Document:

exv10w5

 

EXHIBIT 10.5

AMENDED AND RESTATED SEPARATION BENEFITS AGREEMENT

          THIS AMENDED AND RESTATED SEPARATION BENEFITS AGREEMENT is made this 23rd day of
April, 2007 (this “Agreement”), by and between THORATEC CORPORATION, a California corporation (the
“Company”), and David V. Smith (the “Executive”) and is intended to amend and restate any and all
separation benefits agreements, offer letters or understandings previously entered into between
Executive and the Company with respect to such benefits (“the Original Separation Benefits
Agreement”).

WITNESSETH

          WHEREAS, the Company desires to employ or continue to employ Executive and in order to attract
and retain the services of Executive, the Company is willing to provide certain severance and other
benefits to the Executive as described herein; and

          WHEREAS, by reason of Executive’s employment with the Company, Executive will receive access
to and possession of Company Confidential Information (as more fully set forth in Exhibit A), as
shall exist from time to time; and

          WHEREAS, the Company and Executive each desire to make certain amendments and changes to the
Original Separation Benefits Agreement to be reflected in this Agreement.

          NOW THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Executive hereby agree as follows:

          1. Effectiveness. This Agreement is effective as of the date first noted above.

          2. Separation Benefits.

               (a) Termination of Executive Without Cause. If the Executive’s employment is
involuntarily terminated by the Company without Cause (as defined below), the Executive shall be
paid a severance pay benefit equal to one (1) times the Executive’s then-current annual base
salary. Such amount shall be payable in compliance with Section 7, in a cash lump sum as soon as
practicable (as provided by law) after the Executive’s termination of employment and after the
Executive executes and delivers an effective release of claims, in a form acceptable to the Company
and at the time specified by the Company, and remains in compliance with all applicable restrictive
covenants, including those set forth in this Agreement and the Employee Confidential Information
and Inventions Agreement between the Company and Executive attached as Exhibit A hereto (the “ECII
Agreement”).

 

 

               (b) Termination of Executive After a Change of Control. Notwithstanding Section 2(a),
if the Executive would otherwise have been entitled to benefits pursuant to Section 2(a) but the
Executive’s involuntary termination of employment by the Company occurs on or within eighteen (18)
months after a Change of Control, or if the Executive terminates employment with the Company for
Good Reason during such period, the Executive shall be paid in lieu of the severance pay benefit
described in Section 2(a) a Change of Control severance pay benefit equal to two (2) times the
Executive’s then-current annual base salary plus two (2) times the greatest of (a) the target bonus
for the year preceding the year in which the Executive’s termination occurs, (b) the actual bonus
for such prior year, or (c) the target bonus for the year in which the termination of employment
occurs. For the avoidance of doubt, the term “bonus” as used in this section 2(b) shall not
include any part of the “Sign On Bonus” described in section 2(d) below, and such Sign On Bonus
shall not be included in the calculation of the Change of Control severance payment described in
the immediately preceding sentence. Such amounts shall be payable in compliance with Section 7, in
a cash lump sum as soon as practicable (as provided by law) after the Executive’s termination of
employment and after the Executive executes and delivers an effective release of claims, in a form
acceptable to the Company and at the time specified by the Company, and remains in compliance with
all applicable restrictive covenants, including those set forth in this Agreement and the ECII
Agreement.

               (c) COBRA Benefit. If the Executive is entitled to receive benefits pursuant to
Section 2(a) or 2(b), and if the Executive elects health care continuation coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), as provided by the Company’s
group health plan, then, in each of the first twelve (12) consecutive months following termination
of employment that the Executive has not become employed by another company which offers health
insurance generally comparable with that of the Company at the time of Executive’s termination, the
Company shall pay in monthly payments at the beginning of each such month, an amount equal to the
monthly amount paid by the Company immediately before termination of employment for the Executive’s
health coverage.

               (d) Sign on Bonus: Pursuant to the offer letter between the Executive and the Company
dated November 21, 2006, Executive was granted a sign on bonus of two hundred forty thousand
dollars ($240,000.00) (the “Sign On Bonus”). This bonus will be paid out in four equal
installments of sixty thousand dollars ($60,000). The first installment was paid to Executive
within 30 days of Executive’s date of hire (December 29, 2006), and the remaining installments will
be paid on each of the one year, two year and three year anniversary dates of such first
installment of the Sign On Bonus (each such anniversary, a “Sign On Bonus Anniversary Date”). This
Sign On Bonus is subject to all normal and appropriate payroll withholdings.

                    (i) In the event the Executive’s employment with the Company is terminated prior to the third
and final Sign On Bonus Anniversary Date, except as provided in section 2(d)(ii) below, Executive
will forfeit his entitlement to any

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unpaid installments of his Sign On Bonus and will also remit to the Company a pro-rata portion
of the immediately preceding Sign On Bonus payment received by Executive, representing the amount
attributable to the remaining months left to the next Payment Anniversary Date.

                    (ii) In the event the Executive’s employment with the Company is terminated prior to the third
and final Sign On Anniversary Date by Thoratec without Cause on or within eighteen (18) months
after a Change of Control, or if the Executive terminates employment with the Company for Good
Reason during such period, in addition to the Change of Control severance benefit described in
Section 2(b), the Executive shall be paid the portion of the Sign On Bonus that would otherwise
have been paid to Executive on the next succeeding Sign On Bonus Anniversary Date which follows the
effective date of such termination of employment. Such amounts of the Sign On Bonus shall be
payable in compliance with Section 7, in a cash lump sum as soon as practicable (as provided by
law) after the Executive’s termination of employment and after the Executive executes and delivers
an effective release of claims, in a form acceptable to the Company and at the time specified by
the Company, and remains in compliance with all applicable restrictive covenants, including those
set forth in this Agreement and the ECII Agreement.

               (e) For purposes of this Agreement, the following terms have the following meanings:

                    (i) “Cause” shall mean (A) the Executive’s material misappropriation of personal property of
the Company (including its subsidiaries) that is intended to result in a personal financial benefit
to the Executive or to members of the Executive’s family, (B) the Executive’s conviction of, or
plea of guilty or no contest to, a felony, which the Company reasonably believes has had or will
have a material detrimental effect on the Company’s reputation or business, (C) the Executive’s act
of gross negligence or willful misconduct (including but not limited to any willfully dishonest or
fraudulent act or omission) taken in connection with the performance or intentional nonperformance
of any of the Executive’s duties and responsibilities as an employee or continued neglect of the
Executive’s duties to the Company (including its subsidiaries), or (D) the Executive’s continued
willful or grossly negligent failure to comply with the lawful directions of the Company after
there has been delivered to the Executive a written demand for performance from the Company that
describes the basis for its belief that the Executive has not substantially performed the
Executive’s duties and the Executive fails to cure such act or omission to the Company’s reasonable
satisfaction, if such act or omission is reasonably capable of being cured, no later than five (5)
business days following delivery of such written demand .

                    (ii) “Change of Control” shall mean the occurrence of any of the following events: (A) any
“person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)) becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing fifty percent
(50%) or

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more of the total voting power represented by the Company’s then outstanding voting
securities; or (B) the consummation of a sale of substantially all of the Company’s assets; or (C)
the consummation of a merger or consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or its parent) at least fifty percent
(50%) of the total voting power represented by the voting securities of the Company or such
surviving entity or its parent outstanding immediately after such merger or consolidation; or (D) a
change in the composition of the Board occurring within a two-year period, as a result of which
fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean
directors who either (x) are directors of the Company as of February 15, 2007 or (y) are elected,
or nominated for election, to the Board with the affirmative votes of at least a majority of those
directors whose election or nomination was not in connection with any transaction described in
subsections (A), (B), or (C) above, or in connection with an actual or threatened proxy contest
relating to the election of directors to the Company.

