Document:

EXHIBIT
10.1

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”)
is made and entered into on May 9, 2006, by and between Internet Commerce
Corporation, a Delaware corporation (the “Company”), and Crossbow
Venture Partners, LP, a Delaware limited partnership (“Equity Seller”).

 

WHEREAS,
concurrently with the execution of this Agreement, the Company, Enable Corp. (“Enable”),
the Equity Seller and other stockholders of Enable are consummating the
purchase and sale of all of the capital stock of Enable (the “Enable Stock”)
pursuant to that certain Share Purchase Agreement dated May 9, 2006 (the “Share
Purchase Agreement”);

 

WHEREAS,
pursuant to the terms of the Share Purchase Agreement, as partial consideration
for the purchase of Enable Stock, the Company shall issue to the Equity Seller
shares of the Company’s Class A Common Stock (the “Common Stock”),
having an aggregate value of $2,700,000 (the “Shares”);

 

WHEREAS,
the Share Purchase Agreement also requires the Company and the Equity Seller to
execute this Agreement to provide for certain registration rights for the
benefit of the Equity Seller; and

 

NOW, THEREFORE,
in consideration of the foregoing recitals and the mutual promises hereinafter
set forth, the parties hereto agree as follows:

 

1.             DEFINITIONS. Capitalized terms used
and not otherwise defined herein shall have the meanings ascribed to such terms
in the Share Purchase Agreement. As used in this Agreement, the following terms
shall have the following respective meanings.

 

“Affiliate” of a
Person shall mean: (i) any other Person directly, or indirectly through
one or more intermediaries, controlling, controlled by or under common control
with such Person; (ii) any officer, director, partner, employer, or direct
or indirect beneficial owner of any 10% or greater equity or voting interest of
such Person; or (iii) any other Person for which a Person described in
clause (ii) acts in any such capacity.

 

“Business Day”
shall mean any day which is not a Saturday or Sunday or legal holiday on which
banks are authorized or required to be closed in Atlanta, Georgia.

 

“Person” shall
mean an individual, partnership, corporation, limited liability company, joint
venture, trust or unincorporated organization or a government or agency or
political subdivision thereof or any other similar entity.

 

 

“Prospectus”
shall mean the prospectus included in any Registration Statement, as amended or
supplemented by a prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.

 

“Registrable Securities”
shall mean the Shares issued pursuant to the Share Purchase Agreement,
including any shares of the Shortfall Stock issued pursuant to Section 5.14(b)
of the Share Purchase Agreement, and any other shares of Common Stock issued as
a dividend or other distribution with respect to, or in exchange for, the
Shares.

 

“Registration Statement”
shall mean any registration statement which covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including the
Prospectus included therein, all amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.

 

“SEC” shall mean
the United States Securities and Exchange Commission, or any other federal
agency at the time administering the Securities Act.

 

“Securities Act”
shall mean the Securities Act of 1933, as amended (or any similar successor
federal statute), and the rules and regulations thereunder, as the same are in
effect from time to time.

 

2.             REGISTRATION.

 

(a) Filing. Subject
to the provisions of Section 4 hereof, the Company shall use its commercially
reasonable efforts to file, as soon as reasonably practicable, but in any event
no later than within 45 Business Days from the date hereof, a Registration
Statement on Form S-1 or S-3 or any other appropriate form for the general
registration of securities covering the resale of all Registrable Securities
(the “First Registration Statement”). In the event the Company’s counsel
determines in good faith that the Shortfall Stock cannot be registered on such
First Registration Statement than the Company shall also file a Registration
Statement with respect to such stock within 45 Business Days from the
anniversary date of the date hereof.

 

(b) Securities Subject to this
Agreement. The securities entitled to the benefits of this
Agreement are the Registrable Securities, but, with respect to any particular
Registrable Security, only so long as such security continues to be a
Registrable Security. A security shall cease to be a Registrable Security
subject to this Agreement when it is sold by a person to the public either
pursuant to a Registration Statement, or Rule 144 promulgated under the
Securities Act or sold in a private transaction in which the transferor’s right
under this Agreement are not assigned in accordance with Section 14 hereof. A
Registrable Security that has ceased to be a Registrable Security cannot
thereafter become a Registrable Security.

 

 

(c) Effectiveness of
Registration Statement. Subject to the provisions of Section 4 hereof,
the Company shall use its commercially reasonable efforts to (i) cause the
Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable, and (ii) thereafter keep such Registration
Statement continuously effective until the date when all Registrable Securities
covered by such Registration Statements (a) have been sold pursuant to the
Registration Statement or an exemption from the registration requirements of
the Securities Act or (b) may be sold without any volume or other restrictions
pursuant to Rule 144(k) (the “Registration Period”).

 

(d) Inclusion of Other
Securities. Any other holder of the Common Stock who has
registration rights may include its securities in the Registration Statement
filed and effected pursuant to this Section 2; provided, however, that the
Company may not register any securities for its own account on such Registration
Statement.

 

3.             REGISTRATION PROCEDURE.

 

(a) General. In
connection with the Company’s registration obligations pursuant to Sections 2,
the Company will:

 

(i) prepare and file with the SEC a new Registration Statement or such
amendments (including post-effective amendments) and supplements to an existing
Registration Statement as may be necessary to keep such Registration Statement
effective as to the applicable Registrable Securities at all time during the
Registration Period; provided, however, that before filing a Registration
Statement, or any amendments or supplements thereto (other than reports
required to be filed by the Company under the Exchange Act), the Company shall
furnish to the Equity Seller and its counsel for review and comment, copies of all
documents required to be filed;

 

(ii) notify the Equity Seller promptly and (if requested) confirm such
notice in writing, (1) when a new Registration Statement, Prospectus or any
Prospectus supplement or post-effective amendment to the Registration Statement
has been filed, and, with respect to any new Registration Statement or
post-effective amendment, when the same has become effective, (2) of any
request by the SEC for amendments or supplements to any Registration Statement
or Prospectus or for additional information, (3) of the issuance by the SEC of
any comments in writing on the Registration Statement and the Company shall
reply thereto as promptly as reasonably practicable, (4) of any stop order
suspending the effectiveness of any Registration Statement or the initiation of
any proceedings for that purpose and the Company shall use commercially
reasonable efforts to obtain the withdrawal of such order, (5) of any
suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose and the Company shall use commercially reasonable efforts to obtain the
lifting of any suspension of the qualification or exemption from qualification
of any Registrable Securities for sale in any jurisdiction in the United States
of America, and (6) of the occurrence of any event as a result of which the
Registration Statement,

 

 

Prospectus or
any document incorporated therein by reference, as then in effect, would
include an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing and the Company
shall promptly prepare a supplement or amendment to such Registration Statement
and file any other required document to correct such untrue statement or
omission;

 

(iii) if reasonably requested by the Equity Seller, promptly
incorporate in a Prospectus supplement or post-effective amendment such
information as the Equity Seller reasonably requests be included therein with
respect to the sale and distribution of Registrable Securities and promptly
make all required filings of such Prospectus supplement or post-effective
amendment;

 

