**1.3** ***No Breach of Contract*.**The Executive hereby represents to the Company that theexecution and delivery of this Restated Agreement by the Executive and the performance bythe Executive of the Executive’s duties hereunder shall not constitute a breach of, orotherwise contravene, the terms of any employment or other agreement or policy to which theExecutive is a party or otherwise bound. The Company hereby represents to the Executivethat it is authorized to enter into this Restated Agreement and that the execution anddelivery of this Agreement to the Executive and the employment of the Executive hereundershall not constitute a breach of, or otherwise contravene, the terms of any law, agreementor policy by which it is bound. **2.** **At-Will Employment.**   The Executive and the Company agree that Executive’s employment with the Company is, andshall at all times during the Executive’s employment hereunder be, “at-will” employment.The Company may terminate the Executive’s employment at any time for any reason, with orwithout Cause, by providing thirty (30) days’ prior written notice to the Executive. TheExecutive may terminate his employment with the Company by providing thirty (30) days’prior written notice to the Company. Notwithstanding the foregoing, the Company may relievethe Executive of his duties immediately upon, or at any time during the thirty (30)-dayperiod following, the delivery or receipt of the written termination notice provided by theCompany or the Executive hereunder. No provision of this Restated Agreement shall beconstrued as conferring upon the Executive a right to continue as an employee of theCompany, and the “at-will” relationship between the Executive and the Company may not bealtered except as agreed by the Executive and the Company in writing. **3.** **Compensation.** **3.1** ***Base Salary*.** The Executive’s Base Salary for the 2008 fiscal year shall be at a rate of$550,000 per year, paid in accordance with the Company’s regular payroll practices ineffect from time to time, but not less frequently than monthly. The Executive’s BaseSalary shall be reviewed annually and may be adjusted by the Board. As used in thisRestated Agreement, **“Base Salary”**shall mean the Executive’s annual rate of BaseSalary as adjusted from time to time. **3.2** ***Annual Bonus*.** **3.2.1** While employed hereunder, the Executive shall be eligible for an annualincentive bonus **(“Annual Bonus”)**of up to 90% of his Base Salary, based upon theachievement of performance objectives established by the CompensationCommittee of the Board (the **“Compensation Committee”)**for an annualperformance period coterminous with the Company’s fiscal year.  **3.2.2** At the time the Compensation Committee establishes the Annual Bonus potentialfor the performance period, the Compensation Committee may determine that upto 50% of the Annual Bonus earned by the Executive for that performance period
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   shall be deferred and shall vest and be paid out in successive equal annualinstallments upon the Executive’s completion of each year of continued employmentwith the Company over a period of years (not to exceed three years) measured from thelast day of the performance period to which that Annual Bonus relates (the **“DeferralPeriod”)**. The deferred portion of each Annual Bonus shall accrue interest at prime,as such rate is set forth in The Wall Street Journal from time to time,during the Deferral Period, and the unpaid deferred portion of each Annual Bonus,together with such accrued interest, shall immediately vest in the event (i) theExecutive terminates employment with Good Reason (as defined in Section 7.2.1) or(ii) the Executive is terminated by the Company other than for Cause (as defined inSection 6.1.1) or (iii) the Executive’s employment terminates by reason of death orDisability (as defined in Section 5.1) or (iv) the Executive’s employment terminatesfor any reason following a Change in Control or Corporate Transaction. The deferredportion of each Annual Bonus shall be forfeited to the extent the Executive’semployment terminates for any other reason (or under any other circumstances) priorto vesting in that portion. The deferred portion of each Annual Bonus which vests onan accelerated basis shall be paid to the Executive following his Separation fromService, in accordance with the payment provisions of this Restated Agreementgoverning the particular circumstances under which Executive incurs such Separationfrom Service; ***provided, however,***that any such accelerated vesting and payment of thedeferred portion of each Annual Bonus shall be subject to the Executive’s executionand delivery of an effective release and non-disparagement agreement as requiredunder the terms of this Restated Agreement.  **3.2.3** The Compensation Committee may establish different performance objectives ordifferent target levels for each Annual Bonus opportunity provided the Executivehereunder. In addition, the maximum level of such Annual Bonus as a percentageof Base Salary shall be reviewed annually by the Compensation Committee andmay be adjusted by the Compensation Committee, including (without limitation)an adjustment to increase the maximum level of Annual Bonus as a percentage ofBase Salary.  **3.2.4** The portion of any bonus earned by the Executive for a particular fiscal yearperformance period and not deferred pursuant to Section 3.2.2 shall be paid by the15th day of the third calendar month following the close of that fiscal year or assoon thereafter as administratively practicable, but in no event shall such paymentbe made prior to the first day of the fiscal year next succeeding the fiscal yearforwhich that bonus is earned or later than the last day of that succeeding fiscalyear.**3.3** ***Equity Compensation*.** **3.3.1** ***Future Grants.***In addition to the stock options previously granted to theExecutive, the Executive shall be eligible for periodic grants of stock options orother equity awards under the Company’s equity award program, subject to theExecutive’s continued employment hereunder. The term, exercise price (if
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   applicable), vesting period, any post-employment provisions (includingpost-employment exercise periods) and the remaining provisions of each stock optionor other equity award granted pursuant to this Section 3.3 shall, subject to theexpress provisions of this Restated Agreement, be determined by the CompensationCommittee at the time of grant.  **3.3.2** ***Acceleration and Extension*.** Notwithstanding Section 3.3.1, if the Executive’semployment is terminated (i) by the Company for any reason other than for Cause (asdefined in Section 6.1.1) or (ii) by the Executive with Good Reason (as defined inSection 7.2.1) or (iii) on account of death or Disability, then each stock option andother equity award granted on or after July 21, 2003 shall thereupon vest as to anadditional 25% of the shares of stock subject thereto (or such lesser percentage as tomake the award 100% vested). Further, in the event of a Change of Control (as definedin Section 8.1.1) or a Corporate Transaction (as defined in Section 8.1.2), all of theoptions or other equity awards described in the preceding sentence shall immediatelyvest in full. To the extent that the equity awards described in this Section 3.3.2 arestock options that have vested in accordance with their normal vesting terms or thatotherwise vest on an accelerated basis in accordance with this Section 3.3.2, theperiod for which such stock options shall remain exercisable for the vested optionshares shall be extended until a date at least one year and ninety (90) days after thetermination of the Executive’s employment under the circumstance described in clauses(i), (ii) or (iii) of this Section 3.3.2 or the termination of the Executive’semployment under any circumstances following a Change of Control or a CorporateTransaction (or until such later date as may be specified in the award agreement), butin no event will such options be exercisable after the expiration of their originalten-year (or shorter) maximum terms. Each of the Executive’s stock options grantedprior to July 21, 2003 shall be amended to add the foregoing extended exerciseprovisions at such time, if any, that the Compensation Committee determines, in itssole discretion, that such amendment and the related accounting charges would not inany way adversely affect, when relevant, the Company’s condition (financial orotherwise), financial statements, earnings, earnings per share or other relevantCompany information.