                    (iii) “Good Reason” shall mean any material reduction in the duties or salary or bonus
opportunity of the Executive or a requirement that the Executive work at a facility more than
twenty five (25) miles from the Company facility where the Executive is then employed without the
Executive’s written consent.

          3. Gross-Up for Excise Tax. In the event that any payment and any separation benefit
or other benefit (including without limitation, any acceleration of Equity Units (as defined herein
below)) payable or due to or for the benefit of , or received by or on behalf of, the Executive,
whether under this Agreement or otherwise (determined without regard to any additional payment
required under this paragraph) (a “Payment”) is subject to the excise tax (the “Excise Tax”)
imposed by section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), then the
Executive shall be paid an additional payment (a “Gross-Up Payment”) in an amount such that after
payment by the Executive of all taxes, including, without limitation, any income taxes and Excise
Tax imposed upon the Gross-Up Payment, the Executive shall retain the full amount of the Payment
without being reduced by the Excise Tax imposed upon the Payment. For avoidance of doubt, the
Executive and the Company agree that this Section 3 shall not be interpreted to compensate the
Executive for any other tax to which the Payment may be subject, including but not limited to
income and employment taxes.

          4. Benefits Subject to Execution of Waiver of Claims. The Executive shall not be
entitled to receive any amount or benefit pursuant to Section 2 of this Agreement unless the
Executive executes and delivers an effective release of claims in a form acceptable to the Company
and at the time specified by the Company and remains in compliance with all provisions of this
Agreement.

          5. Acceleration of Stock Options and Stock Grants Upon A Change of Control. In the
event of a Change of Control of the Company, any options to purchase

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Company common stock, shares of restricted stock or restricted stock units (collectively,
“Equity Units”) that have been granted to the Executive by the Company that are outstanding, but
not yet exercisable or as to which restrictions have not yet lapsed, in whole or in part, as of the
effective date of such Change of Control, shall

               (a) with respect to all Equity Units granted to Executive prior to April 2007, become fully
vested and exercisable and shall be otherwise exercisable in accordance with the terms of the stock
option grant, restricted stock grant or restricted stock unit grant and applicable Thoratec stock
option or incentive stock plan; and

               (b) with respect to all Equity Units granted to Executive during or subsequent to April 2007,
if the Company terminates the employment of the Executive without Cause on or within eighteen (18)
months after a Change of Control, or if the Executive terminates employment with the Company for
Good Reason during such period, all such Equity Units shall become fully vested and exercisable
and shall be otherwise exercisable in accordance with the terms of the stock option grant,
restricted stock grant or restricted stock unit grant and applicable Thoratec stock option or
incentive stock plan.

          6. Exclusivity of Agreement. The benefits provided in this Agreement are in lieu of
any other severance-type benefits provided by the Company under any other plan, agreement,
arrangement or policy, notwithstanding the terms of any such other plan, agreement, arrangement or
policy.

          7. Section 409A Compliance. Notwithstanding anything to the contrary in this
Agreement, if the Company determines that any payment or benefit to be provided to the Executive by
the Company pursuant to this Agreement is or may become subject to the additional tax under Section
409A(a)(1)(B) of the Code or any other taxes or penalties imposed under Section 409A of the Code
(“409A Taxes”) if provided at the time otherwise required under this Agreement, then:

               (a) such payments shall be delayed until the date that is six months after the date of the
Executive’s “separation from service” (as such term is defined under Section 409A) with the
Company, or such shorter period that, as determined by the Company, is sufficient to avoid the
imposition of 409A Taxes; and

               (b) with respect to the provision of such benefit, for a period of six (6) months following
the date of the Executive’s “separation from service” (as such term is defined under Section 409A)
with the Company, or such shorter period, that, as determined by the Company, is sufficient to
avoid the imposition of 409A Taxes, Executive shall be responsible for the full cost of providing
such benefits.

          8. Non-disparagement. Except as required by law or legal process, Executive agrees
that during and subsequent to the term of this Agreement, he will not disparage any aspect of the
Company or its successors or assigns, including but not limited to its officers, management,
employees and products.

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          9. Miscellaneous.

               (a) Any notice or other communication required or permitted under this Agreement shall be
effective only if it is in writing and delivered personally or sent by registered or certified
mail, postage prepaid, addressed as follows (or if it is sent through any other method agreed upon
by the parties):

If to the Company:

Thoratec Corporation

6035 Stoneridge Drive

Pleasanton, CA 94588

Attention: Vice President of Human Resources

If to the Executive:

At Executive’s address most recently

provided to the Company by Executive.

or to such other address as any party hereto may designate by notice to the other, and shall be
deemed to have been given upon receipt.

               (b) This Agreement by and between the Executive and the Company constitutes the entire
agreement between the parties hereto with respect to the matters herein, and supersedes and is in
full substitution for any and all prior understandings or agreements, whether oral or written, with
respect to the matters herein, including without limitation, any prior separation benefits
agreement, plan or offer letter between Executive and the Company, including the Original
Separation Benefits Agreement, provided, however, that the ECII Agreement shall remain in full
force and effect and shall not be superseded or substituted by this Agreement.

               (c) This Agreement may be amended only by an instrument in writing signed by the parties
hereto, and any provision hereof may be waived only by an instrument in writing signed by the party
against whom or which enforcement of such waiver is sought. Notwithstanding the foregoing, the
Company may in its sole discretion, amend this Agreement at any time as may be necessary to avoid
the imposition of the additional tax under Section 409(A)(a)(1)(B) of the Code; provided, however,
that any such amendment shall be implemented in such a manner as to preserve, to the greatest
extent possible, the terms and conditions of the Agreement as in existence immediately prior to any
such amendment. The failure of any party hereto at any time to require the performance by any
other party hereto of any provision hereof shall in no way affect the full right to require such
performance at any time thereafter, nor shall the waiver by any party hereto of a breach of any
provision hereof be taken or held to be a waiver of any succeeding breach of such provision or a
waiver of the provision itself or a waiver of any other provision of this Agreement.

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               (d) This Agreement shall be binding upon and inure to the benefit of the executors,
administrators, heirs, successors, and assigns of the parties; provided, however, that except as
herein expressly provided, this Agreement shall not be assignable either by the Company (except to
an affiliate or successor of the Company) or by Executive without the prior written consent of the
other party. Any attempted assignment in contravention of this Section 9(d) shall be void.

               (e) The Company shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such succession had taken
place. As used in the Agreement, the “Company” shall mean both the Company as defined above and
any such successor that assumes and agrees to perform this Agreement, by operation of law or
otherwise.

               (f) The Company may withhold from any amounts payable to the Executive hereunder all federal,
state, city or other taxes that the Company may reasonably determine are required to be withheld
pursuant to any applicable law or regulation.

               (g) This Agreement shall be governed by and construed in accordance with the laws of the state
of California, without reference to principles of conflicts of law. The Executive hereby submits
to the jurisdiction and venue of the courts of the State of California and the Federal Courts of
the United States of America located within the County of Alameda for purposes of any action
relating to or arising out of this Agreement. The Executive further agrees that service upon him
in any such action or proceeding may be made by first class mail, certified or registered, to the
Executive’s address as last appearing on the records of the Company.

               (h) This Agreement may be executed in several counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.

               (i) The headings in this Agreement are inserted for convenience of reference only and shall
not be a part of or control or affect the meaning of any provision hereof.