(iv) if reasonably requested by the Equity Seller, furnish to the
Equity Seller, without charge, up to 5 copies of the then effective
Registration Statement and any post-effective amendments thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference); and
deliver, without charge, such number of copies of the preliminary prospectus,
any amended preliminary prospectus, each final Prospectus and any
post-effective amendment or supplement thereto, as Equity Seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
covered by such Registration Statement in conformity with the requirements of
the Securities Act;

 

(v) use commercially reasonable efforts to register or qualify or
cooperate with the Equity Seller in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as the Equity Seller
reasonably requests in writing; provided, however, that the Company will not be
required to (1) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify, but for this paragraph (v), (2) subject
itself to general taxation in any such jurisdiction or (3) file a general
consent to service of process in any such jurisdiction;

 

(vi) cooperate with the Equity Seller to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to the Registration Statement and not bearing any restrictive
legends;

 

(vii) otherwise use its commercially reasonable efforts to comply in
all material respects with all applicable rules and regulations of the SEC and
any securities exchange, Nasdaq or regulatory body relating to such
registration and the distribution of the securities being offered and make
generally available to its securities holders an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act;

 

(vii) cause all such Registrable Securities registered hereunder to be
listed on The NASDAQ Capital Market of The Nasdaq Stock Market, Inc. and shall
pay

 

 

all fees and
expenses in connection with satisfying its obligation under this Section
3(a)(vii); and

 

(ix) upon reasonable notice and during normal business hours, provide
reasonable access to the Company’s personnel and auditors for the purpose of
permitting the Equity Seller to conduct due diligence in connection with any
such Registration Statement.

 

It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Sections 2 and 3
hereof that the Equity Seller shall furnish to the Company such information
regarding such Equity Seller and the distribution of such Registrable
Securities as the Company may from time to time reasonably request to comply
with the applicable provisions of the Securities Act.

 

(b) Cessation of Sales.
The Equity Seller agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3(a)(ii)(2),
3(a)(ii)(3), 3(a)(ii)(4) or 3(a)(ii)(6) hereof, the Equity Seller will
forthwith discontinue disposition of Registrable Securities pursuant to the
then current Prospectus until (1) the Equity Seller is advised in writing by
the Company that a new Registration Statement covering the offer of Registrable
Securities has become effective under the Securities Act or (2) the Equity
Seller receives copies of any required supplemented or amended Prospectus, or
until the Equity Seller is advised in writing by the Company that the use of
the Prospectus may be resumed; provided, however, that the Company shall use
its commercially reasonable efforts to cure any such misstatement, omission or
event that is applicable to the Registration Statement as soon as reasonably
practicable after delivery of such notice pursuant to clause (6) of Section
3(a)(ii) hereof. If so directed by the Company, on the occurrence of such
event, the Equity Seller will deliver to the Company all copies, other than
permanent file copies then in the Equity Seller’s possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice.

 

4.             LIMITATIONS ON REGISTRATION. With
respect to any Registration Statement filed or to be filed hereunder, if the
Board of Directors of the Company determines that, in its good faith judgment,
it would (because of the existence of, or in reasonable anticipation of, any
acquisition or corporate reorganization or other transaction, financing
activity or any other event or condition of similar significance to the Company
or any subsidiary, each a “Material Development Condition”) be
impracticable or seriously detrimental to the Company or any subsidiary to file
such Registration Statement with the SEC, to amend or supplement a Registration
Statement that has been filed with the SEC, or to permit the continued sale of
Registrable Securities under any such Registration Statement, then the Company
shall, notwithstanding any other provisions of this Agreement, be entitled,
upon the giving to the Equity Seller of a certificate signed by an executive
officer of the Company stating that in the good faith judgment of the Board of
Directors that a Material Development Condition has occurred (a “Delay
Notice”), (i) to cause sales of Registrable Securities by the Equity Seller
pursuant to such Registration Statement to cease (and the Equity Seller shall
comply with

 

 

such
directions), (ii) to cause such Registration Statement to be withdrawn and the
effectiveness of such Registration Statement terminated, or (iii) in the event
no such Registration Statement has yet been filed or declared effective, to
delay the filing or acceleration of effectiveness of any such Registration
Statement until, in the good faith judgment of the Board of Directors, such
Material Development Condition no longer exists (notice of which the Company
shall promptly deliver to the Equity Seller). Notwithstanding the foregoing
provisions of this Section 4: (1) in no event may such cessation or delay be,
for each such Registration Statement, for a period of more than 60 consecutive
days from the giving of the Delay Notice to the Equity Seller with respect to
such Material Development Condition, as above provided; and (2) in the event a
Registration Statement is filed and subsequently withdrawn by reason of any
existing or anticipated Material Development Condition as provided above, the
Company shall cause a new Registration Statement covering the Registrable Securities
to be filed with the SEC as soon as practicable after such Material Development
Condition ceases to exist or, if sooner, as soon as practicable after the
expiration of such 60 day period.

 

5.             REGISTRATION EXPENSES.
All expenses incident to the Company’s performance of or compliance with this
Agreement, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications or registrations or the obtaining of exemptions therefrom of the
Registrable Securities), printing expenses, messenger and delivery expenses,
fees and disbursements of the Company’s counsel and its independent certified
public accountants, fees and expenses of any special experts retained by the
Company in connection with any registration hereunder and fees and expenses of
other Persons retained by the Company (all such expenses being referred to as “Registration
Expenses”), shall be borne by the Company; provided, that Registration
Expenses shall not include any fees and expenses of other counsel for the
Equity Seller, out-of-pocket expenses incurred by the Equity Seller and
underwriting discounts, commissions, brokerage or other fees attributable to
the sale of the Registrable Securities.

 

6.             INDEMNIFICATION.

 

(a) Indemnification by the
Company. The Company agrees to indemnify and hold harmless, to
the full extent permitted by law, the Equity Seller, its Affiliates, and the
officers, directors, partners, agents and employees of each of them against all
losses, claims, damages, liabilities and expenses, including reasonable costs
of investigation and reasonable legal fees and expenses (“Indemnifiable
Costs and Expenses”), resulting from (x) any untrue or alleged untrue
statement of a material fact in, or any omission of a material fact required to
be stated in, any Registration Statement or Prospectus or in any amendment or
supplement thereto or in any preliminary prospectus or necessary to make the
statements therein (in the case of a Prospectus, in light of the circumstances
under which they were made) not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to the Company
by the Equity Seller or any underwriters expressly for use therein, or (y) any
violation or alleged violation by the Company of the Securities Act, the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), any
state securities law or any rule or regulation promulgated under the

 

 

Securities
Act, the Exchange Act or any state securities law in connection with the
offering covered by such Registration Statement.

 

(b) Indemnification by the
Equity Seller. In connection with any Registration Statement, the
Equity Seller will furnish to the Company in writing such information as the
Company reasonably requests for use in connection with any such Registration
Statement or Prospectus and agrees to indemnify and hold harmless, to the full
extent permitted by law, but without duplication, the Company and its
Affiliates, against all Indemnifiable Costs and Expenses resulting from (x) any
untrue statement or alleged untrue statement of a material fact in, or any
omission or alleged omission of a material fact required to be stated in, the
Registration Statement or Prospectus or necessary to make the statements
therein (in the case of a Prospectus in light of the circumstances under which
they were made) not misleading to the extent, but only to the extent, that such
untrue statement or omission is caused by or contained in any information so
furnished in writing by the Equity Seller to the Company, or (y) any violation
or alleged violation by the Equity Seller of the Securities Act, the Exchange
Act, any state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law in connection with
the offering covered by such Registration Statement.