**4.** **Benefits.** **4.1** ***Pension and Welfare Plans.***While the Executive is employed hereunder, he shall beentitled to participate in all employee pension and welfare benefit plans and programsmade available to the Company’s senior level executives or to its employees generally, assuch plans or programs may be in effect from time to time. **4.2** ***Reimbursement of Business and Other Expenses; Perquisites.*** **4.2.1** ***Expense Reimbursement.***The Executive is authorized to incur reasonableexpenses in carrying out his duties and responsibilities under this RestatedAgreement, and the Company shall reimburse him for all business expenses incurred inconnection with carrying out the business of the Company. Such
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   reimbursements shall be subject to the Company’s then-existing policies andprocedures for reimbursement of business expenses, including submission of writtenrequests for reimbursement, accompanied by supporting documentation and receipts.The Executive must submit proper documentation for each such expense within sixty(60) days after the later of (i) the Executive’s incurrence of such expense or (ii)the Executive’s receipt of the invoice for such expense. If such expense qualifieshereunder for reimbursement, then the Company will reimburse the Executive for thatexpense within fifteen (15) business days thereafter.  **4.2.2** ***Perquisites.***During the Executive’s employment hereunder, the Executiveshall be entitled to participate in any of the Company’s executive fringe benefitarrangements provided to its senior level executives generally. In addition, theExecutive shall be entitled to the use of a Company car, which shall be aMercedes Benz SL600 or equivalent and which shall be replaced with a newMercedes Benz SL600 or equivalent no less frequently than once every threeyears.  **4.2.3** ***Legal Expenses.***The Company shall promptly reimburse the Executive for hislegal expenses, up to a maximum of $3,000, incurred in obtaining advice withrespect to the changes effected by this Restated Agreement. Executive mustsubmit proper documentation for such legal expenses within sixty (60) days afterthe Executive’s receipt of the invoice for such expenses, and the Company willreimburse the Executive for those expenses within fifteen (15) business daysthereafter.  **4.2.4** ***Conditions to Reimbursement.***The following conditions shall be applicable toeach expense reimbursable pursuant to the provisions of this Restated Agreement:(i) no such expense shall be reimbursed later than the close of the calendar yearfollowing the calendar year in which that expense is incurred, (ii) the amountseligible for reimbursement in any one calendar year shall not affect the amountsreimbursable in any other calendar year and (iii) the right to such reimbursementmay not be liquidated or exchanged for any other benefit.**4.3** ***Vacation.***During the Executive’s employment hereunder, the Executive shall be entitledto vacation in accordance with the Company’s vacation policy for its executive officers. **4.4** ***Retiree Health Coverage.*** **4.4.1** Notwithstanding anything contained herein to the contrary, the Executive andhis spouse on the date of his termination of employment (his **“Spouse”)**shall each beentitled to the retiree health care coverage described herein for the remainder of hisor her life following the termination of the Executive’s employment for any reason.The retiree health care coverage to be provided by the Company to the Executive andhis Spouse until they become entitled to Medicare coverage shall be comparable to thehealth care coverage provided by the Company to the
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   Executive and his Spouse immediately prior to the termination of the Executive’semployment. Once the Executive or his Spouse becomes covered by Medicare, the Companyshall provide retiree health care coverage that, together with such Medicare coverage, iscomparable to the coverage that the Company provided to him or her immediately prior tothe Executive’s termination of employment.  **4.4.2** The Executive and his Spouse shall, following his termination of employment with theCompany, elect to continue health care coverage in accordance with the provisions of Section4980B of the Code and Section 10116.5 of the CaliforniaInsurance Code **(“COBRA”)**. For theperiod of such COBRA coverage, the retiree health care coverage for the Executive and hisSpouse shall be provided under the Company’s group health plan. Following the expiration ofthe applicable period of COBRA coverage, such retiree health care coverage shall continue tobe provided under one or more of the Company’s group health care plans; ***provided, however,***that to the extent such group health care coverage is not available, the retiree healthcoverage for the Executive and his Spouse shall be provided through health insurance policy orpolicies acquired by the Executive and/or his Spouse that provides the required level ofhealth care coverage hereunder, until each of them attains age sixty-five (65) and thereafterthrough insurance policy or policies providing Medicare supplemental coverage. The Companyshall reimburse the Executive for the cost of such retiree health care coverage for theExecutive and his Spouse during each applicable period of coverage hereunder as follows:     (i) For each period the Executive and/or his Spouse are provided post-retirementhealth care coverage under the Company’s group health care plan, the Company shallreimburse the Executive for the monthly cost he incurs to obtain such continued coveragefor himself and his Spouse (the **“Coverage Costs**”). In order to obtain reimbursement forhis Coverage Costs, the Executive must submit appropriate evidence to the Company of eachperiodic payment within sixty (60) days after the payment date, and the Company shallwithin thirty (30) days after such submission reimburse the Executive for that payment.     (ii) To the extent such post retirement health care coverage is provided throughhealth insurance policies acquired by the Executive and/or his Spouse, the Company shallreimburse the Executive and/or his Spouse for each premium paid by them for suchcoverage. The applicable insurance premiums shall be paid by the Executive and/or theSpouse on or before each due date, and supporting documentation evidencing such paymentshall be provided to the Company within sixty (60) days following such payment. TheCompany shall reimburse the Executive and/or his Spouse for each such insurance premiumpayment within thirty (30) business days following receipt of the supportingdocumentation for such payment.