               (j) All provisions of this Agreement are intended to be severable. In the event any provision
or restriction contained herein is held to be invalid or unenforceable in any respect, in whole or
in part, such finding will in no way affect the validity or enforceability of any other provision
of this Agreement. The parties hereto further agree that any such invalid or unenforceable
provision will be deemed modified so that it will be enforced to the greatest extent permissible
under law, and to the extent that any court of competent jurisdiction determines any restriction
herein to be unreasonable in any respect, such court may limit this Agreement to render it
reasonable in

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light of the circumstances in which it was entered into and specifically enforce this
Agreement as limited.

               (k) The Executive acknowledges and confirms that the Executive has had the opportunity to seek
such legal, financial and other advice and representation as the Executive has deemed appropriate
in connection with this Agreement.

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.

	 	 	 	 	 	 	 
	EXECUTIVE

	 	 	 	THORATEC CORPORATION	 	 
	 
	 	 	 	 	 	 
	/s/ David V. Smith

	 	 	 	/s/ Gerhard F. Burbach	 	 
	 

	 	 	 	 	 	 
	David V. Smith

	 	 	 	Gerhard F. Burbach	 	 
	 

	 	 	 	President & CEO
	 	 

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Exhibit A

Employee Confidential Information and Inventions Agreement

 

 

EMPLOYEE CONFIDENTIAL INFORMATION AND

INVENTIONS AGREEMENT

     In partial consideration and as a condition of my employment or continued employment with
Thoratec Corporation, a California corporation (which together with any parent, subsidiary,
affiliate, or successor is hereinafter referred to as the “Company” or “Thoratec”), and effective
as of the date that my employment with the Company first commenced, I hereby agree as follows:

	 	1.	 	NONCOMPETITION

                    During my employment with the Company, I will perform for the Company such duties as it may
designate from time to time and will devote my full time and best efforts to the business of the
Company and will not, without the prior written approval of (i) an officer of the Company if I am
not an executive officer of the Company or (ii) the Board of Directors of the Company if I am an
executive officer of the Company, (a) engage in any other professional employment or consulting, or
(b) directly or indirectly participate in or assist any business which is a current or potential
supplier, customer, or competitor of the Company.

	 	2.	 	THORATEC’S BUSINESS
	 
	 	 	 	The general line of business of the Company includes but is not limited to:

	 	(i)	 	development, manufacture and sale of (1) medical equipment,
devices, apparatus and instrumentation; (2) specialty polymer and chemicals and
configured polymer parts; and (3) high performance textiles and textile
products;
	 
	 	(ii)	 	all equipment and items related to the above; and
	 
	 	(iii)	 	all matters which are recorded in the Company’s records and
notebooks.

	 	3.	 	CONFIDENTIALITY OBLIGATION

                    I will hold all Thoratec Confidential Information in confidence and will not disclose, use,
copy, publish, summarize, or remove from Thoratec’s premises any Confidential Information, except
(a) as necessary to carry out my assigned responsibilities as a Thoratec employee, and (b) after
termination of my employment, only as specifically authorized in writing by an officer of Thoratec.
“Confidential Information” is all information related to any aspect of Thoratec’s business which
is either information not known by actual or potential competitors of the Company or is proprietary
information of the Company, whether of a technical nature or otherwise. Confidential Information includes computer programs, computer
source code, inventions, discoveries, ideas, designs, circuits, schematics, formulas, algorithms,
trade secrets, secret procedures, works of authorship, developmental or experimental work,
processes, techniques, methods, improvements, know-how, data, financial information and forecasts,
product plans, marketing/ sales plans and strategies, and customer lists.

 

 

	 	4.	 	INFORMATION OF OTHERS

                    I will safeguard and keep confidential the proprietary information of customers, vendors,
consultants, and other parties with which Thoratec does business to the same extent as if it were
Thoratec Confidential Information. I will not, during my employment with the Company or otherwise,
use or disclose to the Company any confidential, trade secret, or other proprietary information or
material of any previous employer or other person, and I will not bring onto the Company’s premises
any unpublished document or any other property belonging to any former employer without the written
consent of that former employer.

	 	5.	 	THORATEC PROPERTY

                    All papers, records, data, notes, drawings, files, documents, samples, devices, products,
equipment, and other materials, including copies, relating to Thoratec’s business that I possess or
create as a result of my employment with Thoratec, whether or not confidential, are the sole and
exclusive property of Thoratec. In the event of the termination of my employment, I will promptly
deliver all such materials to Thoratec and will sign and deliver to the Company the “Termination
Certificate” attached hereto as Exhibit A.

	 	6.	 	OWNERSHIP OF INVENTIONS

                    All computer programs, computer source code, inventions, ideas, designs, circuits, schematics,
formulas, algorithms, trade secrets, works of authorship, developments, processes, techniques,
improvements, and related know-how which result from work performed by me, alone or with others, on
behalf of Thoratec or from access to Thoratec Confidential Information or property, whether or not
patentable or copyrightable, (collectively “Inventions”) shall be the property of Thoratec, and, to
the extent permitted by law, shall be “works made for hire.” I hereby assign and agree to assign
to Thoratec or its designee, without further consideration, my entire right, title, and interest in
and to all Inventions, other than those described in Paragraph 7 of this Agreement, including all
rights to obtain, register, perfect, and enforce patents, copyrights, and other intellectual
property protection for Inventions. I will disclose promptly and in writing to the individual
designated by Thoratec or to my immediate supervisor all Inventions which I have made or reduced to
practice. During my employment and for four years after, I will assist Thoratec (at its expense)
to obtain and enforce patents, copyrights, and other forms of intellectual property protection on
Inventions.

 

 

	 	7.	 	EXCLUDED INVENTIONS

                    Attached is a list of all inventions, improvements, and original works of authorship,
which I desire to exclude from this Agreement, each of which has been made or reduced to practice
by me prior to my employment by Thoratec. If no list is attached to this Agreement, there are no
inventions to be excluded at the time of my signing of this Agreement. I understand that this
Agreement requires disclosure, but not assignment, of any invention that qualifies under Section
2870 of the California Labor Code, which reads:

	 	 	 	“Any provision in an employment agreement which provides that an employee shall
assign or offer to assign any of his or her rights in an invention to his or her
employer shall not apply to an invention that the employee developed entirely on his
or her own time without using the employer’s equipment, supplies, facilities, or
trade secret information except for those inventions that either:
	 
	 	 	 	(a) relate at the time of conception or reduction to practice of the invention to
the employer’s business or actual or demonstrably anticipated research or
development of the employer; or
	 
	 	 	 	(b) result from any work performed by the employee for the employer.”

	 	8.	 	PRIOR CONTRACTS

                    I represent that there are no other contracts to assign inventions that are now in
existence between any other person or entity and me. I further represent that I have no other
employments, consultancies, or undertakings which would restrict or impair my performance of this
Agreement.

	 	9.	 	NON-SOLICITATION

                    During the term of my employment by the Company, and for twelve (12) months thereafter, I
shall not, directly or indirectly, without the prior written consent of the Company: (i) solicit or
induce any employee of the Company to leave the employ of the Company; (ii) hire for any purpose
any employee of the Company or any former employee who has left the employment of the Company
within six months of the date of termination of such employee’s employment with the Company.

	 	10.	 	AGREEMENTS WITH THE UNITED STATES GOVERNMENT AND OTHER THIRD PARTIES

                    I acknowledge that the Company from time to time may have agreements with other persons or
with the United States Government or agencies thereof which impose obligations or restrictions on
the Company regarding Inventions made during the course of work under such agreements or regarding
the confidential nature of such work. I agree to be bound by all such obligations or restrictions
and to take all action necessary to discharge the obligations of the Company thereunder.