 

(c) Conduct of Indemnification
Proceedings. Any Person entitled to indemnification hereunder
will (i) give prompt notice to the indemnifying party of any claim or
commencement of proceeding with respect to which it seeks indemnification or
contribution pursuant hereto; provided, however, that the delay or failure to so
notify the indemnifying party shall not relieve the indemnifying party from any
obligation or liability except to the extent that the indemnifying party has
been prejudiced by such delay or failure and (ii) permit such indemnifying
party to assume the defense of such claim with counsel reasonably satisfactory
to such indemnified party; provided, however, that any Person entitled to
indemnification hereunder shall have the right to employ separate counsel and
to participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such indemnified Person unless: (1) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to the indemnified party in a timely
manner; (2) the indemnifying party agrees to pay such fees and expenses; or (3)
the named parties to any proceeding (including impleaded parties) include both
such indemnified party and the indemnifying party, and such indemnified party
shall have been advised by counsel that there may be one or more legal defenses
available to it that are inconsistent with those available to the indemnifying
party or that a conflict of interest is likely to exist among such indemnified
party and any other indemnified parties (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of such
indemnified party). The indemnifying party will not be subject to any liability
for any settlement made without the indemnifying party’s consent. No
indemnified party will be required to consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect of such claim or litigation. An indemnifying party who
is not entitled to, or elects not to, assume the

 

 

defense of the
claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim.

 

(d) Contribution.
If for any reason the indemnification provided for in Section 6(a) or Section
6(b) hereof is unavailable to an indemnified party or is insufficient to hold
it harmless as contemplated by Section 6(a) and Section 6(b) hereof,
respectively, then the indemnifying party shall contribute to the amount paid
or payable by the indemnified party as a result of such loss, claim, damage,
liability or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party, as well as
any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement or the omission or alleged omission relates to information
supplied by the indemnifying party or parties on the one hand, or the
indemnified party or parties on the other hand, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentations. Notwithstanding the foregoing, the Equity Seller
or its assigns shall not be required to contribute any amount which is in
excess of the amount by which the total proceeds received by such party from
the sale of the Registrable Securities exceeds the amount of any damages that
such party has otherwise been required to pay by reason of an untrue statement
or alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.

 

7.             CERTAIN COVENANTS BY THE COMPANY.
(a) The Company agrees to use its commercially reasonable efforts to (i) file
with the SEC on a timely basis all annual, quarterly and current reports
required to be filed by the Company under the Exchange Act; (ii) make and keep
public information regarding the Company available as those terms are
understood and defined in Rule 144 under the Securities Act, at all times;
and (iii) so long as Equity Seller owns any Common Stock bearing the legend set
forth in Section 2.3(b) of the Share Purchase Agreement, furnish to the Equity
Seller forthwith upon written request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
as Equity Seller may reasonably request in availing itself of any rule or
regulation of the SEC allowing the Equity Seller to sell any such securities
without registration.

 

(b) Upon request by the Equity Seller, the
Company will inform the Equity Seller whether it is in compliance with its
reporting obligations under the Exchange Act.

 

(c) Upon obtaining an opinion from counsel to
the Equity Seller that is reasonably satisfactory in form and substance to the
Company to the effect that the Equity Seller may transfer its Registrable
Securities without registration under the Securities Act, the

 

 

Company will instruct its transfer agent to
issue to the Equity Seller a certificate representing such Registrable
Securities without any restrictive legend affixed thereto.

 

(d) The Board of
Directors of the Company shall appoint a designee of Equity Seller as a
director of the Company effective as of the date hereof. The Equity Seller’s
initial designee shall be Matthew Shaw. For so long as the Shares held by Equity
Seller or its Affiliates comprise 2.5% or more of the outstanding shares of the
Company’s Class A Common Stock, the Company further agrees to recommend to its
stockholders that the Equity Seller’s designee be elected to the Company’s
Board of Directors at any annual or other stockholder meeting where directors
are to be elected and to cause management to vote any stockholder proxies held
by management in favor of such election. For so long as the Shares held by
Equity Seller or its Affiliates comprise 2.5% or more of the outstanding shares
of the Company’s Class A Common Stock, in the event the Equity Seller’s
designee is unable to serve, or once having commenced to serve, is removed or
withdraws from the Board of Directors of the Company, the Board of Directors of
the Company shall properly appoint a new designee of Equity Seller as a
director of the Company.

 

8.             AMENDMENTS AND WAIVERS.
The provisions of this Agreement, including the provisions of this Section 8,
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless such amendment,
modification, waiver or consent is in writing and duly executed by the Company
and the Equity Seller. No waiver of any provision of this Agreement shall
constitute a waiver of any other provision of this Agreement and no waiver on
one occasion shall constitute a waiver on any future occasion with respect to
the same or any other provision of this Agreement.

 

9.             NOTICES. All notices, requests, claims,
demands and other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given upon delivery) by delivery
in person, by telecopy or facsimile with a confirming copy sent overnight by a
nationally recognized courier service, by registered or certified mail (postage
prepaid, return receipt requested) or by a nationally recognized courier
service to the respective parties at the following addresses (or at such other
address for a party as shall be specified in a notice given in accordance with
this Section 9):

 

if to
the Company:

 

Internet Commerce
Incorporation

6025 The Corners Parkway,
Suite 100

Norcross, Georgia 30092

Attention:  Chief Executive Officer

Telecopier:  (678) 291-9610

 

 

and

 

Morris, Manning &
Martin, LLP

1600 Atlanta Financial
Center

3343 Peachtree Road, N.E.

Atlanta, Georgia  30326

Attention:  Larry W. Shackelford, Esq.

Telecopier:  404-365-9532

 

if to
the Equity Seller:

 

Crossbow Venture
Partners, LP

One North Clematis
Street, Suite 510

West Palm Beach, Florida
33401-5523

Attention:  Matthew Shaw

Telecopier:  (561) 838-4105

 

10.          COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of
an executed counterpart by facsimile shall constitute delivery of an original.

 

11.          HEADINGS. The headings
in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.

 

12.          GOVERNING LAW. The
validity, interpretation and performance of this Agreement and any dispute
connected herewith shall be governed by and construed in accordance with the
laws of the State of Georgia, without regard to its conflicts of laws
principles.

 

13.          SEVERABILITY. In the
event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or unenforceable,
the validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be affected
or impaired thereby.

 

14.          SUCCESSORS AND ASSIGNS. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Except as otherwise
expressly provided herein, this Agreement shall not confer any rights or
remedies upon any Person other than the parties hereto and their respective
successors and permitted assigns. The rights under this Agreement shall be
assignable in whole or in party by the Equity Seller to any Permitted
Transferee (as defined below) if: (a) Equity Seller agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment; (b)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (i) the name and address of such transferee or
assignee, and (ii) the securities with respect to which such registration

 

 

rights
are being transferred or assigned; and (c) at or before the time the Company
receives the written notice contemplated by clause (b) of this sentence the
transferee or assignee agrees in writing to be bound by all of the provisions
contained herein. For purposes of this Section 14 “Permitted Transferee” means
any of Equity Seller’s partners, members or other equity owners, or retired
partners, retired members or other equity owners, or to the estate of any of
its partners, members or other equity owners or retired partners, retired
members or other equity owners.