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 **4.4.3** During the period such health care coverage remains in effect hereunder, thefollowing provisions shall govern the arrangement: (a) the amount of health careCoverage Costs and premium payments eligible for reimbursement in any onecalendar year of such coverage shall not affect the amount of Coverage Costs andpremium payments eligible for reimbursement in any other calendar year forwhich health care coverage is to be provided hereunder (ii) no health careCoverage Costs or premium payments shall be reimbursed after the close of thecalendar year following the calendar year in which those Coverage Costs orpremium payments were incurred; and (iii) the right to reimbursement of suchcontinued health care Coverage Costs and premium payments cannot beliquidated or exchanged for any other benefit.  **4.4.4** If, for any reason, the retiree health coverage provided to the Executive orhis Spouse for any taxable year shall constitute taxable income to the Executiveand/or his Spouse, the Company shall report the reimbursed Coverage Costs orpremium payments as taxable W-2 wages and collect the applicable withholdingtaxes. However, the Company shall also pay to the Executive and/or his Spousean amount (a **“Gross-Up Amount”)**that is, after payment of all applicable taxeson the Gross-Up Amount, equal to the tax liability attributable to such retireehealth coverage. Any such tax gross up payment shall be calculated within fifteen(15) business days following the close of the taxable year to which it relates.Subject to the holdback provisions of Section 10.1, the tax gross up payment socalculated shall be made to or on behalf of the Executive within thirty (30) daysfollowing the completion of such calculation or (if later) at the time the incometaxes to which the tax gross up payment relates are remitted to the appropriate taxauthorities. In no event shall any such tax gross up payment be made later thanthe end of the calendar year immediately following the calendar year in which therelated taxes are remitted to the appropriate tax authorities or such otherspecifiedtime or schedule that may be required under Section 409A of the Code.**5.** **Death or Disability.** **5.1** ***Definition of Disabled and Disability.***For purposes of this Restated Agreement, theterms **“Disabled”**and **“Disability”**shall mean the Executive’s inability, because ofphysical or mental illness or injury, to perform his customary duties pursuant to thisRestated Agreement, with or without reasonable accommodation, and the continuation ofsuch disabled condition for a period of one hundred eighty (180) continuous days asdetermined by an approved medical doctor. For purposes hereof, an approved medicaldoctor shall mean a doctor selected by the Company and the Executive. If the Companyand the Executive cannot agree on a medical doctor, each shall select a medical doctor,and the two doctors shall select a third who shall be the approved medical doctor for thispurpose. **5.2** ***Termination Due to Death or Disability.***If the Executive dies or becomes Disabledwhile employed hereunder and prior to a Change of Control (as defined in Section 8.1.1)or a Corporate Transaction (as defined in Section 8.1.2), this Restated Agreement and the
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  Executive’s employment shall automatically cease and terminate as of the date of theExecutive’s death or the date of Disability (which date shall be determined in accordancewith Section 5.1 and referred to as the **“Disability Date”),**as the case may be. In theevent of the termination of the Executive’s employment due to his death or Disability, theExecutive (or, in the event of his death, his estate) shall be entitled to receive: (i) a lump sum cash payment, payable on the Disability Date or within ten (10)business days after the date of the Executive’s death, equal to the sum of (A) anycurrently earned but unpaid Base Salary as of the date of death or the DisabilityDate, (B) any accrued but unpaid vacation pay and (C) any unreimbursed businessexpenses due under Section 4.2.1 of this Restated Agreement;  (ii) a lump sum payment, to be made within ten (10) business days after the date ofthe Executive’s Separation from Service due to his death or Disability, equal to thedeferred portion of any Annual Bonuses for fiscal years completed prior to the date ofthe Executive’s death or the Disability Date which vest on an accelerated basis (inaccordance with Section 3.2.2) by reason of his death or Disability;  (iii) a series of twelve (12) successive monthly payments, each equal to one-twelfth(1/12th) of the Executive’s annual Base Salary in effect immediately prior to his deathor Disability Date, with the first such payment to be made on the first day of themonth immediately following the month in which the Executive’s Separation from Serviceoccurs as a result of the Executive’s death or Disability;  (iv) accelerated vesting of a portion of the Executive’s stock options and otherequity awards, and extension of time to exercise each vested stock option, to theextent provided in Section 3.3.2;  (v) any vested and accrued employee benefits described in Section 4.1 that are bytheir terms payable to the Executive or his estate on or after his termination ofemployment, with each such benefit to be paid in accordance with the applicable termsin effect for such payment at the time of the Executive’s death or Disability;  (vi) the retiree health coverage described in Section 4.4; and  (vii) in the case of Disability, continued use of a Company car as provided inSection 4.2.2 for a period of twelve (12) months following the date of the Executive’sSeparation from Service due to Disability.     Any other vested compensation deferred on behalf of the Executive at the time of his death orDisability under any deferred compensation plan shall be paid at the time or times specified forpayment pursuant to the provisions of such plan.     Any pro-rated Annual Bonus to which the Executive may, in accordance with the provisionsgoverning that Annual Bonus, become entitled for the fiscal year performance period in which hisdeath or Disability Date occurs shall be paid to the Executive by the fifteenth (15th)
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day of the third calendar month following the close of that fiscal year or as soon thereafter asadministratively practicable, but in no event shall such payment be made prior to the first day ofthe fiscal year next succeeding the fiscal year for which that bonus is earned or later than thelast day of that succeeding fiscal year.**6.** **Termination by the Company.** **6.1** ***Termination For Cause.*** **6.1.1** ***Definition of Termination with Cause*.** A termination of the Executive’semployment by the Company for cause (“**Cause**”) shall mean the termination ofthe Executive’s employment by the Board for any of the reasons listed below,except that in the case of the reasons set forth in (i) and (vi) below, only afterwritten notice by the Board stating the reason for the proposed termination forCause and the Executive’s failure to cure the stated reason within ninety (90) daysafter receipt of such notice: (i) the Executive’s repeated failure to perform any essential dutyof his position other than due to Disability or such illness or injury asdescribed in and determined under Section 5.1 that would result in Disabilityif it continued for the period of time prescribed in Section 5.1;  (ii) the Executive’s commitment of an act that constitutes grossmisconduct and is injurious to the Company, any subsidiary of the Company orany successor to the Company;  (iii) the Executive’s conviction of or pleading guilty or *nolocontendere*to any felony involving theft, embezzlement, dishonesty or moralturpitude;  (iv) the Executive’s commission of an act of fraud against, or themisappropriation of property belonging to, the Company, any subsidiary of theCompany or any successor to the Company;  (v) the Executive’s commitment of an act of dishonesty inconnection with his responsibilities as an employee that is intended to resultin his personal enrichment or the personal enrichment of his family or others;or  (vi) the Executive’s material breach of this Restated Agreement orother agreement between the Executive and the Company or any subsidiary of theCompany or successor to the Company. **6.1.2** ***Entitlements Upon a Termination for Cause.***If the Executive’s employment isterminated for Cause, the termination shall be effective on the date the Companygives the Executive written notice of termination, except that in the case of atermination for a reason stated in Section 6.1.1 (i) or Section 6.1.1(vi), thetermination shall be effective on the last day of the ninety (90)-day cure period
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   should Executive fail to cure the stated reason within such cure period. In theevent of the termination of the Executive’s employment hereunder due to atermination by the Company for Cause prior to a Change of Control (as defined inSection 8.1.1) or a Corporate Transaction (as defined in Section 8.1.2), then theExecutive shall be entitled to receive: (i) a lump sum cash payment, payable on the date of suchtermination, equal to the sum of (A) any currently earned but unpaid BaseSalary as of the date of such termination of employment, (B) any accrued butunpaid vacation pay and (C) any unreimbursed business expenses due underSection 4.2.1 of this Restated Agreement;  (ii) any vested and accrued employee benefits described in Section4.1 that are by their terms payable to the Executive on or after histermination of employment, with each such benefit to be paid in accordance withthe applicable terms in effect for such payment at the time of the Executive’stermination; and  (iii) the retiree health coverage described in Section 4.4.     Any other vested compensation deferred on behalf of the Executive at the time of histermination by the Company for Cause under any deferred compensation plan shall be paid at thetime or times specified for payment pursuant to the provisions of such plan.**6.2** ***Termination Without Cause.*** **6.2.1** ***Basic Benefits.***If the Executive’s employment is terminated by the Companywithout Cause, the termination shall be effective on the thirtieth (30th)day following written notice of such termination to the Executive. In the event ofsuch termination without Cause prior to a Change of Control (as defined in Section8.1.1) or a Corporate Transaction (as defined in Section 8.1.2), Executive shall beentitled to receive:(i) a lump sum cash payment, payable on the date of such termination of employment,equal to the sum of (A) any currently earned but unpaid Base Salary as of the dateof such termination of employment, (B) any accrued but unpaid vacation pay and (C)any unreimbursed business expenses due under Section 4.2.1 of this RestatedAgreement;(ii) any vested and accrued employee benefits described in Section 4.1 that are bytheir terms payable to the Executive on or after such termination of employment,with each such benefit to be paid in accordance with the applicable terms governingsuch payment at the time of such termination; and(iii) the retiree health coverage described in Section 4.4.