          
 

 

	 	11.	 	NO EMPLOYMENT AGREEMENT

     I agree that unless specifically provided in another writing signed by me and an officer of
the Company, my employment by the Company is not for a definite period of time. Rather, my
employment relationship with the Company is one of employment at will and my continued employment
is not obligatory by either myself or the Company.

	 	12.	 	MISCELLANEOUS

	 	12.1	 	Governing Law

                              This Agreement shall be governed by, and construed in accordance with, the laws of the State
of California, excluding those laws that direct the application of the laws of another
jurisdiction.

	 	12.2	 	Enforcement

                              If any provision of this Agreement shall be determined to be invalid or unenforceable for any
reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the
parties to the extent possible. In any event, all other provisions of this Agreement, shall be
deemed valid, and enforceable to the full extent possible.

	 	12.3	 	Injunctive Relief; Consent to Jurisdiction

                              I acknowledge and agree that damages will not be an adequate remedy in the event of a breach
of any of my obligations under this Agreement. I therefore agree that the Company shall be
entitled (without limitation of any other rights or remedies otherwise available to the Company) to
obtain, without posting bond, specific performance and preliminary and permanent injunction from
any court of competent jurisdiction prohibiting the continuance or recurrence of any breach of this
Agreement. I hereby submit myself to the jurisdiction and venue of the courts of the State of
California for purposes of any such action. I further agree that service upon me in any such
action or proceeding may be made by first class mail, certified or registered, to my address as
last appearing on the records of the Company.

	 	12.4	 	Arbitration

                              I further agree that the Company, at its option, may elect to submit any dispute or
controversy arising out of this Agreement for final settlement by arbitration conducted in Alameda
County or San Francisco County in accordance with the then existing rules of the American
Arbitration Association, and judgment upon the award rendered by the arbitrators shall be
specifically enforceable and may be entered in any court having jurisdiction thereof.

	 	12.5	 	Attorneys’ Fees

                              If any party seeks to enforce its rights under this Agreement, by legal proceedings or
otherwise, the non-prevailing party shall pay all costs and expenses of the prevailing party.

          
 

 

	 	12.6	 	Binding Effect; Waiver

                              This Agreement shall be binding upon and shall inure to the benefit of the successors,
executors, administrators, heirs, representatives, and assigns of the parties. The waiver by the
Company of a breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach of the same or any other provision hereof.

	 	12.7	 	Headings

                              The Section headings herein are intended for reference and shall not by themselves determine
the construction or interpretation of this Agreement.

	 	12.8	 	Entire Agreement; Modifications

                              This Employee Confidential Information and Inventions Agreement contains the entire agreement
between the Company and the undersigned employee concerning the subject matter hereof and
supersedes any and all prior and contemporaneous negotiations, correspondence, understandings, and
agreements, whether oral or written, respecting that subject matter. All modifications to this
Agreement must be in writing and signed by the party against whom enforcement of such modification
is sought.

                    IN WITNESS WHEREOF, I have executed this document as of the 29 day of December, 2006.

	 	 	 	 	 
	 	 	 
	 	                                                  /s/ David Smith
 	 
	 	Employee  David Smith 	 
	 	 	 
	 

RECEIPT ACKNOWLEDGED:

THORATEC CORPORATION

By:  /s/ Anna Mawani                    

 

 

SCHEDULE 1

(Excluded Inventions, Improvements, and

Original Works of Authorship)

	 	 	 	 	 
	 

Title
	 	 

Date
	 	Identifying Number

Or Brief Description 
	 
	 	 
	 	 

 

 

EXHIBIT A

Thoratec Corporation

TERMINATION CERTIFICATION

     This is to certify that I do not have in my possession, nor have I failed to return, any
papers, records, data, notes, drawings, files, documents, samples, devices, products, equipment,
and other materials, including reproductions of any of the aforementioned items, belonging to
Thoratec Corporation, its subsidiaries, affiliates, successors, or assigns (together, the
“Company”).

     I further certify that I have complied with all the terms of the Company’s Confidential
Information and Inventions Agreement signed by me, including the reporting of any inventions and
original works of authorship (as defined therein) conceived or made by me (solely or jointly with
others) covered by that agreement.

     I further agree that, in compliance with the Confidential Information and Inventions
Agreement, I will hold in confidence and will not disclose, use, copy, publish, or summarize any
Confidential Information (as defined in the Company’s Confidential Information and Inventions
Agreement) of the Company or of any of its customers, vendors, consultants, and other parties with
which it does business.

Date:                     

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	
Employee’s Signature 	 
	 	 	 
	 

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	
Type/Print Employee's Name 	 
	 	 	 
	 

California Labor Code § 2870. Application of provision providing that employee shall assign or
offer to assign rights in invention to employer.

	(a)	 	Any provision in an employment agreement which provides that an employee shall assign, or
offer to assign, any of his or her rights in an invention to his or her employer shall not
apply to an invention that the employee developed entirely on his or her own time without
using the employer’s equipment, supplies, facilities, or trade secret information except for
those inventions that either:

 

 

	 	(1)	 	Relate at the time of conception or reduction to practice of the invention to the
employer’s business, or actual or demonstrably anticipated research or development of
the employer; or
	 
	 	(2)	 	Result from any work performed by the employee for the employer.

	(b)	 	To the extent a provision in an employment agreement purports to require an employee to
assign an invention otherwise excluded from being required to be assigned under subdivision
(a), the provision is against the public policy of this state and is unenforceable.

Added Stats 1979 ch 1001 § 1; Amended Stats 1986 ch 346 § 1.exv10w1

 

EXHIBIT 10.1

ARKANSAS BEST CORPORATION

RESTRICTED STOCK UNIT AWARD AGREEMENT

(Non-Employee Directors)

     This Restricted Stock Unit Award Agreement (this “Agreement”) is dated as of this ___
day of ___, 20___ (the “Grant Date”), and is between Arkansas Best Corporation (the
“Company”) and ___ (“Participant”).

     WHEREAS, the Company, by action of the Board and approval of its shareholders established the
Arkansas Best Corporation 2005 Ownership Incentive Plan (the “Plan”);

     WHEREAS, Participant is a member of the Board and is not employed by the Company or a
Subsidiary;

     WHEREAS, the Company desires to encourage Participant to own Common Stock for the purposes
stated in Section 1 of the Plan; and

     WHEREAS, Participant and the Company have entered into this Agreement to govern the terms of
the Restricted Stock Unit Award (as defined below) granted to Participant by the Company.

     NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree as follows:

1. Definitions

     Defined terms in the Plan shall have the same meaning in this Agreement, except where the
context otherwise requires.

2. Grant of Restricted Stock Units

     On the Grant Date, the Company hereby grants to Participant an Award of ___ Restricted
Stock Units (the “Award”) in accordance with Section 9 of the Plan and subject to the
conditions set forth in this Agreement and the Plan (as amended from time to time). Each
Restricted Stock Unit subject to the Award represents the right to receive one Share (as adjusted
from time to time pursuant to Paragraph 14 hereof and/or Section 13 of the Plan) upon the terms and
subject to the conditions (including the vesting conditions) set forth in this Agreement and the
Plan. By accepting the Award, Participant irrevocably agrees on behalf of Participant and
Participant’s successors and permitted assigns to all of the terms and conditions of the Award as
set forth in or pursuant to this Agreement and the Plan (as such Plan may be amended from time to
time).

