Document:

exv10w9

 

Exhibit 10.9

Change-In-Control Agreements

with Five Executive Officers

Form of Change-in-Control Agreements made with the following five Executive Officers of Cullen/Frost Bankers, Inc.

	 	1.	 	Robert A. Berman
	 
	 	2.	 	Paul H. Bracher
	 
	 	3.	 	Paul J. Olivier
	 
	 	4.	 	William L. Perotti
	 
	 	5.	 	Emily A. Skillman

All of the above agreements are substantially identical in all material respects, except as to the dates of the
agreements and the parties thereto.

 

 

Cullen/Frost Bankers, Inc.

Executive Severance Agreement

     THIS AGREEMENT is made and entered into as of the [DAY] day of [MONTH], [YEAR], by and between
Cullen/Frost Bankers, Inc. (hereinafter referred to as the “Company”) and [NAME] (hereinafter
referred to as the “Executive”).

     WHEREAS, the Board of Directors of the Company has approved the Company entering into
severance agreements with certain key executives of the Company;

     WHEREAS, the Executive is a key executive of the Company;

     WHEREAS, should the possibility of a Change in Control of the Company arise, the Board
believes it is imperative that the Company and the Board should be able to rely upon the Executive
to continue in his/her position, and that the Company should be able to receive and rely upon the
Executive’s advice, if requested, as to the best interests of the Company and its shareholders
without concern that the Executive might be distracted by the personal uncertainties and risks
created by the possibility of a Change in Control;

     WHEREAS, should the possibility of a Change in Control arise, in addition to his/her regular
duties, the Executive may be called upon to assist in the assessment of such possible Change in
Control, advise management and the Board as to whether such Change in Control would be in the best
interests of the Company and its shareholders, and to take such other actions as the Board might
determine to be appropriate; and

     WHEREAS, the Executive and the Company desire that the terms of this Agreement shall
completely replace and supersede the provisions set forth in the Cullen/Frost Bankers, Inc.
Executive Severance Plan and the Executive Severance Agreement, entered into by and between the
Company and the Executive on «Date», setting forth the terms and provisions with respect to
the Executive’s entitlement to payments and benefits following a Change in Control of the Company.

     NOW THEREFORE, to assure the Company that it will have the continued dedication of the
Executive and the availability of his/her advice and counsel notwithstanding the possibility,
threat, or occurrence of a Change in Control of the Company, and to induce the Executive to remain
in the employ of the Company, and for other good and valuable consideration, the Company and the
Executive agree as follows:

Article 1. Establishment, Term, and Purpose

     This Agreement will commence on the Effective Date and shall continue in effect for one (1)
full year. However, at the end of such one (1) year period and, if extended, at the end of each
additional year thereafter, the term of this Agreement shall be extended automatically for one (1)
additional year, unless the Committee delivers written notice thirty (30) days prior to the end of
such term, or extended term, to each Executive, that the Agreement will not be extended. In such
case, the Agreement will terminate at the end of the term, or extended term, then in progress.

 

 

     However, in the event a Change in Control occurs during the original or any extended term,
this Agreement will remain in effect for the longer of: (i) twenty-four (24) months beyond the
month in which such Change in Control occurred; or (ii) until all obligations of the Company
hereunder have been fulfilled, and until all benefits required hereunder have been paid to the
Executive.

Article 2. Definitions

     Whenever used in this Agreement, the following terms shall have the meanings set forth below
and, when the meaning is intended, the initial letter of the word is capitalized.

     2.1 “Base Salary” means the salary of record paid to an Executive as annual salary, excluding
amounts received under incentive or other bonus plans, whether or not deferred.

     2.2 “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the
General Rules and Regulations under the Exchange Act.

     2.3 “Beneficiary” means the persons or entities designated or deemed designated by the
Executive pursuant to Section 11.2 herein.

     2.4 “Board” means the Board of Directors of the Company.

     2.5 “Cause” means:

	 	(a)	 	The Executive’s willful and continued failure to substantially perform his/her duties
with the Company (other than any such failure resulting from Disability or occurring after
issuance by the Executive of a Notice of Termination for Good Reason), after a written
demand for substantial performance is delivered to the Executive that specifically
identifies the manner in which the Company believes that the Executive has willfully
failed to substantially perform his/her duties, and after the Executive has failed to
resume substantial performance of his/her duties on a continuous basis within thirty (30)
calendar days of receiving such demand;
	 
	 	(b)	 	The Executive’s willfully engaging in conduct (other than conduct covered under (a)
above) which is demonstrably and materially injurious to the Company, monetarily or
otherwise; or
	 
	 	(c)	 	The Executive’s having been convicted of a felony.
	 