 

15.          ENTIRE AGREEMENT. This
Agreement is intended by the parties as a final expression of their agreement
and is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement under seal
on the date first above written.

 

	
  BUYER:

  
	
   

  
	
  INTERNET COMMERCE INCORPORATION

  
	
   

  
	
   

  
	
  By:

  	
   /s/ Thomas J. Stallings

  	
   

  
	
  Name:

  	
  Thomas J. Stallings

  	
   

  
	
  Title:

  	
  CEO

  	
   

  
	
   

  
	
   

  
	
  EQUITY SELLER:

  
	
   

  
	
  CROSSBOW VENTURE PARTNERS, LP, A

  DELAWARE LIMITED PARTNERSHIP

  
	
   

  
	
  By: Crossbow Venture Partners Corp., as its

  general partner

  
	
   

  
	
   

  
	
  By:

  	
    /s/ Matthew Shaw

  	
   

  
	
   

  	
  Matthew Shaw, authorized representativeExhibit 10.1

 

INTERDENT DEFERRED INCENTIVE

COMPENSATION RETIREMENT PLAN

 

 

INTERDENT
DEFERRED INCENTIVE COMPENSATION

RETIREMENT
PLAN

 

RECITALS

 

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

 

ARTICLE 1

DEFINITIONS

 

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

 

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

 

1.3           BENEFICIARY
means any person or persons so designated in accordance with the provisions of
Section 7.1.

 

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

 

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

 

1

 

1.6           CODE
means the Internal Revenue Code of 1986 and the regulations thereunder, as
amended from time to time.

 

1.7           COMMITTEE
means the Administrative Committee composed of such individuals as may be
appointed by the Board which shall function as the administrator of the Plan.

 

1.8           COMPANY
means InterDent Service Corporation, a Washington corporation and any successor
organization thereto.

 

1.9           COMPANY’S
PARENT means InterDent, Inc., a Delaware corporation and any successor
organization thereto.

 

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

 

1.11         COMPENSATION
DEFERRALS means the percentage or dollar amount of an Eligible Employee’s
Compensation which the Eligible Employee elects to defer pursuant to Section
3.1.

 

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

 

1.13         DISABILITY
will be determined to exist if the Participant is, by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, eligible to receive income replacement benefits for a period of not
less than 3 months under any disability benefit plan for covered Employees of
the Employer, or, if the Participant does not participate in such plan, would
have been eligible to receive such benefits had the Participant participated in
such plan. If the Employer does not sponsor such a plan or discontinues
sponsoring such a plan, Disability shall be determined by the Committee in its
sole discretion.

 

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

 

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

 

1.16         ELIGIBLE
EMPLOYEE means, for any Plan Year (or applicable portion thereof), an
employee (or non-employee service provider) of the Employer who is a member of
the select group of management or highly compensated employees as more
particularly described in Article 2 and who has been designated by the Committee, in its sole discretion, as eligible to
participate in the Plan.

 

1.17         EMPLOYER
means either the Company or any professional dental corporation affiliated with
the Company or subsidiary of the Company that has, with the consent of the
Committee, adopted this Plan for the benefit of its Eligible Employees as
applicable.

 

2

 

1.18         EMPLOYER
CONTRIBUTIONS means the amount, if any, of contributions awarded to a
Participant pursuant to Section 3.2.

 

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

 

1.20         GROSS
MISCONDUCT means the (i) Participant’s
conviction of a felony offense under state or federal law that causes
demonstrable harm to the Company, the Company’s Parent, any of the Company’s
affiliated professional dental corporations, or the Company’s subsidiaries,
(ii) the continued breach by Participant of any of the material provisions of
their employment agreement for a period of thirty (30) days after written
notice of such breach is given to Participant by the Company, (iii) Participant
having acted with gross negligence or willful misconduct in connection with the
performance of his material duties, (iv) Participant having acted
willfully against the best interests of the Company, the Company’s Parent, any
of the Company’s affiliated professional dental corporations, or the Company’s
subsidiaries (and not with the belief that such action was in the best interest
of the Company, the Company’s Parent, any of the Company’s affiliated
professional dental corporations, or the Company’s subsidiaries) or making an
intentional misrepresentation against or to the Company, the Company’s Parent,
any of the Company’s affiliated professional dental corporations, or the
Company’s subsidiaries or their respective employees, which act or
misrepresentation has a material adverse effect on the interests of the Company,
the Company’s Parent, any of the Company’s affiliated professional dental
corporations, or the Company’s subsidiaries that was reasonably foreseeable.

 

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

 

1.22         PARTICIPANT
means an Eligible Employee who has elected to participate in the Plan by
executing and submitting an Election to the Committee. A Participant shall also
mean an Eligible Employee for whom Employer Contributions are made, regardless
of whether such Eligible Employee has executed and submitted an Election.

 

1.23         PLAN
means this InterDent Deferred Incentive Compensation Retirement Plan, as
amended from time to time.

 

1.24         PLAN
YEAR means the twelve (12) month period beginning on each January 1 and
ending on the following December 31.

 

1.25         RETIREMENT
means the Participant’s termination of service with the Employer after
obtaining age sixty (60), or a combination of age and years of services equaling
sixty (60) or more with a minimum age of fifty (50).

 

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

 

1.27         TRUSTEE
means the trustee of the Trust described in Article 11.

 

3

 

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

 

1.29         YEAR
OF PARTICIPATION means the 12 consecutive month period measured by an
Eligible Employee’s date of entry into this Plan and anniversaries thereof.

 

1.30         YEAR
OF SERVICE means the 12 consecutive month period measured by an Eligible
Employee’s date of hire and anniversaries thereof.

 

ARTICLE 2

ELIGIBILITY
AND PARTICIPATION

 

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

 

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

 

2.3           CESSATION
OF PARTICIPATION.  Active participation in the Plan shall end
when a Participant’s employment terminates for any reason or at such time as a
Participant is notified by the Committee, pursuant to Section 2.4, below,
that he or she is no longer eligible to participate in the Plan. Upon
termination of employment or eligibility, a Participant shall remain an
inactive Participant in the Plan until the vested Account of the Participant
under this Plan has been paid in full.

 

2.4           CESSATION
OF ELIGIBILITY.  The Committee may at any time, in its sole
discretion, notify any Participant that he or she is not eligible to
participate in the Plan, or is not eligible for Employer Contributions in any
Plan Year.

 

ARTICLE 3

CONTRIBUTIONS
AND CREDITS

 

3.1           PARTICIPANT
CONTRIBUTIONS AND CREDITS.

 

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

 

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

 

4

 

(c)           Timing
of Election.  The Election must be filed with the Committee
during the Open Enrollment Period for the Plan Year to which such Election
applies.

 

(d)           Irrevocable
Election.  The Participant’s Election with respect to his or her
Compensation Deferral is irrevocable for the rest of the Plan Year. Unless
increased, decreased or terminated during any subsequent Open Enrollment
Period, an Election shall remain in effect until so changed by the Participant
during such subsequent Open Enrollment Period. Increases or decreases in the
amount of Compensation a Participant elects to defer shall not be permitted
during the Plan Year.