 

 

3. Vesting; Payment

     (a) The Award shall not be vested as of the Grant Date and shall be forfeitable unless and
until otherwise vested pursuant to the terms of this Agreement. After the Grant Date, provided
that Participant remains a member of the Board continuously through the fifth anniversary of the
Grant Date (the “Normal Vesting Date”), the Award shall become vested with respect to 100%
of the Restricted Stock Units on such Normal Vesting Date. In addition, prior to the Normal
Vesting Date:

     (i) the Award shall become vested with respect to 100% of the Restricted Stock Units on the
first date on or after the 13-month anniversary of the Grant Date that Participant satisfies the
requirements for Normal Retirement, as defined below, whether or not actual retirement or
separation from service has occurred on that date

     (ii) on the first date on or after the 13-month anniversary of the Grant Date on which
Participant satisfies the requirements for Early Retirement, as defined below whether or not actual
retirement or separation from service has occurred on that date, the Award shall become vested with
respect to the number of the Restricted Stock Units subject to the Award multiplied by a fraction,
(A) the numerator of which is equal to the number of full months between such date and the Grant
Date, and (B) the denominator of which is 60, and the Award shall continue to vest on the fifteenth
day of each subsequent month until the first day of the month in which Normal Vesting Date occurs
with respect to an additional one-sixtieth of the number of Restricted Stock Units subject to the
Award. No vesting will occur by virtue of Normal Retirement or Early Retirement prior to the
13-month anniversary of the Grant Date. In the month that the Normal Vesting Date occurs, all
Units not previously vested shall become vested on the date of the month that corresponds to the
Grant Date.

     For purposes of this Agreement, the term “Normal Retirement” shall mean Participant’s
retirement from service as a member of the Board on or after age 65 so long as Participant has, as
of the date of such retirement, at least 5 years of service with the Company.

     For purposes of this Agreement, the term “Early Retirement” shall mean Participant’s
retirement from service as a member of the Board with at least 3 years of Board member service with
the Company.

     Restricted Stock Units that have vested and are no longer subject to a substantial risk of
forfeiture are referred to herein as “Vested Units.” Restricted Stock Units that are not vested
and generally remain subject to forfeiture are referred to herein as “Unvested Units.”

     (b) Notwithstanding anything to the contrary in this Paragraph 3, the Award shall be subject
to earlier acceleration of vesting and/or forfeiture and transfer as provided in this Agreement and
the Plan.

     (c) Subject to Paragraph 3(d) below, on the Normal Vesting Date, or, if earlier, the date
Participant’s service as a member of the Board terminates on or after he satisfied the requirements
for accelerated vesting by virtue of qualifying for Normal Retirement or Early Retirement,
Participant shall be entitled to receive one Share (subject to adjustment under

2

 

Section 13 of the Plan) for each Vested Unit in accordance with the terms and provisions of
this Agreement and the Plan. The Company will transfer such Shares to Participant or Participant’s
designee subject to (i) Participant’s satisfaction of any required tax withholding obligations as
set forth in Paragraph 7 and (ii) the restrictions, if any, imposed by the Company pursuant to
Paragraph 15(f) or otherwise pursuant to the terms and conditions of the Plan and this Agreement.

     (d) Subject to the satisfaction of all of the tax withholding obligations described in Section
7 below, Participant may irrevocably elect to defer the receipt of any Shares issuable pursuant to
Vested Units, including Units distributable by reason of Sections 6(b) or (c), by submitting to the
Company an election to defer receipt in the form attached hereto as Exhibit A (the “Deferral
Election Form”). In the event Participant intends to defer the receipt of any Shares,
Participant must submit to the Company a proposed Deferral Election Form within 30 days following
the Grant Date of the Award. Notwithstanding anything herein to the contrary, any Shares subject
to Vested Units with respect to which a deferred payment date has been elected shall be immediately
distributed to Participant or Participant’s estate, as applicable, upon Participant’s death or
Disability (as defined below) or upon a “change in the ownership or effective control” of the
Company or in the “ownership of a substantial portion of the assets” of the Company within the
meanings ascribed to such terms in Treasury Department regulations or other guidance issued under
Section 409A of the Code. Participant hereby represents that he or she understands the effect of
any such deferral under relevant federal, state and local tax laws.

     (e) The date upon which Shares are to be issued under either Paragraph 3(c) or 3(d) is
referred to as the “Settlement Date.” The issuance of the Shares hereunder may be effected
by the issuance of a stock certificate, recording shares on the stock records of the Company or by
crediting shares in an account established on the Participant’s behalf with a brokerage firm or
other custodian, in each case as determined by the Company. Fractional shares will not be issued
pursuant to the Award.

     Notwithstanding the above, prior to a Change in Control, (i) for administrative or other
reasons, the Company may from time to time temporarily suspend the issuance of Shares in respect of
earned Vested Units (whether or not deferred), (ii) the Company shall not be obligated to deliver
any Shares during any period when the Company determines that the delivery of Shares hereunder
would violate any federal, state or other applicable laws, and (iii) the date on which shares are
issued hereunder may include a delay in order to provide the Company such time as it determines
appropriate to address tax withholding and other administrative matters.

     Notwithstanding the delay for administrative or other reasons provided for in clauses (i) and
(iii) above, in no event will such issuance of shares be delayed beyond the later of the end of the
calendar year or the 15th day of the third month after the month in which the Settlement
Date occurs, or such other time as permitted under Section 409A of the Code and the regulations
thereunder without the imposition of any additional taxes under Section 409A of the Code.

     Notwithstanding any other provision of the Plan, this Agreement or the Deferral Election Form
to the contrary, the Plan, this Agreement and the Deferral Election Form shall be construed or
deemed to be amended as necessary to comply with the requirements of Section 409A of the Code to
avoid the imposition of any additional or accelerated taxes or other penalties under

3

 

Section 409A of the Code. The Committee, in its sole discretion, shall determine the
requirements of Section 409A of the Code applicable to the Plan, this Agreement and the Deferral
Election Form and shall interpret the terms of the Plan, this Agreement and the Deferral Election
Form consistently therewith. Under no circumstances, however, shall the Company have any liability
under the Plan, this Agreement or the Deferral Election Form for any taxes, penalties or interest
due on amounts paid or payable pursuant to the Plan, this Agreement or the Deferral Election Form,
including any taxes, penalties or interest imposed under Section 409A of the Code.

4. Status of Participant

     Except as set forth in Paragraph 5, Participant shall have no rights as a stockholder
(including, without limitation, any voting rights with respect to the Shares subject to the Award)
with respect to either the Restricted Stock Units granted hereunder or the Shares underlying the
Restricted Stock Units, unless and until such Shares are issued in respect of Vested Units, and
then only to the extent of such issued Shares.

5. Dividend Equivalents

     From and after the Grant Date and unless and until the Restricted Stock Units are forfeited or
otherwise transferred back to the Company, Participant will be entitled to receive cash payments
(subject to applicable withholding taxes) equal to all dividends and other distributions paid with
respect to the Shares subject to this Award, which dividend equivalent payments shall be paid on or
about the date such dividends or other distributions are payable to public stockholders, subject to
any applicable tax withholding requirements. Notwithstanding the foregoing, no such dividend
equivalents will be paid with respect to any dividend or other distribution declared by the Company
in connection with which the Award is adjusted pursuant to Paragraph 14 hereof and/or Section 13 of
the Plan. For avoidance of doubt, this ineligibility for a dividend equivalent will apply only to
the actual stock distribution in question (in the year of such distribution), and shall not
adversely affect the ability to receive subsequent regular cash dividends on the Award as so
adjusted.

