 of the applicable Employment Agreement.




     3. Accordingly, by reason of the foregoing modification to the definition of Involuntary
Termination, the following additional provisions relating to a Good Reason termination shall be in
effect for determining the Long-Term Incentive Bonuses to which the foregoing participants may
become entitled under the Plan:



               - Should any such participant terminate Employee status during the Performance Period for Good
Reason (as defined above) prior to attainment of age sixty-five (65), then that participant shall
be entitled to receive an amount determined by multiplying (i) the non-Deferred Portion of the
Long-Term Incentive Bonus to which he would have become entitled had he continued in Employee
status until the end of that Performance Period, with the actual amount of that non-deferred
portion to be determined on the basis of the Corporation’s attainment of the applicable Performance
Milestones for that Performance Period, by (ii) a fraction the numerator of which is the number of
days such participant remained in Service during the Performance Period and the denominator of
which is the total number of days in that Performance Period. The payment date for such pro-rated
amount shall be determined in accordance with Section 6.02.



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               - Should any such participant terminate Employee status during the Performance Period for Good
Reason (as defined above) at or after attainment of age sixty-five (65), then that participant
shall be entitled to receive the non-Deferred Portion of the Long-Term Incentive Bonus to which he
would have become entitled had he continued in Employee status until the end of that Performance
Period, with the actual amount of that non-deferred portion to be determined on the basis of the
Corporation’s attainment of the applicable Performance Milestones for that Performance Period. The
payment date for such amount shall be determined in accordance with Section 6.02



               - Should any such participant terminate Employee status for Good Reason (as defined above)
after the completion of the Performance Period for a particular Long-Term Incentive Bonus but
before completion of the Service vesting requirement in effect for the Deferred Portion of that
bonus, then he shall immediately vest in that entire Deferred Portion. The payment date for each
installment of that Deferred Portion (whether before or after such termination of Employee status)
shall be the fifteenth (15th) day following the earlier of (a) the normal vesting date for that
installment had there not been a Good Reason trigger applicable to that installment or (b) the date
of his Separation from Service, or as soon after the earlier of those two dates as administratively
practicable, but in no event later than the later of the close of the calendar year in which that
earlier date occurs or the fifteenth (15th) day of the third (3rd) calendar month following that
earlier date. However, if the payment is triggered by the Participant’s Separation from Service,
then the deferred payment provisions of Section 8.02 shall be applicable.



     4. The definition of Termination for Cause in Section 3.16 of the Plan is hereby replaced with
the definition of Termination for Cause in Section 6.1.1 of the applicable Employment Agreement.



     5. The benefit limitation of Section 8.03 of the Plan shall not be in effect for Mr.
Zafiropoulo with respect to any payments which are made to him under the Plan while his Employment
Agreement remains in force, and he will accordingly be entitled to the tax gross-up payment
provided under Section 8.3 of his Employment Agreement to the extent any payment made to him under
the Plan while his Employment Agreement remains in force is deemed to constitute a parachute
payment under Code Section 280G.




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