	 	 	 	For purposes of this subparagraph, no act, or failure to act, on the Executive’s part
shall be deemed “willful” unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the action or omission was in the best
interests of the Company.

     2.6 “Change in Control” of the Company shall be deemed to have occurred as of the first day
that any one or more of the following conditions is satisfied and regulatory approval has been
granted if necessary:

	 	(a)	 	The “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act) of
securities representing more than 20 percent (20%) of the combined voting power of the
Company is

 

 

	 	 	 	acquired by a Person (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or an affiliate thereof, or any
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company); or

	 	(b)	 	The stockholders of the Company approve a definitive agreement to merge or
consolidate the Company with or into another company (other than a merger or consolidation
which would result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than sixty percent (60%) of the
combined voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation);
	 
	 	(c)	 	During any period of two (2) consecutive years, individuals who at the beginning of
such period constitute the Board of Directors and any new director (other than a director
designated by a person who has entered into an agreement with the Company to effect a
transaction described in paragraph (a) or (b) of this section) whose election by the Board
of Directors or nomination for election by the Company’s stockholders was approved by a
vote of at least two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof; or
	 
	 	(d)	 	The stockholders of the Company approve a definitive agreement to sell or otherwise
dispose of all or substantially all of its assets, or adopt a plan for liquidation.

     However, in no event shall a Change in Control be deemed to have occurred, with respect to the
Executive, if the Executive is part of a purchasing group which consummates the Change-in-Control
transaction. The Executive shall be deemed “part of a purchasing group” for purposes of the
preceding sentence if the Executive is an equity participant in the purchasing company or group
(except for: (i) passive ownership of less than three percent (3%) of the stock of the purchasing
company; or (ii) ownership of equity participation in the purchasing company or group which is
otherwise not significant, as determined prior to the Change in Control by a majority of the
nonemployee continuing Directors).

     2.7 “Code” means the United States Internal Revenue Code of 1986, as amended, and any
successors thereto.

     2.8 “Committee” means the Compensation and Benefits Committee of the Board or any other
committee appointed by the Board to perform the functions of the Compensation and Benefits
Committee.

     2.9 “Company” means Cullen/Frost Bankers, Inc., a Delaware corporation, or any successor
thereto as provided in Article 10 herein.

     2.10 “Disability” means complete and permanent inability by reason of illness or accident to
perform the duties of the occupation at which the Executive was employed when such disability
commenced.

 

 

     2.11 “Effective Date” means the date of this Agreement set forth above.

     2.12 “Effective Date of Termination” means the date on which a Qualifying Termination occurs
which triggers the payment of Severance Benefits hereunder.

     2.13 “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

     2.14 “Good Reason” shall mean, without the Executive’s express written consent, the occurrence
of any one or more of the following:

	 	(a)	 	The assignment of the Executive to duties materially inconsistent with the
Executive’s authorities, duties, responsibilities, and status (including offices and
reporting requirements) as an employee of the Company, or a reduction or alteration in the
nature or status of the Executive’s authorities, duties, or responsibilities than those in
effect immediately preceding the Change in Control;
	 
	 	(b)	 	The Company’s requiring the Executive to be based at a location which is at least
fifty (50) miles further from the current primary residence than is such residence from
the Company’s current headquarters, except for required travel on the Company’s business
to an extent substantially consistent with the Executive’s business obligations as of the
Effective Date;
	 
	 	(c)	 	A material change in the Executive’s Base Salary or bonus opportunity as in effect on
the Effective Date or as the same shall be increased from time to time;
	 
	 	(d)	 	A material reduction in the Executive’s level of participation in any of the
Company’s short- and/or long-term incentive compensation plans, or employee benefit or
retirement plans, policies, practices, or arrangements in which the Executive participates
immediately preceding the Change in Control; provided, however, that reductions in the
levels of participation in any such plans shall not be deemed to be “Good Reason” if the
Executive’s reduced level of participation in each such program remains substantially
consistent with the average level of participation of other executives who have positions
commensurate with the Executive’s position.
	 
	 	 	 	For purposes of this Agreement, long-term incentives shall mean the
Cullen Frost Bankers, Inc. 1992 Stock Plan and any other similar plans
instituted by the Company;
	 
	 	(e)	 	The failure of the Company to obtain a satisfactory agreement from any successor to
the Company to assume and agree to perform this Agreement, as contemplated in Article 10
herein; or
	 
	 	(f)	 	Any termination of Executive’s employment by the Company that is not effected
pursuant to a Notice of Termination.