6. Effect of Termination of Board Service; Change in Control

     (a) General. Except as provided in Paragraphs 6(b) or (c), upon a termination of
Participant’s service as a member of the Board for any reason, the Unvested Units shall be
forfeited by Participant and cancelled and surrendered to the Company without payment of any
consideration to Participant.

     (b) Death; Disability. Upon a termination of Participant’s service as a member of the
Board by reason of Participant’s death or Disability, all Unvested Units shall vest as of the date
of such termination of service and, unless Participant has elected deferred payment date pursuant
to Section 3(d), be issued as soon as administratively possible. For the purposes of this
Agreement, the term “Disability” shall mean a condition under which Participant either (i)
is unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than twelve months, or (ii) is, by reason of any medically

4

 

determinable physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than twelve months, receiving income
replacement benefits for a period of not less than three months under an accident and health plan.

     (c) Change in Control. All Unvested Units shall vest as of the date a Change in
Control occurs and be issued as soon as administratively possible so long as with respect to any
amounts that the Company determines to be deferred compensation within the meaning of Section 409A
of the Code, such Change in Control qualifies as a “change in the ownership or effective control”
of the Company or in the “ownership of a substantial portion of the assets” of the Company within
the meanings ascribed to such terms in Treasury Department regulations or other guidance issued
under Section 409A of the Code.

7. Withholding and Disposition of Shares

     Participant is liable and responsible for all taxes owed in connection with the Award,
regardless of any action the Company takes with respect to any tax reporting or withholding
obligations that arise in connection with the Award. The Company does not make any representation
or undertaking regarding the tax treatment of the grant or vesting of the Award or the subsequent
sale of Shares issuable pursuant to the Award. The Company does not commit and is under no
obligation to structure the Award to reduce or eliminate Participant’s tax liability.

8. Excess Parachute Payments

     Notwithstanding anything in this Agreement to the contrary, if any of the payments in respect
of this Award, together with any other payments to which Participant has the right to receive from
the Company or any purchaser, successor, or assign, would constitute an “excess parachute payment”
(as defined in Code Section 280G), the payments pursuant to the Award and/or such other plans or
agreements shall be reduced to the largest amount as will result in no portion of such payments
being subject to the excise tax imposed by Code Section 4999.

9. Plan Controls

     The terms of this Agreement are governed by the terms of the Plan, as it exists on the Grant
Date and as the Plan is amended from time to time. In the event of any conflict between the
provisions of this Agreement and the provisions of the Plan, the terms of the Plan shall control,
except as expressly stated otherwise in this Agreement. The term “Section” generally refers to
provisions within the Plan; provided, however, the term “Paragraph” shall refer to a provision of
this Agreement.

10. Limitation on Rights; No Right to Future Grants; Extraordinary Item

     By entering into this Agreement and accepting the Award, Participant acknowledges that: (a)
Participant’s participation in the Plan is voluntary and (b) the grant of the Award will not be
interpreted to form an employment or Board member relationship with the Company or any Subsidiary.
The Company shall be under no obligation whatsoever to advise Participant of the existence,
maturity or termination of any of Participant’s rights hereunder and Participant shall

5

 

be responsible for familiarizing himself or herself with all matters contained herein and in
the Plan which may affect any of Participant’s rights or privileges hereunder.

11. Committee Authority

     Any question concerning the interpretation of this Agreement or the Plan, any adjustments
required to be made under the Plan, and any controversy that may arise under the Plan or this
Agreement shall be determined by the Committee in its sole and absolute discretion. Such decision
by the Committee shall be final and binding.

12. Transfer Restrictions

     Any sale, transfer, assignment, encumbrance, pledge, hypothecation, conveyance in trust, gift,
transfer by bequest, devise or descent, or other transfer or disposition of any kind, whether
voluntary or by operation of law, directly or indirectly, of (i) Unvested Units, (ii) Vested Units
prior to the Settlement Date, or (iii) Shares subject to such Unvested Units or Vested Units shall
be strictly prohibited and void; provided, however, Participant may assign or transfer the Award to
the extent permitted under the Plan, provided that the Award shall be subject to all the terms and
condition of the Plan, this Agreement and any other terms required by the Committee as a condition
to such transfer.

13. Suspension or Termination of Award

     Pursuant to Section 16 of the Plan, if at any time prior to Participant’s receipt of Shares
pursuant to the Award an Authorized Officer reasonably believes that Participant may have committed
an Act of Misconduct (as defined below), the Authorized Officer, the Committee or the Board may
suspend Participant’s rights to vest in any Restricted Stock Units, and/or to receive payment for
or receive Shares in settlement of Vested Units pending a determination of whether an Act of
Misconduct has been committed. In addition, pursuant to Section 16 of the Plan, if the Committee
or an Authorized Officer determines Participant has committed an act of embezzlement, fraud,
dishonesty, nonpayment of any obligation owed to the Company or any Subsidiary, breach of fiduciary
duty, violation of Company ethics policy or code of conduct, deliberate disregard of Company or
Subsidiary rules, or if Participant makes an unauthorized disclosure of any Company or Subsidiary
trade secret or confidential information, solicits any employee or service provider to leave the
employ or cease providing services to the Company or any Subsidiary, breaches any intellectual
property or assignment of inventions covenant, engages in any conduct constituting unfair
competition, breaches any non-competition agreement, induces any Company or Subsidiary customer to
breach a contract with the Company or any Subsidiary or to cease doing business with the Company or
any Subsidiary, or induces any principal for whom the Company or any Subsidiary acts as agent to
terminate such agency relationship (any of the foregoing acts, an “Act of Misconduct”),
then except as otherwise provided by the Committee, (i) neither Participant nor Participant’s
estate nor transferee will be entitled to vest in or have the restrictions on Unvested Units lapse,
or otherwise receive payment or Shares in respect of Vested Units and (ii) Participant will forfeit
all undelivered (including deferred) Vested and Unvested Units. In making such determination, the
Committee or an Authorized Officer shall give Participant an opportunity to appear and present
evidence on his or her behalf at a hearing before the Committee or an opportunity to submit written
comments,

6

 

documents, information and arguments to be considered by the Committee. Any dispute by
Participant or other person as to the determination of the Committee must be resolved pursuant to
Paragraph 15(j).

14. Adjustment of and Changes in the Stock

     In the event that the number of Shares increases or decreases through a reorganization,
reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend
(other than regular, quarterly cash dividends), or otherwise, the Committee shall equitably adjust
the number of Shares subject to this Award to reflect such increase or decrease.

15. General Provisions

     (a) Notices. Whenever any notice is required or permitted hereunder, such notice must
be in writing and delivered in person or by mail (to the address set forth below if notice is being
delivered to the Company) or electronically. Any notice delivered in person or by mail shall be
deemed to be delivered on the date on which it is personally delivered, or, whether actually
received or not, on the third business day after it is deposited in the United States mail,
certified or registered, postage prepaid, addressed to the person who is to receive it at the
address that such person has theretofore specified by written notice delivered in accordance
herewith. Any notice given by the Company to Participant directed to Participant at Participant’s
address on file with the Company shall be effective to bind Participant and any other person who
shall have acquired rights under this Agreement. The Company or Participant may change, by written
notice to the other, the address previously specified for receiving notices. Notices delivered to
the Company in person or by mail shall be addressed as follows:

	 	 	 	 	 	 	 
	 	 	Company:	 	Arkansas Best Corporation
	 

	 	 	 	Attn:
	 	Executive Benefits
	 

	 	 	 	 	 	P.O. Box 10048
	 

	 	 	 	 	 	Fort Smith, AR 72917-0048
	 

	 	 	 	 	 	Fax: (479) 494-6928

     (b) No Waiver. No waiver of any provision of this Agreement will be valid unless in
writing and signed by the person against whom such waiver is sought to be enforced, nor will
failure to enforce any right hereunder constitute a continuing waiver of the same or a waiver of
any other right hereunder.