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 **6.2.2** ***Additional Benefits.***In addition to the benefits to which the Executive may beentitled pursuant to Section 6..2.1, the Executive shall, subject to (A) hisexecution of a release and non-disparagement agreement in a form acceptable tothe Company (the **“Release”)**within twenty-one (21) days (or within forty-five(45) days if such longer period is required under applicable law) following suchtermination of employment, (B) the Release becoming effective in accordancewith applicable law following the expiration of any applicable revocation periodand (C) his continued compliance with the non-competition covenants set forth inSection 11, be entitled to receive the following benefits:(i) a lump sum, payable on the third business day, within the sixty (60)-day periodmeasured from the date of the Executive’s Separation from Service due to such terminationof employment by the Company without Cause, following the date on which the Release firstbecomes effective following the expiration of any applicable revocation period, equal tothe deferred portion of any Annual Bonuses for fiscal years completed prior to the date ofsuch termination of employment which vest on an accelerated basis (in accordance withSection 3.2.2) by reason of such termination of employment; provided, however, that suchpayment shall in no event be made later than the last day of such sixty (60)-day period onwhich the Release is so effective, unless a further deferral is required pursuant toSection 10 of this Agreement;(ii) a series of twelve (12) successive monthly payments, each in an amount equal toone-twelfth (1/12th) of the Executive’s annual Base Salary in effect immediately prior tosuch termination of employment, with the first such monthly payment to be made on thethird business day, within the sixty (60)-day period measured from the date of Executive’sSeparation from Service due to such termination, following the date on which the requisiteRelease first becomes effective following the expiration of any applicable revocationperiod; provided, however, that the first such payment shall in no event be made laterthan the last day of such sixty (60)-day period on which the Release is so effective,unless a further deferral is required pursuant to Section 10 of this Agreement;(iii) accelerated vesting of a portion of the Executive’s stock options and other equityawards, and extension of time to exercise each vested stock option, to the extent providedin Section 3.3.2; and(iv) continued use of a Company car as provided in Section 4.2.2 for a period of twelve(12) months following the date of the Executive’s Separation from Service due to suchtermination of employment. **6.2.3** ***Deferred and Vested Benefits.***Any other vested compensation deferred onbehalf of the Executive at the time of his termination by the Company withoutCause under any deferred compensation plan shall be paid at the time or timesspecified for payment pursuant to the provisions of such plan, subject to anyrequired deferral pursuant to Section 10. Any pro-rated Annual Bonus to whichthe Executive may, in accordance with the provisions governing that Annual
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   Bonus, become entitled for the fiscal year performance period in which histermination by the Company without Cause occurs shall be paid to the Executive bythe fifteenth (15th) day of the third calendar month following the close of thatfiscal year or as soon thereafter as administratively practicable, but in no eventshall such payment be made prior to the first day of the fiscal year nextsucceeding the fiscal year for which that bonus is earned or later than the lastday of that succeeding fiscal year.**7.** **Termination by the Executive.** **7.1** ***Termination Without Good Reason.***If the Executive voluntarily terminates hisemployment with the Company without Good Reason, the termination shall be effectiveat the end of the thirty (30)-day notice period. Upon such termination of employmentwithout Good Reason prior to a Change of Control (as defined in Section 8.1.1) or aCorporate Transaction (as defined in Section 8.1.2), the Executive shall have the sameentitlements as provided in Section 6.1.2 in the case of a termination by the Company forCause. **7.2** ***Termination With Good Reason.*** **7.2.1** ***Definition of Good Reason.***For purposes of this Restated Agreement, **“GoodReason”**shall mean the occurrence of any of the following events without theExecutive’s written consent: (i) a reduction in the level of the Executive’s Base Salary, otherthan a reduction that is part of a program to reduce expenses applicable to allof the Company’s officers;  (ii) a material breach by the Company or any subsidiary of theCompany or successor to the Company of the terms of this Restated Agreement orany other material agreement between the Executive and the Company or anysubsidiary of the Company or successor to the Company;  (iii) any material reduction in the nature or scope of theExecutive’s duties, title, function, authority, responsibilities or reporting(including, for example, the Executive directly reporting to anyone other thanthe Company’s or its successor entity’s Board of Directors or, in the event ofa Change of Control (as defined in Section 8.1.1) or a Corporate Transaction(as defined in Section 8.1.2), the Executive not being offered a position asthe highest executive officer of the successor entity); or  (iv) a material relocation of Executive’s principal office, with arelocation that is more than sixty (60) miles from the location of hisprincipal office on January 1, 2009 to be deemed material for such purpose;
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 *** ****** ******provided, however,***that none of the events specified above shall constitute GoodReason unless the Executive shall have notified the Company in writing describingthe events which constitute Good Reason within thirty (30) days following theoccurrence of such event and the Company shall have failed to cure such eventwithin thirty (30) days after the Company’s receipt of such written notice.  **7.2.2** ***Entitlements Upon a Termination with Good Reason.***If the Executive terminateshis employment, as a result of the event identified in hisSection 7.2.1 notice asgrounds for a Good Reason termination, within thirty (30) days following the Company’sfailure to cure that event prior within the applicable cure period, then suchtermination shall constitute a termination for Good Reason. Upon such termination ofemployment for Good Reason prior to a Change of Control (as defined in Section 8.1) ora Corporate Transaction (as defined in Section 8.1.2), the Executive’s entitlement totermination payments and severance benefits shall be governed by the same provisionsset forth in Section 6.2 for a termination by the Company without Cause, including thenecessity of an effective Release and continued compliance with the non-competitioncovenants set forth in Section 11 as express conditions for the additional severancebenefits specified in Section 6.2.2.**8.** **Change of Control Provisions.** **8.1** ***Definitions.*** **8.1.1** ***Definition of Change of Control.***For purposes of this RestatedAgreement, “Change of Control” shall mean either of the following events: (i) any person or related group of persons (other than the Companyor a person that directly or indirectly controls, is controlled by, or isunder common control with, the Company) directly or indirectly acquiresbeneficial ownership (within the meaning of Rule 13d-3 of the SecuritiesExchange Act of 1934, as amended) of securities possessing more than fiftypercent (50%) of the total combined voting power of the Company’s outstandingsecurities pursuant to a tender or exchange offer made directly to theCompany’s stockholders; or  (ii) there is a change in the composition of the Board over aperiod of thirty-six (36) consecutive months or less such that a majority ofthe Board members cease, by reason of one or more proxy contests for theelection of Board members to be comprised of individuals who either (A) havebeen Board members continuously since the beginning of such period or (B) havebeen elected or nominated for election as Board members during such period byat least a majority of the Board members described in clause (A) who werestill in office at the time such election or nomination was approved by theBoard.