     The existence of Good Reason shall not be affected by the Executive’s temporary incapacity due
to physical or mental illness not constituting a Disability. The Executive’s Retirement shall
constitute a waiver of the Executive’s rights with respect to any circumstance constituting Good
Reason. The

 

 

Executive’s continued employment shall not constitute a waiver of the Executive’s rights with
respect to any circumstance constituting Good Reason.

     2.15 “Notice of Termination” shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon, and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the Executive’s employment
under the provision so indicated.

     2.16 “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange
Act and used in Sections 13(d) and 14(d) thereof, including a “group” as provided in Section 13(d).

     2.17 “Qualifying Termination” means any of the events described in Section 3.2 herein, the
occurrence of which triggers the payment of Severance Benefits hereunder.

     2.18 “Retirement” means the Executive’s voluntary termination of employment in a manner which
qualifies the Executive to receive immediately payable retirement benefits under the Company’s
tax-qualified retirement plan or under the successor or replacement of such retirement plan if it
is then no longer is effect.

     2.19 “Severance Benefits” means the payment of severance compensation as provided in
Section 3.3 herein.

     2.20 “Target Bonus” shall mean the target bonus amount established under the Company’s annual
incentive plan.

     2.21 “Trust” means the Company grantor trust to be created pursuant to Article 6 of this
Agreement.

Article 3. Severance Benefits

     3.1 Right to Severance Benefits. The Executive shall be entitled to receive from the Company
Severance Benefits, as described in Section 3.3 herein, if there has been a Change in Control of
the Company and if, within twenty-four (24) calendar months following the Change in Control, a
Qualifying Termination of the Executive has occurred.

     The Executive shall not be entitled to receive Severance Benefits if he/she is terminated for
Cause, or if his/her employment with the Company ends due to death, Disability, or Retirement or
due to a voluntary termination of employment by the Executive without Good Reason.

     3.2 Qualifying Termination. The occurrence of any one or more of the following events shall
trigger the payment of Severance Benefits to the Executive under this Agreement:

	 	(a)	 	An involuntary termination of the Executive’s employment by the Company for reasons
other than Cause within twenty-four (24) calendar months following a Change in Control of
the Company pursuant to a Notice of Termination delivered to the Executive by the Company;

 

 

	 	(b)	 	A voluntary termination by the Executive for Good Reason within twenty-four (24)
calendar months following a Change in Control of the Company pursuant to a Notice of
Termination delivered to the Company by the Executive; or
	 
	 	(c)	 	The Company or any successor company breaches any of the provisions of this
Agreement.

     3.3 Description of Severance Benefits. In the event the Executive becomes entitled to receive
Severance Benefits, as provided in Sections 3.1 and 3.2 herein, the Company shall pay to the
Executive and provide him with the following:

	 	(a)	 	An amount equal to two (2) times the highest rate of the Executive’s annualized Base
Salary in effect immediately preceding the Change in Control.
	 
	 	(b)	 	An amount equal to two (2) times the Executive’s highest target bonus established for
the year immediately preceding the Change in Control.
	 
	 	(c)	 	An amount equal to the Executive’s unpaid Base Salary, a pro rata amount of the
Executive’s Target Bonus for the year in which the termination occurs, accrued vacation
pay, and earned but not taken vacation pay through the Effective Date of Termination.
	 
	 	(d)	 	A continuation of the welfare benefits of health care, life and accidental death and
dismemberment, and disability insurance coverage for two (2) full years after the
Effective Date of Termination. These benefits shall be provided to the Executive at the
same premium cost, and at the same coverage level, as in effect as of the Executive’s
Effective Date of Termination. However, in the event the premium cost and/or level of
coverage shall change for all employees of the Company, or for management employees with
respect to supplemental benefits, the cost and/or coverage level, likewise, shall change
for the Executive in a corresponding manner.
	 
	 	 	 	The continuation of these welfare benefits shall be discontinued prior to the end of the
two (2) year period in the event the Executive has available substantially similar
benefits at a comparable cost from a subsequent employer, as determined by the
Committee.
	 
	 	(e)	 	All long-term incentive awards immediately vest.

     The aggregate benefits accrued by the Executive as of the Effective Date of Termination under
all other savings and retirement plans sponsored by the Company shall be distributed pursuant to
the terms of the applicable plans.

