Document:

Exhibit
10.1

 

Eighth Amendment to Lease

 

This Amendment to Lease dated
this 1st day of February, 2004 shall further amend the terms of a lease dated
February 3, 1993, as amended, (“Lease”) by and between Jaytee Properties
(“Landlord”) and Republic Bank & Trust Company (“Tenant”) at Republic Bank
Place and any other amendments to such lease.

 

Landlord and Tenant agree that
the following terms of the Lease shall be amended to increase the Tenant’s
square footage by approximately 3,996 square feet.  Tenant shall be responsible for all Tenant Improvement costs
associated with the additional square footage referenced herein.  The Tenant’s rent shall be increased by
$5,661.00, ($17.00 per square foot) per month effective February 1, 2004 and
continue in accordance with the terms of that original lease, as amended,
referenced herein.

 

ARTICLE I.  PREMISES

 

SECTION 1.  Tenant leases from Landlord and Landlord
leases to Tenant the following additional premises (hereinafter called the
“Premises”):

 

Being an additional approximate
3,996 square feet of office space located on the second floor in the Republic
Bank Building (hereinafter called “the Building”) located at Hurstbourne
Parkway and Stone Creek Parkway in Jefferson County, Kentucky, for a total
approximate square footage of 30,969.

 

ARTICLE II.  TERM

 

The Term of this lease, as
amended, shall remain in effect through 6/30/08.

 

ARTICLE III.  RENT AND OPERATING EXPENSES

 

SECTION 1.  Tenant shall pay to Landlord, at Landlord’s
office in the Building or at such place as Landlord may from time to time
designate, as monthly rental for the Premises as of the effective date of this
Amendment, the sum of $43,872.75.

 

 

	
  JAYTEE
  PROPERTIES

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Steve Trager

  	
   

  
	
   

  	
   

  
	
  REPUBLIC
  BANK & TRUST COMPANY

  
	
   

  	
   

  
	
  By:

  	
  /s/ Michael A. Ringswald

  	
   

  

 

1Exhibit 10(N)

 

EARL SCHEIB, INC.

15206 Ventura Boulevard

Suite 200

Ventura, California 91403

 

April 2, 2003

 

	
  To:

  	
   

  	
  Christian K. Bement

  
	
   

  	
   

  	
  David I. Sunkin

  
	
   

  	
   

  	
  Charles E. Barrantes

  

 

	
  From:

  	
   

  	
  The Board of Directors
  of Earl Scheib, Inc.

  

 

	
  Subject:

  	
  Earl Scheib, Inc.
  Modified Executive Retention and Incentive Plan

  

 

Earl Scheib, Inc. has
adopted the Earl Scheib, Inc. Modified Executive Retention and Incentive Plan
(the “Plan”) which modifies and supersedes the Earl Scheib, Inc. Executive
Retention Plan dated December 13, 2002. 
The provisions of the Plan are as follows:

 

ARTICLE I

DEFINITIONS

 

1.1                               Definitions

 

Whenever used in this
Plan, the following capitalized terms shall have the meanings set forth in this
Section 1.1, certain other capitalized terms being defined elsewhere in
this Plan:

 

(a)                                  “Aggregate Consideration” has the meaning
set forth in the Investment Banking Firm Agreement.

 

(b)                                 “Board” means the Board of Directors of
the Company.

 

(c)                                  “Change in Control” shall mean the
occurrence of any of the following:

 

(i)                                     Any “Person” or “Group” (as such terms
are defined in Section 13(d) of the Securities Exchange Act of 1934 (the
“Exchange Act”) and the rules and regulations promulgated thereunder) is or
becomes the “Beneficial Owner” (within the meaning of Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company, or of any
entity resulting from a merger or consolidation involving the Company,
representing more than 35% of the combined voting power of the then outstanding
securities of the Company or such entity.

 

(ii)                                  The individuals who, as of the date
hereof, are members of the Board (the “Existing Directors”), cease, for any
reason, to constitute more than fifty percent (50%) of the number of authorized
directors of the Company as determined in the manner prescribed in the
Company’s Certificate of

 

1

 

Incorporation and Bylaws; provided, however, that if the election, or
nomination for election, by the Company’s stockholders of any new director was
approved by a vote of at least fifty percent (50%) of the Existing Directors,
such new director shall be considered an Existing Director; provided further,
however, that no individual shall be considered an Existing Director if such
individual initially assumed office as a result of either an actual or
threatened “Election Contest” (as described in Rule 14a-11 promulgated under
the Exchange Act) or other actual or threatened solicitation of proxies by or
on behalf of anyone other than the Board (a “Proxy Contest”), including by
reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest.