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 **8.1.2** ***Definition of Corporate Transaction.***For purposes of this Restated Agreement,“Corporate Transaction” shall mean any of the following stockholder-approvedtransactions to which the Company is a party: (i) a merger or consolidation in which the Company is not thesurviving entity, except for a transaction the principal purpose of which isto change the state in which the Company is incorporated,  (ii) the sale, transfer or other disposition of all orsubstantially all of the assets of the Company in complete liquidation ordissolution of the Company, or  (iii) any reverse merger in which the Company is the survivingentity but in which securities possessing more than fifty percent (50%) of thetotal combined voting power of the Company’s outstanding securities aretransferred to person or persons different from the persons holding thosesecurities immediately prior to such merger.**8.2** ***Effect of Change of Control or Corporate Transaction.***In the event of a Change of Control ora Corporate Transaction, the Executive’s stock options and other equity awards shallautomatically vest in full, and the time to exercise his vested stock options shall beextended, to the extent provided in Section 3.3.2. Upon the Executive’s termination ofemployment for any reason following a Change of Control or Corporate Transaction, Executiveshall be entitled to receive: (i) a lump sum cash payment, payable on the date of such termination of employment,equal to the sum of (A) any currently earned but unpaid Base Salary as of the date ofsuch termination of employment, (B) any accrued but unpaid vacation pay and (C) anyunreimbursed business expenses due under Section 4.2.1 of this Restated Agreement;  (ii) any vested and accrued employee benefits described in Section 4.1 that are bytheir terms payable to the Executive on or after such termination of employment, witheach such benefit to be paid in accordance with the applicable terms governing suchpayment at the time of such termination; and  (iii) the retiree health coverage described in Section 4.4.  In addition, subject to (A) the Executive’s execution of the requisite Release withintwenty-one (21) days (or within forty-five (45) days if such longer period is requiredunder applicable law) following such termination of employment, (B) the Release becomingeffective in accordance with applicable law following the expiration of any applicablerevocation period and (C) his continued compliance with the non-competition covenants setforth in Section 11, the Executive shall also be entitled to receive: (iv) a lump sum, payable on the third business day, within the sixty (60)-dayperiod measured from the date of the Executive’s Separation from Service due to suchtermination of employment, following the date on which the Release first becomeseffective following the expiration of any applicable revocation period,
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   equal to the deferred portion of any Annual Bonuses for fiscal years completedprior to the date of such termination of employment which vest on an acceleratedbasis (in accordance with Section 3.2.2) by reason of such termination ofemployment; provided, however, that such payment shall in no event be made laterthan the last day of such sixty (60)-day period on which the Release is soeffective, unless a further deferral is required pursuant to Section 10 of thisAgreement;  (v) a series of twenty-four (24) successive monthly payments, each in an amountequal to one-twelfth (1/12th) of the Executive’s annual Base Salary in effectimmediately prior to such termination of employment or (if greater) his rate of BaseSalary in effect immediately prior to the Change of Control or Corporate Transaction,,with the first such monthly payment to be made on the third business day, within thesixty (60)-day period measured from the date of Executive’s Separation from Service dueto such termination, following the date on which the requisite Release first becomeseffective following the expiration of any applicable revocation period; provided,however, that the first such payment shall in no event be made later than the last dayof such sixty (60)-day period on which the Release is so effective, unless a furtherdeferral is required pursuant to Section 10 of this Agreement; and  (vi) continued use of a Company car as provided in Section 4.2.2 for a period oftwenty-four (24) months following the date of the Executive’s Separation from Service.          Any other vested compensation deferred on behalf of the Executive at the time of histermination by the Company without Cause under any deferred compensation plan shall be paid at thetime or times specified for payment pursuant to the provisions of such plan, subject to anyrequired deferral pursuant to Section 10.          Any pro-rated Annual Bonus to which the Executive may, in accordance with the provisionsgoverning that Annual Bonus, become entitled for the fiscal year performance period in which hisemployment terminates following the Change in Control or Corporate Transaction shall be paid tothe Executive by the fifteenth (15th) day of the third calendar month following the close of thatfiscal year or as soon thereafter as administratively practicable, but in no event shall suchpayment be made prior to the first day of the fiscal year next succeeding the fiscal year forwhich that bonus is earned or later than the last day of that succeeding fiscal year.**8.3** ***Section 280G Provisions.*** **8.3.1** Notwithstanding anything contained in this Restated Agreement to thecontrary, to the extent that any payment or distribution of any type made to or forthe benefit of the Executive by the Company (or any subsidiary or affiliate of theCompany or any successor to the Company), whether paid or payable or distributed ordistributable pursuant to the terms of this Restated Agreement or otherwise(including, without limitation, any accelerated vesting of stock options, restrictedstock or restricted stock units granted pursuant to this Restated
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   Agreement or otherwise) (collectively, the **“Total Payments”)**is or will be subject to theexcise tax (**“Excise Tax”**) imposed under Section 4999 of the Code (or any successor to suchSection), the Company shall pay to the Executive an additional amount (a **“Gross-UpPayment”)**which is, after the imposition of all income, employment, excise and other taxes,penalties and interest thereon, equal to the sum of (i) the Excise Tax on such TotalPayments plus (ii) any penalty and interest assessments associated with such Excise Tax.The determination of whether any portion of the Total Payments is subject to an Excise Taxand, if so, the amount of any Gross-Up Payment pursuant to this Section 8.3 shall be madeby an independent registered public accounting firm (the **“Auditor”)**jointly selected by theExecutive and the Company, and the fees of such Auditor shall be paid by the Company. Ifthe Executive and the Company cannot agree on the firm to serve as the Auditor, then theyshall each select one registered public accounting firm, and those two firms shall jointlyselect the registered public accounting firm to serve as the Auditor. Unless the Executiveagrees otherwise in writing, the Auditor shall be a nationally recognized United Statesregistered public accounting firm that has not during the two years preceding the date ofits selection, acted in any way on behalf of the Company.  **8.3.2** For any parachute payments occurring at the time of theChange in Control or Corporate Transaction, the relevant calculations shall be completed within ten(10) business days after the effective date of such Change in Control or CorporateTransaction, and for any parachute payments attributable to the Executive’sSeparation from Service, the calculations shall be completed within ten (10)business days after the effective date of such Separation from Service. Suchcalculations shall be conclusive and binding on all interested persons. Theadditional payment resulting from such calculations shall be made to theExecutive within ten (10) business days following the completion of suchcalculations or (if later) at the time the related Excise Tax is remitted to theappropriate tax authorities.  **8.3.3** In the event that the Executive’s actual Excise Taxliability is determined by a Final Determination to be greater than the Excise Tax liability taken into accountfor purposes of calculating the Gross-Up Payment initially made to the Executivepursuant to the preceding provisions of this Section 8.3, then within thirty (30)days following that Final Determination, the Executive shall notify the Companyof such determination, and a new Excise Tax calculation based on that FinalDetermination shall be made by the Auditor within thirty (30) days thereafter.The Company shall pay the Executive the supplemental Gross-Up Paymentresulting from the Final Determination within ten (10) business days followingthe completion of the applicable calculations or (if later) at the time the excesstaxes attributable to the Final Determination are remitted to the appropriate taxauthorities. In the event that the Executive’s actual Excise Tax liability isdetermined by a Final Determination to be less than the Excise Tax liability takeninto account for purposes of any Gross-Up Payment made to him pursuant to thepreceding provisions of this Section 8.3, then the Executive shall refund to theCompany, within ten (10) business days following receipt, any federal or state tax
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   refund attributable to the Excise Tax overpayment. For purposes of this Section8.3.3, a “Final Determination” means an audit adjustment by the Internal RevenueService that is either (i) agreed to by both the Executive and the Company (withsuch agreement by the Company to be not unreasonably withheld) or (ii) sustained bya court of competent jurisdiction in a decision with which the Executive and theCompany concur or with respect to which the period within which an appeal may befiled has lapsed without a notice of appeal being filed.  **8.3.4** Notwithstanding anything to the contrary in the foregoing provisions of thisSection 8.3, any Gross-Up Payment to be made hereunder (whether as the initial orsupplemental payment) shall be subject to the hold-back provisions of Section 10 ofthis Restated Agreement, to the extent those payments relate to any amounts andbenefits provided hereunder that constitute parachute payments attributable to theExecutive’s Separation from Service. In addition, no such Gross-Up Payment shall bemade later than the end of the calendar year that follows the calendar year in whichthe related taxes are remitted to the appropriate tax authorities.**9.** ***Separation from Service.***     For purposes of this Restated Agreement, “Separation from Service” shall mean theExecutive’s cessation of Employee status and shall be deemed to occur at such time as thelevel of the bona fide services the Executive is to perform in Employee status (or as aconsultant or other independent contractor) permanently decreases to a level that is notmore than twenty percent (20%) of the average level of services the Executive rendered inEmployee status during the immediately preceding thirty-six (36) months. Any suchdetermination as to Separation from Service, however, shall be made in accordance with theapplicable standards of the Treasury Regulations issued under Code Section 409A. Forpurposes of determining whether the Executive has incurred a Separation from Service, theExecutive will be deemed to continue in “Employee” status for so long as he remains in theemploy of one or more members of the Employer Group, subject to the control and direction ofthe employer entity as to both the work to be performed and the manner and method ofperformance. “Employer Group” means the Company and any other corporation or businesscontrolled by, controlling or under common control with, the Company as determined inaccordance with Sections 414(b) and (c) of the Code and the Treasury Regulations thereunder,except that in applying Sections 1563(a)(l), (2) and (3) for purposes of determining thecontrolled 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 appears in suchsections, and in applying Section 1.414(c)-2 of the Treasury Regulations for purposes ofdetermining trades or businesses that are under common control for purposes of Section414(c), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” eachplace the latter phrase appears in Section 1.414(c)-2 of the Treasury Regulations. Inaddition to the foregoing, a Separation from Service will not be deemed to have occurredwhile the Executive is on a sick leave or other bona fide leave of absence if the period ofsuch leave does not exceed six (6) months or any longer period for which the Executive isprovided with a right to reemployment with the Corporation by either statute or contract;***provided,***
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***however,***that in the event of a leave of absence due to any medically determinable physicalor mental impairment that can be expected to result in death or to last for a continuousperiod of not less than six (6) months and that causes the Executive to be unable toperform his duties as an Employee, no Separation from Service shall be deemed to occurduring the first twenty-nine (29) months of such leave. If the period of leave exceeds six(6) months (or twenty-nine (29) months in the event of disability as indicated above) andthe Executive is not provided with a right to reemployment by either statute or contract,then the Executive will be deemed to have Separated from Service on the first dayimmediately following the expiration of the applicable six (6)-month or twenty-nine(29)-month period.**10.** ***Delayed Commencement Date for Payments and Benefits.*** **10.1** Notwithstanding any provision to the contrary in this Restated Agreement (other thanSection 10.2 below), no payments, benefits or reimbursements to which the Executivebecomes entitled under Sections 4.4.2, 4.4.4, 5.2, 6.1.2, 6.2, 7.1, 7.2.2, 8.2 or 8.3 ofthis Restated Agreement in connection with his Separation from Service (other than thereimbursement of health care coverage costs and premiums payments during theapplicable period of COBRA coverage) shall be made or paid to the Executive prior tothe *earlier*of (i) the first business day of the seventh month following the date of theExecutive’s Separation from Service with the Company or (ii) the date of the Executive’sdeath (the “Hold-Back Period”), if the Executive is deemed at the time of such Separationfrom Service a “specified employee” within the meaning of that term under Section 409Aof the Code and such delayed commencement is otherwise required in order to avoid aprohibited distribution under Code Section 409A(a)(2). Upon the expiration of theapplicable deferral period, all payments and reimbursements deferred pursuant to thisSection 10.1 shall be paid in a lump sum to the Executive, and any remaining paymentsand reimbursements due under this Restated Agreement shall be paid in accordance withthe normal payment dates specified for them herein. **10.2** The six month holdback set forth in Section 10.1 above shall not be applicable to theExecutive’s continued use of a Company car under Sections 5.2, 6.2, 7.2.2 or 8.2 duringthe Hold-Back Period, to the extent that the aggregate monthly rental value of suchvehicle during that period does not exceed the dollar limit in effect underSection 402(g)(l)(B) of the Code for the year in which the Executive’s Separation fromService occurs. To the extent that the aggregate monthly rental value of such vehicleexceeds that limit during the Hold-Back Period, the Executive shall pay to the Company,on or before the first day of each month during the Hold-Back Period, a dollar amountequal to the amount by which the rental value of such car for that month exceeds one-sixth of the applicable Section 402(g)(l)(B) limit. Upon the expiration of the Hold-BackPeriod, all payments made by the Executive to the Company pursuant to this Section 10.1shall be reimbursed to Executive in a lump sum payment. **10.3** To the extent the payment of any cash amounts, reimbursements or tax gross-ups towhich the Executive becomes entitled under Sections 4.4.2, 4.4.4, 5.2, 6.1.2, 6.2.2, 7.1,7.2.2, 8.2 or 8.3 of this Restated Agreement is deferred pursuant to the provisions ofSection 10.1, then the Executive shall be entitled to interest on those cash amounts