     3.4 Termination for Disability. Following a Change in Control of the Company, if an
Executive’s employment is terminated due to Disability, the Executive shall receive his/her Base
Salary through the Effective Date of Termination, at which point in time the Executive’s benefits
shall be determined in accordance with the Company’s disability, retirement, insurance, and other
applicable plans and programs then in effect. In the event the Executive’s employment is terminated
due to Disability, the Executive shall not be entitled to the Severance Benefits described in
Section 3.3.

 

 

     3.5 Termination for Retirement or Death. Following a Change in Control of the Company, if the
Executive’s employment is terminated by reason of his/her Retirement or death, the Executive’s
benefits shall be determined in accordance with the Company’s retirement, survivor’s benefits,
insurance, and other applicable programs of the Company then in effect. In the event the
Executive’s employment is terminated by reason of his/her Retirement or death, the Executive shall
not be entitled to the Severance Benefits described in Section 3.3.

     3.6 Termination for Cause, or Other Than for Good Reason or Retirement. Following a Change in
Control of the Company, if the Executive’s employment is terminated either: (a) by the Company for
Cause; or (b) by the Executive (other than for Retirement, Good Reason, or under circumstances
giving rise to a Qualifying Termination described in Section 3.2(c) herein), the Company shall pay
the Executive his/her full Base Salary and accrued vacation through the Effective Date of
Termination, at the rate then in effect, plus all other amounts to which the Executive is entitled
under any compensation plans of the Company, at the time such payments are due, and the Company
shall have no further obligations to the Executive under this Agreement.

     3.7 Notice of Termination. Any termination of employment by the Company or by the Executive
for Good Reason shall be communicated by a Notice of Termination.

Article 4. Form and Timing of Severance Benefits

     4.1 Form and Timing of Severance Benefits. The Severance Benefits described in
Sections 3.3(a), 3.3(b), and 3.3(c) herein shall be paid in cash to the Executive in a single lump
sum as soon as practicable following the Effective Date of Termination, but in no event beyond
thirty (30) days from such date.

     4.2 Withholding of Taxes. The Company shall be entitled to withhold from any amounts payable
under this Agreement all taxes as legally shall be required (including, without limitation, any
United States federal taxes and any other state, city, or local taxes).

Article 5. Excise Tax Equalization Payment

     5.1 Excise Tax Equalization Payment. In the event that the Executive becomes entitled to
Severance Benefits or any other payment or benefit under this Agreement, or under any other
agreement with or plan of the Company (in the aggregate, the “Total Payments”), if all or any part
of the Total Payments will be subject to the tax (the “Excise Tax”) imposed by Section 4999 of the
Code (or any similar tax that may hereafter be imposed), the Company shall pay to the Executive in
cash an additional amount (the “Gross-Up Payment”) such that the net amount retained by the
Executive after deduction of any Excise Tax upon the Total Payments and any federal, state, and
local income tax, penalties, interest, and Excise Tax upon the Gross-Up Payment provided for by
this Section 5.1 (including FICA and FUTA), shall be equal to the Total Payments. Such payment
shall be made by the Company to the Executive as soon as practical following the Effective Date of
Termination, but in no event beyond thirty (30) days from such date.

     5.2 Tax Computation. For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amounts of such Excise Tax:

	 	(a)	 	Any other payments or benefits received or to be received by the Executive in
connection with a Change in Control of the Company or the Executive’s termination of
employment

 

 

	 	 	 	(whether pursuant to the terms of this Agreement or any other plan, arrangement, or
agreement with the Company, or with any Person whose actions result in a Change in
Control of the Company or any Person affiliated with the Company or such Persons) shall
be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code,
and all “excess parachute payments” within the meaning of Section 280G(b)(1) shall be
treated as subject to the Excise Tax, unless in the opinion of tax counsel as supported
by the Company’s independent auditors and acceptable to the Executive, such other
payments or benefits (in whole or in part) do not constitute parachute payments, or
unless such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of Section 280G(b)(4) of
the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the
Code, or are otherwise not subject to the Excise Tax;

	 	(b)	 	The amount of the Total Payments which shall be treated as subject to the Excise Tax
shall be equal to the lesser of: (i) the total amount of the Total Payments; or (ii) the
amount of excess parachute payments within the meaning of Section 280G(b)(1) (after
applying clause (a) above); and
	 
	 	(c)	 	The value of any noncash benefits or any deferred payment or benefit shall be
determined by the Company’s independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code.