     (c) Undertaking. Participant hereby agrees to take whatever additional action and
execute whatever additional documents the Company may deem necessary or advisable in order to carry
out or effect one or more of the obligations or restrictions imposed on either Participant or the
Award pursuant to the express provisions of this Agreement.

     (d) Entire Contract. This Agreement and the Plan constitute the entire contract
between the parties hereto with regard to the subject matter hereof. This Agreement is made
pursuant to the provisions of the Plan and will in all respects be construed in conformity with the
express terms and provisions of the Plan.

7

 

     (e) Successors and Assigns. The provisions of this Agreement will inure to the
benefit of, and be binding on, the Company and its successors and assigns and Participant and
Participant’s legal representatives, heirs, legatees, distributees, assigns and transferees by
operation of law, whether or not any such person will have become a party to this Agreement and
agreed in writing to join herein and be bound by the terms and conditions hereof.

     (f) Securities Law Compliance. The Company may impose such restrictions, conditions
or limitations as it determines appropriate as to the timing and manner of any resales by
Participant or other subsequent transfers by Participant of any Shares issued as a result of or
under this Award, including without limitation (i) restrictions under an insider trading policy,
(ii) restrictions that may be necessary in the absence of an effective registration statement under
the Securities Act of 1933, as amended, covering the Award and/or the Shares underlying the Award
and (iii) restrictions as to the use of a specified brokerage firm or other agent for such resales
or other transfers. Any sale of the Shares must also comply with other applicable laws and
regulations governing the sale of such shares.

     (g) Information Confidential. As partial consideration for the granting of the Award,
Participant agrees that he or she will keep confidential all information and knowledge that
Participant has relating to the manner and amount of his or her participation in the Plan;
provided, however, that such information may be disclosed as required by law and may be given in
confidence to Participant’s spouse, tax and financial advisors, or to a financial institution to
the extent that such information is necessary to secure a loan.

     (h) Electronic Delivery. The Company may, in its sole discretion, decide to deliver
any documents related to any awards granted under the Plan by electronic means or to request
Participant’s consent to participate in the Plan by electronic means. Participant hereby consents
to receive such documents by electronic delivery and, if requested, to agree to participate in the
Plan through an on-line or electronic system established and maintained by the Company or another
third party designated by the Company, and such consent shall remain in effect throughout
Participant’s term of service with the Company and thereafter until withdrawn in writing by
Participant.

     (i) Governing Law. Except as may otherwise be provided in the Plan, the provisions of
this Agreement shall be governed by the laws of the State of Delaware, without giving effect to
principles of conflicts of law.

     (j) Arbitration of Disputes. Pursuant to Section 23 of the Plan, Participant hereby
agrees as follows:

          (i) If Participant or Participant’s transferee wishes to challenge any action of the Committee
or the Plan Administrator, the person may do so only by submitting to binding arbitration with
respect to such decision. The review by the arbitrator will be limited to determining whether
Participant or Participant’s transferee has proven that the Committee’s decision was arbitrary or
capricious. This arbitration will be the sole and exclusive review permitted of the Committee’s
decision. Participant explicitly waives any right to judicial review.

8

 

          (ii) Notice of demand for arbitration will be made in writing to the Committee within thirty
(30) days after written notice to Participant of the applicable decision by the Committee. The
arbitrator will be selected by mutual agreement of the Committee and Participant. If the Committee
and Participant are unable to agree on an arbitrator, the arbitrator will be selected by the
American Arbitration Association. The arbitrator, no matter how selected, must be neutral within
the meaning of the Commercial Rules of Dispute Resolution of the American Arbitration Association.
The arbitrator will administer and conduct the arbitration pursuant to the Commercial Rules of
Dispute Resolution of the American Arbitration Association. Each side will bear its own fees and
expenses, including its own attorney’s fees, and each side will bear one half of the arbitrator’s
fees and expenses; provided, however, that the arbitrator will have the discretion to award the
prevailing party its fees and expenses. The arbitrator will have no authority to award exemplary,
punitive, special, indirect, consequential, or other extracontractual damages. The decision of the
arbitrator on the issue(s) presented for arbitration will be final and conclusive and any court of
competent jurisdiction may enforce it.

     (k) Section 409A of the Code. This Award is intended to comply, to the extent
applicable, with the election, distribution and any other requirements of Section 409A of the Code
and, as such, shall be interpreted in a manner consistent therewith. Notwithstanding anything
herein or in the Plan to the contrary, the Company may, in its sole discretion, amend this Award
(which amendment shall be effective upon its adoption or at such other time designated by the
Company) as may be necessary to avoid the imposition of the additional tax under Section
409A(a)(1)(B) of the Code or otherwise comply with Section 409A and the regulations thereunder;
provided, however, that any such amendment shall be implemented in such a manner as to preserve, to
the greatest extent possible, the terms and conditions of this Award as in existence immediately
prior to any such amendment.

[signature page follows]

9

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.

	 	 	 	 	 	 	 
	 	 	ARKANSAS BEST CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	PARTICIPANT	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	[Participant]	 	 

10

 

Exhibit A

ARKANSAS BEST CORPORATION

RESTRICTED STOCK UNIT

INITIAL DEFERRAL ELECTION FORM

     Effective as of                     , the undersigned hereby irrevocably elects (the
“Election”) to defer receipt of certain shares of common stock (the “Shares”) of
Arkansas Best Corporation (the “Company”) related to the Restricted Stock Units (the
“Award”) awarded under and pursuant to the Restricted Stock Unit Award Agreement dated
                     (the “Award Agreement”) and the Arkansas Best Corporation 2005 Ownership
Incentive Plan, as amended from time to time (the “Plan”). This deferral shall be made in
accordance with the terms and provisions outlined in this Election in the manner and amount set
forth below. In making this Election, you may elect to defer the settlement of all or a portion of
your Award. Your deferral must be expressed as a percentage of the Restricted Stock Units subject
to the Award. In executing this Election form you acknowledge that, in order to be effective, (i)
the Election must be returned no later than 30 days following the Grant Date set forth in your
Award Agreement, and (ii) the portion of your Award subject to this Election must not become vested
until more than 12 months following the date of this Election (or, if later, 13 months following
the Grant Date).

     In general, all deferrals pursuant to this election will be paid out in Shares. Subject to
the terms and conditions of the Award Agreement and the Plan, all of the Shares you are entitled to
receive on the Settlement Date specified in this Election will be transferred to you on the
applicable Settlement Date.

Amount of the Deferral

	o	 	I hereby irrevocably elect to defer settlement of ___% of the Shares subject to the Award.

Duration of the Deferral

Settlement of that portion of the Award specified above shall be deferred until [complete by
checking the appropriate box below and, if applicable, filling in the distribution date. CHECK
ONLY ONE BOX]:

	o	 	                    , 20___ [Note: this date must be after                     , 20___]; or
	 
	o	 	the termination of my service as a member of the Board; or
	 
	o	 	the earlier of                     , 20___ [Note: this date must be after                     , 20___] or the
termination of my service as a member of the Board; or
	 
	o	 	the later of                     , 20___ [Note: this date must be after                     , 20___] or the
termination of my service as a member of the Board.