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  reimbursement and tax gross-ups, for the period the payment of such amounts is so deferred,with such interest to accrue at the prime rate in effect from time to time during thatperiod and to be paid in a lump sum upon the expiration of the applicable Hold-Back Period. **10.4** The cash payments and each of the other benefits to which Executive becomes entitled inaccordance with Section 5.2, 6.2.2, 7.2.2, 8.2 or 8.3 of this Restated Agreement shall betreated as a right to a series of separate payments and benefits for purposes of Section 409Aof the Code, **11.** **Non-Competition.**   The Executive acknowledges and recognizes the highly competitive nature of the businesses ofthe Company, the amount of sensitive and confidential information involved in the dischargeof the Executive’s position as Chairman and Chief Executive Officer of the Company, and theharm to the Company that would result if such knowledge or expertise was disclosed or madeavailable to a competitor, and accordingly agrees that during the entire period that he isemployed by the Company, he shall not, directly or indirectly in any manner or capacity(e.g., as an advisor, principal, agent, partner, officer, director, shareholder, employee,member of any association or otherwise) engage in, work for, consult, provide advice orassistance or otherwise participate in any activity that is competitive with the business ofthe Company. The Executive further agrees that during such period he will not assist orencourage any other person in carrying out any activity that would be prohibited by theforegoing provisions of this Section 11 if such activity were carried out by the Executiveand, in particular, the Executive agrees that he will not induce any employee of the Companyto carry out any such activity; ***provided, however,***that the “beneficial ownership” by theExecutive, either individually or as a member of a “group,” as such terms are used in Rule13d of the General Rules and Regulations under the Exchange Act, of not more than onepercent (1%) of the voting stock of any publicly held corporation shall not be a violationof this Restated Agreement. It is further expressly agreed that the Company will or wouldsuffer irreparable injury if the Executive were to compete with the Company or anysubsidiary or affiliate of the Company in violation of this Restated Agreement and that theCompany would by reason of such competition be entitled to injunctive relief in a court ofappropriate jurisdiction, and the Executive further consents and stipulates to the entry ofsuch injunctive relief in such a court prohibiting the Executive from competing with theCompany or any subsidiary or affiliate of the Company in violation of this RestatedAgreement. The Executive further agrees that his continued compliance with the foregoingprovisions of this Section 11 following his termination of employment with the Company shallbe a condition precedent to his entitlement to certain severance benefits to be providedunder this Restated Agreement. Accordingly, in the event that the Executive breaches theprovisions of this Section 11 following his termination of employment with the Company, theExecutive shall no longer have the right to receive any salary continuation payments underSection 6.2.2, 7.2.2 or 8.2, whichever is applicable, in excess of the greater of (i) six(6) months of such salary continuation payments or (ii) the actual salary continuationpayments made to date (with such limited salary continuation payments to serve as theconsideration for his requisite Release), the Executive shall not
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  be entitled to any further Gross-Up Payments under Section 8.3, any stock options or otherequity awards outstanding at the time of such breach shall, to the extent those options orawards vested on an accelerated basis pursuant to Section 3.3.2, immediately terminate andcease to be outstanding or exercisable, and the extension of the post-termination exerciseperiod provided for the Executive’s outstanding stock options pursuant to Section 3.3.2shall be immediately cancelled, whether or not those outstanding options vested on anaccelerated basis. **12.** **Confidentiality and Treatment of Inventions.** **12.1** ***Confidentiality.***The Executive will not at any time (whether during or after hisemployment with the Company), other than in the course of his duties hereunder orunless compelled by lawful process, disclose or use for his own benefit or purposes or thebenefit or purposes of any other person, firm, partnership, joint venture, association,corporation or other business organization, entity or enterprise other than an entity withinthe Company or a subsidiary or affiliate of the Company, any trade secrets, or otherconfidential data or information relating to customers, development programs, costs,marketing, trading, investment, sales activities, promotion, credit and financial data,financing methods, or plans of any entity within the Company or any subsidiary oraffiliate of the Company; provided that the foregoing shall not apply to information thatis generally known to the industry or the public other than as a result of the Executive’sbreach of this covenant. The Executive agrees that upon termination of his, employmentwith the Company for any reason, he will return to the Company immediately allmemoranda, books, papers, software, plans, information, letters and other data, and allcopies thereof or therefrom, in any way relating to the business of any entity within theCompany or any subsidiary or affiliate of the Company, except that he may retainpersonal notes, notebooks and diaries that do not contain confidential information of thetype described in the preceding sentence. The Executive further agrees that he will notretain or use for his account at any time any trade names, trademark or other proprietarybusiness designation used or owned in connection with the business of any entity withinthe Company or any subsidiary or affiliate of the Company. **12.2** ***Treatment of Inventions.*** **12.2.1** ***Prior Inventions.***The Executive understands and acknowledges that he does nothave any right or claim to any invention, idea, process, formula, discovery,technical information, trade secret, design, computer program,proprietaryinformation, copyright, patent or other such item or matter (together, any“Invention”), including without limitation any Invention made prior to hisemployment with the Company. The Executive further understands andacknowledges that he has had the opportunity to disclose any Invention to theCompany, and has voluntarily and knowingly waived and declined suchopportunity because he has no Invention to disclose.  **12.2.2** ***Subsequent Invention Disclosure.***The Executive hereby agrees to disclose to theCompany in a prompt manner any Invention that he develops at any time prior tothe six-month anniversary of his termination of employment with the Company.