     For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed
to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar
year in which the Gross-Up Payment is to be made, and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive’s residence on the Effective
Date of Termination, net of the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes.

     5.3 Subsequent Recalculation. In the event the Internal Revenue Service adjusts the
computation of the Company under Section 5.2 herein so that the Executive did not receive the
greatest net benefit, the Company shall reimburse the Executive for the full amount necessary to
make the Executive whole, plus a market rate of interest, as determined by the Committee.

Article 6. The Company’s Payment Obligation

     The Company’s obligation to make the payments and the arrangements provided for herein shall
be absolute and unconditional, and shall not be affected by any circumstances, including, without
limitation, any offset, counterclaim, recoupment, defense, or other right which the Company may
have against the Executive or anyone else. All amounts payable by the Company hereunder shall be
paid without notice or demand. Each and every payment made hereunder by the Company shall be final,
and the Company shall not seek to recover all or any part of such payment from the Executive or
from whomsoever may be entitled thereto, for any reasons whatsoever.

     The Executive shall not be obligated to seek other employment in mitigation of the amounts
payable or arrangements made under any provision of this Agreement, and the obtaining of any such
other employment shall in no event effect any reduction of the Company’s obligations to make the

 

 

payments and arrangements required to be made under this Agreement, except to the extent
provided in Section 3.3(d) herein.

Article 7. Legal Remedies

     7.1 Payment of Legal Fees. To the extent permitted by law, the Company shall pay all legal
fees, costs of litigation, prejudgment interest, and other expenses incurred in good faith by the
Executive as a result of the Company’s refusal to provide the Severance Benefits to which the
Executive becomes entitled under this Agreement, or as a result of the Company’s contesting the
validity, enforceability, or interpretation of this Agreement, or as a result of any conflict
(including conflicts related to the calculation of parachute payments) between the parties
pertaining to this Agreement.

     7.2 Arbitration. Any dispute or controversy arising under or in connection with this Agreement
shall be settled by arbitration, conducted before a panel of three (3) arbitrators sitting in a
location selected by the Executive within fifty (50) miles from the location of his/her employment
with the Company, in accordance with the rules of the American Arbitration Association then in
effect.

     Judgment may be entered on the award of the arbitrator in any court having proper
jurisdiction. All expenses of such arbitration, including the fees and expenses of the counsel for
the Executive, shall be borne by the Company.

Article 8. Successors and Assignment

     8.1 Successors to the Company. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) of all or substantially all of the
business and/or assets of the Company or of any division or subsidiary thereof to expressly assume
and agree to perform the Company’s obligations under this Agreement in the same manner and to the
same extent that the Company would be required to perform them if no such succession had taken
place. The date on which any such succession becomes effective shall be deemed to be the date of
the Change in Control.

     8.2 Assignment by the Executive. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees. If the Executive dies while any amount
would still be payable to him hereunder had he/she continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the
Executive’s Beneficiary. If the Executive has not named a Beneficiary, then such amounts shall be
paid to the Executive’s devisee, legatee, or other designee, or if there is no such designee, to
the Executive’s estate.

Article 9. Miscellaneous

     9.1 Employment Status. Except as may be provided under any other agreement between the
Executive and the Company, the employment of the Executive by the Company is “at will,” and may be
terminated by either the Executive or the Company at any time, subject to applicable law.

     9.2 Beneficiaries. The Executive may designate one or more persons or entities as the primary
and/or contingent Beneficiaries of any Severance Benefits owing to the Executive under this
Agreement. Such designation must be in the form of a signed writing acceptable to the Committee.
The Executive may make or change such designations at any time.

 

 

     9.3 Severability. In the event any provision of this Agreement shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the
Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision
had not been included. Further, the captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.

     9.4 Modification. No provision of this Agreement may be modified, waived, or discharged unless
such modification, waiver, or discharge is agreed to in writing and signed by the Executive and by
an authorized member of the Committee, or by the respective parties’ legal representatives and
successors.

     9.5 Applicable Law. To the extent not preempted by the laws of the United States, the laws of
the state of Texas shall be the controlling law in all matters relating to this Agreement.

          IN WITNESS WHEREOF, the parties have executed this Agreement on this [DAY] day of
[MONTH], [YEAR].

	 	 	 	 	 	 	 	 	 
	Cullen/Frost Bankers, Inc.	 	 	 	Executive	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 
	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	Its:

	 	Chairman
 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Attest: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

2

 

          (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

7

 

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.

9

 

               (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

10

 

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.

15

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