 

(e)           Limitation
on Compensation Deferrals.  A Participant’s Compensation Deferral
Elections shall be subject to the following:

 

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

 

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

 

(3)           The
Compensation Deferrals elected by the Participant shall be reduced by the
amount(s), if any, which may be necessary, in the Committee’s sole and absolute
discretion: (i) to satisfy all applicable income and employment taxes
withholding and FICA contributions; (ii) to pay all contributions elected by
the Participant pursuant to any other Company benefit plan which would require
such compensation to be taken into account under such plan; and (iii) to
satisfy all garnishments or other amounts required to be withheld by applicable
law or court order.

 

(f)            No
Withdrawal.  Except as provided in Section 5.2 below, amounts
credited to a Participant’s Account may not be withdrawn by a Participant and
shall be paid only in accordance with the provisions of this Plan and
applicable Participant Election.

 

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

 

3.2           EMPLOYER
CONTRIBUTIONS AND CREDITS.

 

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

 

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

 

5

 

(c)           Forfeitures
for Misconduct.  If a Participant separates from service with the
Employer as a result of the Participant’s Gross Misconduct, as determined by
the Committee, the Participant shall forfeit all amounts allocated to his or
her Employer Contribution Account(s) under this Section 3 (regardless of the
vesting of such amounts). Such forfeitures shall be retained by the Employer. Notwithstanding
any provision of the Plan to the contrary, this Section 3.2(c) shall only be
enforceable to the extent authorized by applicable law.

 

ARTICLE 4

ALLOCATION
OF FUNDS

 

4.1           ALLOCATION
OF DEEMED EARNINGS OR LOSSES ON ACCOUNTS.  Subject to Section
4.3, each Participant shall have the right to direct the Committee as to how
amounts in his or her Account shall be deemed to be invested. Subject to such
limitations as may from time to time be required by law, imposed by the
Committee or the Trustee or contained elsewhere in the Plan, and subject to
such operating rules and procedures as may be imposed from time to time by the
Committee, prior to the date on which a direction will become effective, the Participant
shall have the right to direct the Committee as to how amounts in his or her
Compensation Deferral Account shall be deemed to be invested. The Committee
may, but is not required to, invest assets held by the Company on behalf of the
Participant pursuant to the deemed investment directions the Committee has
properly received from the Participant or instead may choose to invest in company
owned life insurance (COLI) as a means of funding any Plan Distributions based
on a Participant’s underlying investments and/or associated investment gains or
losses related to a Participant’s deemed investment directions, and may utilize
the Trust for the same in its discretion.

 

As of each Valuation Date, the Participant’s
Account will be credited or debited to reflect the Participant’s deemed
investments. The Participant’s Account will be credited or debited with the
increase or decrease in the realizable net asset value of the designated deemed
investments, as follows. As of each Valuation Date, an amount equal to the net
increase or decrease in realizable net asset value (as determined by the
Committee) of each deemed investment option within the Account since the
preceding Valuation Date shall be allocated among all Participants’ Accounts
deemed to be invested in that investment option in accordance with the ratio
which the portion of the Account of each Participant which is deemed to be
invested within that investment option, determined as provided herein, bears to
the aggregate of all amounts deemed to be invested within that investment
option.

 

4.2           ACCOUNTING
FOR DISTRIBUTIONS.  As of the date of any distribution hereunder,
the distribution made hereunder to the Participant or his or her Beneficiary or
Beneficiaries shall be charged to such Participant’s Account. Such amounts
shall be charged on a pro rata basis against the investments of the Plan in
which the Participant’s Account is deemed to be invested.

 

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

 

6

 

(a)           Any
initial or subsequent deemed investment direction shall be in writing, on a
form supplied by and filed with the Committee, and/or, as required or permitted
by the Committee, shall be by written designation and/or electronic
transmission designation. A designation shall be effective as of the
Designation Date next following the date the direction is received and accepted
by the Committee on which it would be reasonably practicable for the Committee
to effect the designation. The Participant may, if permitted by the Committee,
make a deemed investment direction for his or her existing Account balance as
of the Designation Date and a separate deemed investment direction for
contribution credits occurring after the Designation Date.

 

(b)           All
amounts credited to the Participant’s Account shall be deemed to be invested in
accordance with the then effective deemed investment direction, and as of the
Designation Date with respect to any new deemed investment direction, all or a
portion of the Participant’s Account at that date shall be reallocated among
the designated deemed investment funds according to the percentages specified
in the new deemed investment direction unless and until a subsequent deemed
investment direction shall be filed and become effective. An election
concerning deemed investment choices shall continue indefinitely as provided in
the Participant’s most recent Election, or other form specified by the
Committee.

 

(c)           If
the Employer receives an initial or revised deemed investment direction which
it deems to be incomplete, unclear or improper, the Participant’s investment
direction then in effect shall remain in effect (or, in the case of a
deficiency in an initial deemed investment direction, the Participant shall be
deemed to have filed no deemed investment direction) until the next Designation
Date, unless the Employer provides for, and permits the application of,
corrective action prior thereto.

 

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

 

(e)           Each
reference in this Section to a Participant shall be deemed to include, where
applicable, a reference to a Beneficiary.

 

ARTICLE 5

ENTITLEMENT
TO BENEFITS

 

5.1           FIXED
PAYMENT DATES; TERMINATION OF EMPLOYMENT.  During the Open
Enrollment Period of each Plan Year and on his or her Election a Participant
may select a fixed payment date for the payment of amounts (or a portion of
amounts) credited to his or her Account during the Plan Year for which the
Participant Election is effective, which will be valued and payable according
to the provisions of Article 6. Such fixed payment dates may be postponed to
later dates so long as elections to so postpone the dates are made by the
Participant at least twelve (12) months prior to the date on which the
distribution was originally scheduled to be made, the election will not take
effect until at least twelve (12) months after the date on which the election
is made, and the new postponed distribution date is at least five (5) years
from the originally scheduled date. Notwithstanding the foregoing, in no event
shall any such fixed payment date be accelerated to a date earlier than that
initially selected by the Participant.

 

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

 

7

 

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

 

If a Participant does not
make an election as provided above for any particular amounts hereunder, and
the Participant terminates employment with the Employer for any reason, other
than reaching Retirement, the Participant’s vested Account at the date of such
termination shall be valued and payable in a single lump sum as soon as
practicable after such termination according to the provisions of Article 6.

 

5.2           HARDSHIP
DISTRIBUTIONS.  In the event of an unforeseeable emergency of the
Participant, as hereinafter defined, the Participant may apply to the Committee
for the distribution of all or any part of his or her vested Account. The
Committee shall consider the circumstances of each such case, and the best
interests of the Participant and his or her family, and shall have the right,
in its sole discretion, if applicable, to allow such distribution, or, if
applicable, to direct a distribution of part of the amount requested, or to
refuse to allow any distribution. Upon a finding of unforeseeable emergency,
the Committee shall make the appropriate distribution to the Participant from
amounts under the Participant’s vested Account. In no event shall the aggregate
amount of the distribution exceed either the full value of the Participant’s
vested Account or the amount determined by the Committee to be necessary to
alleviate the Participant’s financial hardship (which financial hardship may be
considered to include any taxes due because of the distribution occurring
because of this Section) caused by the unforeseeable emergency, and which is
not reasonably available from other resources of the Participant. For purposes
of this Section, the value of the Participant’s vested Account shall be
determined as of the date of the distribution. “Unforeseeable Emergency” means
(a) a severe financial hardship to the Participant resulting from an illness or
accident of the Participant or of a dependent (as defined in Code section
152(a)) of the Participant, (b) loss of the Participant’s property due to
casualty, or (c) other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant, each as
determined to exist by the Committee. A distribution may be made under this
Section only with the written consent of the Committee.