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 **12.2.3** ***Assignment of Inventions.***Except as otherwise provided by Section 12.2.4, theExecutive hereby assigns and agrees to assign to the Company or its designee theExecutive’s entire right, title, and interest in and to any Invention that theExecutive, whether solely or jointly, develops prior to the six-month anniversaryof his termination of employment with the Company, with the use of time,material, equipment, supplies, facilities or trade secret information of theCompany or any subsidiary or affiliate of the Company, whether or not duringworking hours. The Executive further agrees to cooperate with the Company andto perform all acts deemed necessary or desirable by the Company to permit andto assist the Company, at the Company’s expense, in obtaining and enforcing thefull benefits, enjoyment, rights and title (whether domestic or foreign) to anyInvention hereby assigned by the Executive to the Company.  **12.2.4** ***Inventions not Assigned.***Section 12.2.3 shall not apply to an Invention that theExecutive developed entirely on his own time without using the Company’s orany of its subsidiaries’ or affiliates’ time, material, equipment, supplies,facilitiesor trade secret information, except for any Invention that either (i) relates at thetime of conception or reduction to practice of the Invention to the Company’s or asubsidiary’s or affiliate’s business, or actual or demonstrably anticipated researchdevelopment of the Company or a subsidiary or affiliate of the Company or(ii) results from the Executive’s work with the Company or a subsidiary oraffiliate of the Company, whether or not during normal working hours.**13.** **Antisolicitation.**   The Executive promises and agrees that, for a period of twelve (12) months following histermination of employment hereunder, he will not influence or attempt to influencesuppliers or customers of the Company, either directly or indirectly, to divert theirbusiness away from the Company to any individual, partnership, firm, corporation or otherentity then in competition with the Company or any subsidiary of successor to the Company. **14.** **Soliciting Employees.**   The Executive promises and agrees that, for a period of twelve (12) months followingtermination of his employment hereunder, he will not directly or indirectly solicit anyperson who is then, or at any time within six months prior thereto was, an employee of theCompany to leave the employ of the Company to work for any business, individual,partnership, firm, corporation, or other entity then in competition with the business of theCompany or any subsidiary of or successor to the Company. **15.** **Cooperation in Litigation.**   The Executive agrees that he will reasonably cooperate with the Company in any litigationthat arises out of events occurring prior to the termination of his employment, includingbut not limited to, serving as a witness or consultant and producing documents
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and information relevant to the case or helpful to the Company. The Company agrees toreimburse the Executive promptly for all reasonable costs and expenses he incurs inconnection with his obligations under this Section 15.**16.** **Indemnification.**Indemnification shall be provided tothe Executive as set forth in the indemnification agreement entered into between the Company and the Executive prior tothe date hereof and/or any subsequent indemnification agreement between the Companyand the Executive (the **“Indemnification Agreement”).** **17.** **Assignment.**   This Restated Agreement is personal in its nature and neither of the parties hereto shall,without the consent of the other, assign or transfer this Restated Agreement or any rightsor obligations hereunder; ***provided, however,***that, in the event of a merger, consolidationor transfer or sale of all or substantially all of the assets of the Company with or to anyother individual(s) or entity, this Restated Agreement shall, subject to the provisionshereof, be binding upon and inure to the benefit of such successor and such successor shalldischarge and perform all the promises, covenants, duties, and obligations of the Companyhereunder; and ***provided, further,***that the Executive may assign his rights to compensationand benefits by will or by operation of law or pursuant to Section 29. **18.** **Governing Law.**   This Agreement and the legal relations hereby created between the parties hereto shall begoverned by and construed under and in accordance with the internal laws of the State ofCalifornia, without regard to conflicts of laws principles thereof, except as provided inSection 16. **19.** **Entire Agreement.**   This Restated Agreement and the Indemnification Agreement, together with all agreementsevidencing the Executive’s stock options and other stock-based awards from the Company,represent the entire agreement of the parties hereto respecting the matters within thescope of this Restated Agreement and the Indemnification Agreement and supersede all prioragreements of the parties hereto on the subject matter hereof (including, withoutlimitation, the Prior Agreement). Any prior negotiations, correspondence, other agreements,proposals or understandings relating to the subject matter hereof (other than theIndemnification Agreement and the agreements evidencing the Executive’s stock options andother stock-based awards from the Company) shall be deemed to be merged into this RestatedAgreement and to the extent inconsistent herewith, such negotiations, correspondence,agreements, proposals, or understandings shall be deemed to be of no force or effect. Thereare no representations, warranties, or agreements, whether express or implied, or oral orwritten, with respect to the subject matter hereof, except as set forth herein.
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**20.** **Modifications.**   This Restated Agreement shall not be modified by any oral agreement, either express orimplied, and all modifications hereof shall be in writing and signed by the parties hereto. **21.** **Waiver.**   Failure to insist upon strict compliance with any of the terms, covenants, or conditionshereof shall not be deemed a waiver of such term, covenant, or condition, nor shall anywaiver or relinquishment of, or failure to insist upon strict compliance with, any right orpower hereunder at any one or more times be deemed a waiver or relinquishment of such rightor power at any other time or times. 22. **Number and Gender.**   Where the context requires, the singular shall include the plural, the plural shall includethe singular, and any gender shall include all other genders. **23.** **Section Headings.**   The section headings in this Restated Agreement are for the purpose of convenience only andshall not limit or otherwise affect any of the terms hereof. **24.** **Resolution of Disputes.**   Any controversy or claim arising out of or relating to the Executive’s employment, thisRestated Agreement, its enforcement, arbitrability or interpretation, or because of an alleged breach, default, or misrepresentation inconnection with any of its provisions, shall be submitted to arbitration in Santa ClaraCounty, California, before a single arbitrator, in accordance with the National Rules forthe Resolution of Employment Disputes then in effect of the American Arbitration Association(“ **AAA**”) as modified by the terms and conditions of this Section 24; ***provided, however,***thatprovisional injunctive relief may, but need not, be sought in a court of law whilearbitration proceedings are pending, and any provisional injunctive relief granted by suchcourt shall remain effective until the matter is finally determined by the arbitrator. Thearbitrator shall be selected by mutual agreement of the parties or, if the parties cannotagree, by striking from a list of arbitrators supplied by AAA. The arbitrator shall issue awritten opinion revealing, however briefly, the essential findings and conclusions uponwhich the award is based. Final resolution of any dispute through arbitration may includeany remedy or relief which the arbitrator deems just and equitable. Any award or reliefgranted by the arbitrator hereunder shall be final and binding on the parties hereto and maybe enforced by any court of competent jurisdiction.   The parties acknowledge that they are hereby waiving any rights to trial by jury in anyaction, proceeding or counterclaim brought by either of the parties against the other inconnection with any matter whatsoever arising out of or in any way connected with thisAgreement or the Executive’s employment.
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The Company shall pay the arbitrator’s fees and arbitration expenses and any other costsassociated with the arbitration or arbitration hearing that are unique to arbitration. TheCompany and the Executive each shall separately pay its or his own deposition, witness,expert and attorneys’ fees and other expenses as and to the same extent as if the matterwere being held in court unless otherwise provided by law; ***provided, however,***that thearbitrator may award the prevailing party reasonable attorneys’ fees. The arbitrator shallresolve any dispute as to reasonableness of any fee or cost. The arbitrator shall have thesole and exclusive power and authority to decide any and all issues of or related toarbitrability.**25.** **Severability.**   In the event that a court of competent jurisdiction or arbitrator determines that anyportion of this Restated Agreement is in violation of any statute or public policy, thenonly the portions of this Restated Agreement which violate such statute or public policyshall be stricken, and all portions of this Restated Agreement which do not violate anystatute or public policy shall continue in full force and effect. Furthermore, any courtorder or arbitrator determination striking any portion of this Restated Agreement shallmodify the stricken terms as narrowly as possible to give as much effect as possible to theintentions of the parties under this Restated Agreement. **26.** **Notices.**   All notices under this Restated Agreement shall be in writing and shall be either personallydelivered or mailed postage prepaid, by certified mail, return receipt requested: (i) if to the Company:    Ultratech, Inc.3050 Zanker RoadSan Jose, California 95134Attention: Chair, Compensation Committee of the Board of Directors  (ii) if to the Executive:    Arthur W. Zafiropoulo