 

 

Terms and Conditions

By signing this form, you acknowledge your understanding and acceptance of the following:

     1. Submission of Election to the Company. You understand that the Election must be submitted
to the Company within 30 days following the date the Award was granted.

     2. Dividend Equivalents. You will be entitled to receive cash payments (subject to applicable
withholding taxes) equal to all dividends and other distributions paid with respect to the Shares
subject to this Election. Dividend equivalent payments shall be paid in cash on or about the date
such dividends or other distributions are payable to public stockholders, subject to any applicable tax withholding
requirements. Notwithstanding the foregoing, no such dividend equivalents will be paid with
respect to any dividend or other distribution declared by the Company in connection with which the
Award is adjusted pursuant to Paragraph 14 of the Award Agreement and/or Section 13 of the Plan.
For avoidance of doubt, this ineligibility for a dividend equivalent will apply only to the actual
stock distribution in question (in the year of such distribution), and shall not adversely affect
the ability to receive subsequent regular cash dividends on the Award as so adjusted.

     3. Status of Participant. Except as set forth in Paragraph 3 above, you will have no rights as
a stockholder (including, without limitation, any voting rights with respect to the Shares subject
to this Election) with respect to the Shares subject to this Election, unless and until such Shares
are issued to you hereunder.

     4. Payment Acceleration. Notwithstanding anything herein to the contrary, any Shares subject
to this Election shall be immediately distributed to you or your estate, as applicable, upon your
death or Disability (as defined in the Award Agreement) or upon a “change in the ownership or
effective control” of the Company or in the “ownership of a substantial portion of the assets” of
the Company within the meanings ascribed to such terms in Treasury Department regulations or other
guidance issued under Section 409A of the Code.

     5. Administration. This Election is administered and interpreted by the Committee (as such
term is defined in the Plan). The Committee has full and exclusive discretion to interpret and
administer this Election. All actions, interpretations and decisions of the Committee are
conclusive and binding on all persons, and will be given the maximum possible deference allowed by
law.

     6. Arbitration of Disputes. All disputes under this Election form shall be subject to
arbitration pursuant to Paragraph 15(j) of the Award Agreement and Section 23 of the Plan.

	 	 	 	 	 	 	 	 	 
	Submitted by:	 	 	 	Accepted by:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	ARKANSAS BEST CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	[Participant]

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	Title:
	 	 

2

 

Exhibit B

ARKANSAS BEST CORPORATION

RESTRICTED STOCK UNIT

DISTRIBUTION ELECTION CHANGE FORM

     Effective as of                     , the undersigned hereby irrevocably elects (the
“Subsequent Election”) to change the timing of the distribution of certain shares of common
stock (the “Shares”) of Arkansas Best Corporation (the “Company”) related to the
Restricted Stock Units (the “Award”) awarded under and pursuant to the Restricted Stock
Unit Award Agreement dated                      (the “Award Agreement”) and the Arkansas Best
Corporation 2005 Ownership Incentive Plan, as amended from time to time (the “Plan”), which
Shares are currently subject to a deferral election (the “Initial Election”) pursuant to a
Deferral Election Form submitted to the Company on                      (the “Initial Election
Form”). This deferral shall be made in accordance with the terms and provisions outlined in
this Subsequent Election in the manner set forth below.

     As with your Initial Election, in general, all deferrals pursuant to this Subsequent Election
will be paid out in Shares. Subject to the terms and conditions of the Award Agreement and the
Plan, all of the Shares you are entitled to receive on the Settlement Date specified in this
Subsequent Election will be transferred to you on the applicable Settlement Date.

Amount Subject to Subsequent Election

	o	 	I hereby irrevocably elect to defer settlement of ___% of the Shares previously deferred
under my Initial Election.

Duration of the Subsequent Deferral Election

     You hereby acknowledge that this Subsequent Election is being made at least one year prior to
the current Settlement Date of the Shares subject to the Initial Election. Settlement of the above
described Shares shall be deferred until [complete by checking the appropriate box below that
corresponds to your current distribution election (and, if applicable, filling in the distribution
date) and then selecting a new distribution election. CHECK ONLY ONE BOX]:

	o	 	Current Settlement Date:                     , 20___
	 
	 	 	New Settlement Date:                     , 20___ [this date must be at least five years later than
your current Settlement Date]
	 
	o	 	Current Settlement Date: the termination of my service as a member of the Board
	 
	 	 	New Settlement Date: ___ years [this must be no less than five years] following the
termination of my service as a member of the Board

 

 

	o	 	Current Settlement Date: the earlier of                     , 20___ or the termination of my service
as a member of the Board
	 
	 	 	New Settlement Date: ___ years [this must be no less than five years] following the
earlier of                     , 20___ [this date may not change from the Current Election] or the
termination of my service as a member of the Board
	 
	o	 	Current Settlement Date: the later of                     , 20___ or the termination of my service
as a member of the Board
	 
	 	 	New Settlement Date: ___ years [this must be no less than five years] following the later
of                     , 20___ [this date may not change from the Current Election] or the
termination of my service as a member of the Board

Terms and Conditions

By signing this form, you acknowledge your understanding and acceptance of the following:

     1. Rules Regarding Changes to Distribution Elections. Any change to your existing deferral
election must be made at least twelve months prior to the date the distribution otherwise would be
made. Your new distribution election pursuant to this Subsequent Election will not take effect
until twelve months after the date it is submitted to the Company. This Subsequent Election must
defer the settlement of your Award for a minimum of five additional years.

     2. Dividend Equivalents. You will be entitled to receive cash payments (subject to applicable
withholding taxes) equal to all dividends and other distributions paid with respect to the Shares
subject to this Election. Dividend equivalent payments shall be paid in cash on or about the date
such dividends or other distributions are payable to public stockholders, subject to any applicable tax withholding
requirements. Notwithstanding the foregoing, no such dividend equivalents will be paid with
respect to any dividend or other distribution declared by the Company in connection with which the
Award is adjusted pursuant to Paragraph 14 of the Award Agreement and/or Section 13 of the Plan.
For avoidance of doubt, this ineligibility for a dividend equivalent will apply only to the actual
stock distribution in question (in the year of such distribution), and shall not adversely affect
the ability to receive subsequent regular cash dividends on the Award as so adjusted.

     3. Status of Participant. Except as set forth in Paragraph 3 above, you will have no rights as
a stockholder (including, without limitation, any voting rights with respect to the Shares subject
to this Subsequent Election) with respect to either the Shares subject to this Subsequent Election,
unless and until such Shares are issued to you hereunder.

     4. Payment Acceleration. Notwithstanding anything herein to the contrary, any Shares subject
to this Election shall be immediately distributed to you or your estate, as applicable, upon your
death or Disability (as defined in the Award Agreement) or upon a “change in the ownership or
effective control” of the Company or in the “ownership of a substantial portion of the assets” of
the Company within the meanings ascribed to such terms in Treasury Department regulations or other
guidance issued under Section 409A of the Code.

2

 

     5. Administration. This Subsequent Election is administered and interpreted by the Committee
(as such term is defined in the Plan). The Committee has full and exclusive discretion to interpret
and administer this Subsequent Election. All actions, interpretations and decisions of the
Committee are conclusive and binding on all persons, and will be given the maximum possible
deference allowed by law.

     6. Arbitration of Disputes. All disputes under this Election form shall be subject to
arbitration pursuant to Paragraph 15(j) of the Award Agreement and Section 23 of the Plan.

	 	 	 	 	 	 	 	 	 
	Submitted by:	 	 	 	Accepted by:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	ARKANSAS BEST CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	[Participant]

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	Title:
	 	 

3

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