 

5.3           RE-EMPLOYMENT
OF RECIPIENT.  If a Participant receiving installment
distributions by virtue of an entitlement due to termination of employment
after reaching Retirement is re-employed by the Employer, the remaining
distributions due to the Participant shall be suspended until such time as the
Participant (or his or her Beneficiary) once again becomes eligible for
benefits under Section 5.1, at which time such installment distributions shall
commence, subject to the limitations and conditions contained in this Plan.

 

5.4           LIMITATION
ON DISTRIBUTIONS TO COVERED EMPLOYEES.  Notwithstanding any other
provision of this Plan, in the event that the Participant is a “covered
employee” as that term is defined in Section 162(m)(3) of the Code, or would be
a covered employee if amounts were distributed in accordance with his or her
distribution election or hardship withdrawal, the maximum amount which may be
distributed from the Participant’s Account in any Plan Year shall not exceed
one million dollars ($1,000,000) less the amount of compensation paid to the
Participant in such Plan Year which is not “performance-based” (as defined in
Code Section 162(m)(4)(C) which amount shall be reasonably determined by the
Committee at the time of the proposed distribution. Any amount which is not
distributed to the Participant in a Plan Year as a result of this limitation
shall be distributed to the Participant in the next Plan Year, subject to
compliance with the foregoing limitations set forth in this Section 5.4. During
any such delay in payment, unpaid amounts shall continue to be credited (or
debited) with deemed investment income, gains and losses under Article 4. Notwithstanding
the foregoing, distribution of a Participant’s Account shall be made without
regard to the deductibility limitation of Code section 162(m) if the time for
distribution is accelerated pursuant to Section 9.3 or Section 10.3.

 

8

 

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

 

ARTICLE 6

DISTRIBUTION
OF BENEFITS

 

6.1           AMOUNT.  The
value of the Participant’s (or his or her Beneficiary’s) distribution shall be
equal to the vested value of the Participant’s Account as of the Valuation Date
or such other date as the Committee may specify, each as adjusted for Participant
Compensation Deferrals, Employer Contributions, and/or withdrawals which have
been subsequently credited thereto or made therefrom prior to the distribution
date.

 

6.2           TIMING
OF DISTRIBUTION.  Subject to the Participant having satisfied all
applicable tax withholding obligations, distributions shall be paid (or,
payments shall commence in installments) as soon as practicable after the earlier
of:

 

(a)           The
fixed payment date designated by the Participant; or

 

(b)           The
date as soon as administratively feasible following the Participant’s
termination of employment with the Employer, death, or Disability.

 

6.3           METHOD
OF DISTRIBUTION.  In advance of each Plan Year a Participant
shall have the right to determine how that year’s deferral is to be
distributed. The Participant will have this option annually during the open
enrollment period. Account shall be paid in one of the following methods, as
specified in his or her Election:

 

(a)           A
single lump sum payment;

 

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

 

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

 

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

 

9

 

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

 

ARTICLE 7

BENEFICIARIES;
PARTICIPANT DATA

 

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

 

In the absence of a valid Beneficiary
designation, or if, at the time any benefit payment is due to a Beneficiary,
there is no living Beneficiary validly named by the Participant, the Employer
shall pay any such benefit payment to the Participant’s spouse, if then living,
but otherwise to the Participant’s then living descendants, if any, per
stirpes, but, if none, to the Participant’s estate. In determining the existence
or identity of anyone entitled to a benefit payment, the Employer may rely
conclusively upon information supplied by the Participant’s personal
representative, executor or administrator. If a question arises as to the
existence or identity of anyone entitled to receive a benefit payment as
aforesaid, or if a dispute arises with respect to any such payment, then,
notwithstanding the foregoing, the Employer, in its sole discretion, may
distribute such payment to the Participant’s estate without liability for any
tax or other consequences which might flow therefrom, or may take such other
action as the Employer deems to be appropriate.

 

7.2           INFORMATION
TO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES; INABILITY TO LOCATE
PARTICIPANTS OR BENEFICIARIES.  Any communication, statement or
notice addressed to a Participant or to a Beneficiary at his or her last post
office address as shown on the Employer’s records shall be binding on the
Participant or Beneficiary for all purposes of the Plan. The Committee shall not
be obliged to search for any Participant or Beneficiary beyond the sending of
notice to such last known address. If the Committee notifies any Participant or
Beneficiary that he or she is entitled to an amount under the Plan and the
Participant or Beneficiary fails to claim such amount or make his or her
location known to the Committee within three (3) years thereafter, then, except
as otherwise required by law, if the location of one or more of the next of kin
of the Participant is known to the Committee, the Committee may direct
distribution of such amount to any one or more or all of such next of kin, and
in such proportions as the Committee determines. If the location of none of the
foregoing persons can be determined, the Committee shall have the right to
direct that the amount payable shall be deemed to be a forfeiture, except that
the dollar amount of the forfeiture, unadjusted for deemed gains or losses in
the interim, shall be paid by the Committee if a claim for the benefit
subsequently is made by the Participant or the Beneficiary to whom it was
payable. If a benefit payable to an unlocated Participant or Beneficiary is
subject to escheat pursuant to applicable state law, the Committee shall not be
liable to any person for any payment made in accordance with such law.

 

ARTICLE 8

ADMINISTRATION

 

8.1           COMMITTEE
POWERS AND RESPONSIBILITIES.  The Committee shall have the
complete control of the administration of the Plan herein set forth with all
the powers

 

10

 

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

 

(a)           Construe
the trust agreement to determine all questions that shall arise as to the
interpretations of the Plan’s provisions including determination of which
individuals are Eligible Employees and the determination of the amounts
credited to a Participant’s Account, and the appropriate timing and method of
distributions.

 

(b)           Adopt
such rules of procedure and regulations as in its opinion may be necessary for
the proper and efficient administration of the Plan and as are consistent with
the Plan.

 

(c)           Implement
the Plan in accordance with its terms and the rules and regulations adopted as
above.

 

(d)           Appoint
any persons or firms, or otherwise act to secure specialized advice or
assistance, as it deems necessary or desirable in connection with the
administration and operation of the Plan, and the Committee shall be entitled
to rely conclusively upon, and shall be fully protected in any action or
omission taken by it in good faith reliance upon, the advice or opinion of such
firms or persons. The Committee may authorize one or more persons to execute
any certificate or document on behalf of the Company, an Employer or the
Committee, in which event any person notified by the Committee of such
authorization shall be entitled to accept and conclusively rely upon any such
certificate or document executed by such person as representing action by the
Committee until such notified person shall have been notified of the revocation
of such authority.

 

(e)           Subject
to Article 9 hereof, adopt amendments to the Plan document which are deemed
necessary or desirable to facilitate administration of the Plan and/or to bring
the Plan into compliance with all applicable laws and regulations, provided
that the Committee shall not have the authority to adopt any Plan amendment
that will result in substantially increased costs to the Company unless such
amendment is either expressly authorized by the Board or contingent upon
ratification by the Board before becoming effective.

 

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

 

(g)           Compile
and maintain all records it determines to be necessary, appropriate or
convenient in connection with the administration of the Plan.

 

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

 

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

 

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

 

8.2           UNIFORMITY
OF DISCRETIONARY ACTS.  Whenever in the administration or
operation of the Plan discretionary actions by the Employer are required or
permitted, such actions shall be consistently and uniformly applied to all
persons similarly situated, and no such action shall be taken which shall
discriminate in favor of any particular person or group of persons.

 

8.3           LITIGATION.  Except
as may be otherwise required by law, in any action or judicial proceeding
affecting the Plan, no Participant or Beneficiary shall be entitled to any
notice

 

11

 

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

 

8.4           INDEMNIFICATION.  To
the extent permitted by law, the Company shall indemnify each member of the
Committee, and any other employee or member of the Board with duties under the
Plan, against losses and expenses (including any amount paid in settlement)
reasonably incurred by such person in connection with any claims against such
person by reason of such person’s conduct in the performance of duties under
the Plan, except in relation to matters as to which such person has acted
fraudulently or in bad faith in the performance of duties. Notwithstanding the
foregoing, the Company shall not indemnify any person for any expense incurred
through any settlement or compromise of any action unless the Company consents
in writing to the settlement or compromise.

 

8.5           CLAIMS
PROCEDURE.

 

(a)           Initial
Claim.  A Participant or Beneficiary who believes he or she is
entitled to any Benefit (a “Claimant”) under this Plan may file a claim with
the Committee. The Committee shall review the claim itself or appoint an
individual or an entity to review the claim.

 

(i)            Benefit
Claim.  The Claimant shall be notified within ninety days after
the claim is filed whether the claim is allowed or denied, unless the Claimant
receives written notice from the Committee or from an appointee of the
Committee before the end of the ninety day period stating that special
circumstances require an extension of the time for decision. Any such extension
will not extend beyond one hundred eighty days after the day the claim is
filed.

 

(ii)           Manner
and Content of Denial of Initial Claims.  If the Plan
Administrator denies a claim, it must provide to the Claimant, in writing or by
electronic communication:

 

(A)          The
specific reasons for the denial;

 

(B)           A
reference to the Plan provision or insurance contract provision upon which the
denial is based;

 

(C)           A
description of any additional information or material that the Claimant must
provide in order to perfect the claim;

 

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

 

(E)           Notice
that the Claimant has a right to request a review of the claim denial and
information on the steps to be taken if the Claimant wishes to request a review
of the claim denial; and

 

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

 

(b)           Review
Procedures.

 

(i)            Benefit
Claims.  A request for review of a denied claim must be made in
writing to the Plan Committee within sixty days after receiving notice of
denial. The decision upon review will be made within sixty days after the Plan
Committee’s receipt of a request for review, unless special circumstances
require an extension of time for processing, in which case a decision will be
rendered not later than one hundred twenty days after receipt of a request for
review. A notice of such an extension must be provided to the Claimant within
the

 

12

 

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

 

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

 

(ii)           Manner
and Content of Notice of Decision on Review.  Upon completion of
its review of an adverse initial claim determination, the Plan Committee will
give the Claimant, in writing or by electronic notification, a notice
containing:

 

(A)          its
decision;

 

(B)           the
specific reasons for the decision;

 

(C)           the
relevant Plan provisions or insurance contract provisions on which its decision
is based;

 

(D)          a
statement that the Claimant is entitled to receive, upon request and without
charge, reasonable access to, and copies of, all documents, records and other
information in the Plan’s files which is relevant to the Claimant’s claim for
benefits;

 

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

 

(F)           if
an internal rule, guideline, protocol or other similar criterion was relied
upon in making the adverse determination on review, a statement that a copy of
the rule, guideline, protocol or other similar criterion will be provided
without charge to the Claimant upon request.

 

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

 

(d)           Failure
of Plan to Follow Procedures.  If the Plan fails to follow the
claims procedures required by this Section 8.5, a Claimant shall be deemed to
have exhausted the administrative remedies available under the Plan and shall
be entitled to pursue any available remedy under ERISA section 502(a) on the
basis that the Plan has failed to provide a reasonable claims procedure that
would yield a decision on the merits of the claim. If the Claimant fails to
follow the claims procedures required by this Section 8.5, the Claimant shall
not be entitled to pursue any further legal action, claim or remedy until such
time as the Claimant, to the extent applicable, exhausts the administrative
remedies available under the Plan.

 

13

 

ARTICLE 9

AMENDMENT

 

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

 

9.2           AMENDMENTS
TO ENSURE PROPER CHARACTERIZATION OF PLAN.  Notwithstanding the
provisions of Section 9.1, the Plan may be amended by the Committee or the
Company, by action of its Board, at any time, retroactively if required, if
found necessary, in the opinion of the Committee or the Board, in order to
ensure that the Plan is characterized as a “top-hat” plan of deferred
compensation maintained for a select group of management or highly compensated
employees as described under ERISA sections 201(2), 301(a)(3), and 401(a)(1),
and to conform the Plan to the provisions and requirements of any applicable
law (including specifically Section 409A of the Code, and other applicable
portions of ERISA and the Code). No such amendment shall be considered
prejudicial to any interest of a Participant or a Beneficiary hereunder.

 

9.3           CHANGES
IN LAW AFFECTING TAXABILITY.

 

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

 

(b)           Affected
Right or Feature Nullified.  Notwithstanding any other Section of
this Plan to the contrary (but subject to subsection (c), below), as of an
Early Taxation Event, the feature or features of this Plan that would cause the
Early Taxation Event shall be null and void, to the extent, and only to the
extent, required to prevent the Participant from being required to include in
his or her federal gross income amounts accrued by the Participant under the
Plan prior to the date on which such amounts are made available to him or her
hereunder. If only a portion of a Participant’s Account is impacted by the
change in the law, then only such portion shall be subject to this Section,
with the remainder of the Account not so affected being subject to such rights
and features as if the law were not changed. If the law only impacts Participants
who have a certain status with respect to the Employer, then only such
Participants shall be subject to this Section.

 

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

 

14

 

ARTICLE 10

TERMINATION

 

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

 

10.2         SUSPENSION
OF DEFERRALS.  In the event of a suspension of the Plan, the
Employer shall continue all aspects of the Plan, other than Compensation
Deferrals and Employer Contributions, during the period of the suspension, in
which event payments hereunder will continue to be made during the period of
the suspension in accordance with Articles 5 and 6.

 

10.3         ALLOCATION
AND DISTRIBUTION.  This Section shall become operative on a
complete termination of the Plan. The provisions of this Section also shall
become operative in the event of a partial termination of the Plan, as
determined by the Employer, but only with respect to that portion of the Plan
attributable to the Participants to whom the partial termination is applicable.
Upon the effective date of any such event, notwithstanding any other provisions
of the Plan, no persons who were not theretofore Participants shall be eligible
to become Participants, the value of the interest of all Participants and
Beneficiaries shall be determined and, after deduction of estimated expenses in
liquidating and, if applicable, paying Plan benefits, paid to them as soon as
is practicable after such termination.

 

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

 

ARTICLE 11

THE TRUST

 

11.1         ESTABLISHMENT
OF TRUST.  The Employer, in its sole and absolute discretion, will
establish an irrevocable Trust with a qualified trustee pursuant to such terms
and conditions as are set forth in a Trust agreement to be entered into between
the Employer and such trustee (the Trustee). Or, the Employer will cause to be
maintained one or more separate subaccounts in an existing Trust maintained
with the Trustee with respect to one or more other plans of the Employer, which
subaccount or subaccounts represent Participants’ interests in the Plan. The
Employer shall have the discretion to make contributions to such Trust that
correspond to credits to Participants’ Accounts and/or to invest Trust assets
in a manner that corresponds to Participants’ selected deemed investments in
order to provide a source of funds with which the Employer shall pay Plan
benefits as they become due. Alternatively, the Employer may contribute certain
proceeds from any company owned life insurance established for the purposes of
this Plan into such Trust.

 

15

 

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

 

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

 

ARTICLE 12

MISCELLANEOUS

 

12.1         LIMITATIONS
ON LIABILITY OF EMPLOYER.  Neither the establishment of the Plan
nor any modification thereof, nor the creation of any account under the Plan,
nor the payment of any benefits under the Plan shall be construed as giving to
any Participant or other person any legal or equitable right against the
Employer or the Company’s Parent, or any officer or employer thereof except as
provided by law or by any Plan provision. The Employer and the Company’s Parent
do not in any way guarantee any Participant’s Account from loss or
depreciation, whether caused by poor investment performance of a deemed
investment or the inability to realize upon an investment due to an insolvency
affecting an investment vehicle or any other reason. In no event shall the
Employer, the Company’s Parent, or any successor, employee, officer, director
or stockholder of the Employer or the Company’s Parent, be liable to any person
on account of any claim arising by reason of the provisions of the Plan or of
any instrument or instruments implementing its provisions, or for the failure
of any Participant, Beneficiary or other person to be entitled to any
particular tax consequences with respect to the Plan, or any credit or
distribution hereunder.

 

12.2         CONSTRUCTION.  The
laws of the state of California shall govern, control and determine all
questions of law arising with respect to the Plan and the interpretation and
validity of its respective provisions, except where those laws are preempted by
the laws of the United States. Participation under the Plan will not give any
Participant neither the right to be retained in the service of the Employer nor
any right or claim to any benefit under the Plan unless such right or claim has
specifically accrued hereunder.

 

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

 

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

 

16

 

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

 

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

 

12.4         TAX
WITHHOLDING.  Distribution and withdrawal payments under this
Plan shall be subject to all applicable withholding requirements for state and
federal income taxes and to any other federal, state or local taxes that may be
applicable to such payments. The Employer shall have the right, but not the
obligation, to deduct from any distribution from the Plan, that amount equal to
all or any part of the federal, state, local and foreign taxes, if any,
required by law to be withheld by the Employer with respect to such
distributions. Alternatively or in addition, in its discretion, the Employer shall
have the right to require a Participant, through payroll withholding, cash
payment or otherwise, to make adequate provision for any such tax withholding
obligations of the Company arising in connection with any distribution from the
Plan. The Trustee shall have no obligation to distribute amounts form the Trust
until the Employer’s tax withholding obligations have been satisfied by the
Participant.

 

12.5         NO
EMPLOYMENT AGREEMENT.  Nothing contained herein shall be
construed as conferring upon any Participant the right to continue in the
employ of the Employer or the Company’s Parent as an employee.

 

12.6         ATTORNEY’S
FEES.  If the Employer, the Participant, any Beneficiary, any
beneficiary under an insurance policy purchased under the Trust, and/or a
successor in interest to any of the foregoing, brings legal action to enforce
any of the provisions of this Plan, the prevailing party in such legal action
shall be reimbursed by the other party, the prevailing party’s costs of such
legal action including, without limitation, reasonable fees of attorneys,
accountants and similar advisors and expert witnesses.

 

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

 

12.8         ENTIRE
AGREEMENT.  This Plan constitutes the entire understanding and
agreement with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations or warranties among
any Participant and the Employer other than those as set forth or provided for
herein.

 

12.9         SEVERABILITY.  If
any provision of this Plan is determined, by the Committee or any governmental
agency or court decision, to be unenforceable or invalid under any applicable
law, such unenforceability or invalidity shall not render this Plan
unenforceable or invalid as a whole, and such provision shall be changed and
interpreted by the Committee, in its sole discretion, so as to best accomplish
the objectives of such unenforceable or invalid provision within the limits of
applicable law or applicable court decisions.

 

17

 

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

 

	
   

  	
  InterDent Service
  Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated: January 1, 2006

  	
  By:

  	
  /s/ Robert Hill

  

 

18

 

ADDENDUM A

 

(a) Employer
Contributions.  Employer Contributions will be made to affiliated
dentists (whether employees or non-employee service providers) quarterly based
on their achievement of predetermined performance goals and will be vested to
the participant based on the schedule provided in the Vesting section of this
Addendum. These performance goals will be reviewed annually, and may be revised
accordingly. For each affiliated dentist that produces a minimum of $120,000 of
Adjusted Production Revenue per calendar quarter, their Employer will make a
contribution equal to five percent (5%) multiplied by that affiliated dentist’s
quarterly Adjusted Production Revenue-based gross wages into their Plan account.
Adjusted Production Revenue is defined as all production based revenue directly
attributable to Participant, generated at an Employer-affiliated office, less
any sales adjustments (direct or accrued), as commonly displayed on Company
information systems, and as used to calculate Participant’s regular paycheck
from Employer, specifically excluding all revenue generated from capitated
revenue sources. Only affiliated dentists are eligible for such Employer Contributions
– no management, or non-production-revenue-generating affiliated dentists are
eligible for an Employer Contribution.

 

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

 

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

 

	
   

  	
   

  	
  Vested % at date

  	
   

  
	
  Contribution Year

  	
   

  	
  12/31/2007

  	
   

  	
  12/31/2008

  	
   

  	
  12/31/2009

  	
   

  	
  12/31/2010

  	
   

  	
  12/31/2011

  	
   

  
	
  2006

  	
   

  	
  33

  	
  %

  	
  33

  	
  %

  	
  34

  	
  %

  	
   

  	
   

  	
   

  	
   

  
	
  2007

  	
   

  	
   

  	
   

  	
  33

  	
  %

  	
  33

  	
  %

  	
  34

  	
  %

  	
   

  	
   

  
	
  2008

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  33

  	
  %

  	
  33

  	
  %

  	
  34

  	
  %

  

 

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

 

Until such amounts are
vested, the Committee will direct such deemed investment into a moderate
allocation investment. While this deemed investment is a balanced, more conservative
selection, there is still risk involved and there is no guarantee as to capital
preservation. Once vested, the Participant shall have the right to direct the
Committee as to how such vested amounts should be subsequently deemed to be invested.

 

19

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