 

(iii)                               The consummation of (x) a merger,
consolidation or

 

(iv)                              reorganization to which the Company is a
party, whether or not the Company is the Person surviving or resulting
therefrom, (y) a sale, assignment, lease, conveyance or other disposition
of all or substantially all of the assets of the Company, in one transaction or
a series of related transactions, to any Person other than the Company, or
(z) a “split up” of the Company, consisting of a series of transactions
(regardless of their form), on the conclusion of which substantially all of the
Company’s Subsidiaries, divisions, operating units and assets have been sold,
assigned, leased, conveyed or disposed of to different Persons, where any such
transaction or series of transactions as is referred to in clauses (x), (y) or
(z) above in this subparagraph (iii) (a “Transaction”) does not otherwise
result in a “Change in Control” pursuant to subparagraph (i) of this definition
of “Change in Control”; provided, however, that no such Transaction shall
constitute a “Change in Control” under this subparagraph (iii) if the
Persons who were the stockholders of the Company immediately before the
consummation of such Transaction are the Beneficial Owners, immediately
following the consummation of such Transaction, of 35% or more of the combined
voting power of the then outstanding voting securities of the Person surviving
or resulting from any merger, consolidation or reorganization referred to in
clause (x) above in this subparagraph (iii), the Person to whom the assets of
the Company are sold, assigned, leased, conveyed or disposed of in any
transaction or series of related transactions referred in clause (y) above in
this subparagraph (iii), or any of the Persons to whom a substantial
Subsidiary, division or operating unit, or a substantial portion of the
Company’s assets, are sold, assigned, leased, conveyed or disposed of in any
transaction or series of transactions referred in clause (z) above in this
subparagraph (iii).

 

(v)                                 The approval by the Company’s
shareholders of any plan or proposal for the liquidation or dissolution of the
Company.

 

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(d)                                 “Change in Control Transaction Bonus” has
the meaning set forth in Section 4.1.

 

(e)                                  “Committee” means the Compensation
Committee of the Board.

 

(f)                                    “Company” means Earl Scheib, Inc., a
Delaware corporation, and any successor or assignee as provided in
Article VII.

 

(g)                                 “Compensation” means and includes all of
your base salary attributable to your employment with the Company and/or any of
its Subsidiaries (including, but not limited to, any amounts excludable from
your gross income for federal income tax purposes pursuant to Section 125
or Section 401(k) of the Internal Revenue Code of 1986, as amended), in
effect immediately before execution by the Company of a definitive agreement to
consummate a Change in Control. “Compensation” shall not include your bonuses
or other cash or non-cash compensations or reimbursements, if any (e.g., the
grant or vesting of restricted stock, the grant, vesting, or exercise of stock
options, automobile allowance and gasoline reimbursement).

 

(h)                                 “Continuous Service” means your
continuous full time employment with the Company or any of its Subsidiaries.
Periods during which you are on paid or approved leave of absence or suffer
from a Disability shall be deemed to be periods of Continuous Service.

 

(i)                                     “Disability” means entitlement to receive
primary benefits as a disabled employee under the Social Security Act as in
effect of the date of disability.

 

(j)                                     “Effective Time” means October 25,
2002.

 

(k)                                  “Eligible Employee” means Christian K.
Bement, David I. Sunkin and Charles E. Barrantes.

 

(l)                                     “ERISA” means the Employee Retirement
Income Security Act of 1974, as amended.

 

(m)                               “Good Reason” means the occurrence, on or
after the Effective Time, of any of the following:

 

(i)                                     The Company or any of its Subsidiaries
reduces your Compensation as in effect on the Effective Time.

 

(ii)                                  The Company or any of its Subsidiaries
substantially reduces any bonus for which you are eligible (other than any
bonus for which you are eligible under the Plan the reduction of which is not
permitted under Section 10.7 without the prior written consent of the
Eligible Employee so affected), or changes the standards or parameters for
determining the amount of any such bonus, for any period after the Effective
Time, so that your potential bonus for such period is materially less than your
potential bonus for the period of equal length immediately before the Effective
Time.

 

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(iii)                               The Company fails to provide you with
employee benefits and cash or non-cash perquisites or reimbursements, which,
taken as a whole, are materially at least as favorable to you as those
(including the medical reimbursement plan under which you are covered as of the
Effective Time), taken as a whole, provided to you by the Company or any of its
Subsidiaries on the Effective Time.

 

(iv)                              Without your express written consent, the
Company or any of its Subsidiaries substantially reduces your job authority or
responsibility so that you no longer have authority or responsibility reasonably
commensurate with the authority or responsibility you had on the Effective
Time, or (unless the Company becomes a subsidiary, affiliate, or business unit
of a substantially larger business enterprise) causes you to report primarily
to a substantially lower-ranking person than the person to whom you primarily
reported as of the Effective Time.

 

(v)                                 Without your express written consent, the
Company or any of its Subsidiaries requires you to change the location of your
job or office, so that you will be based at a location more than 25 miles from
the location of your job or office on the Effective Time.

 

(vi)                              A successor to the Company fails or
refuses to assume the obligations of the Company under this Plan.

 

(vii)                           The Company or any successor breaches any
of the material provisions of this Plan.

 

(n)                                 “Investment Banking Firm Agreement” means
that certain letter agreement dated February 11, 2003, between the Company
and Ryan Beck & Co., Inc. (“Ryan Beck”) pursuant to which the Company
engaged Ryan Beck to act as its exclusive financial advisor to explore
strategic options designed to maximize stockholder value.

 

(o)                                 “Just Cause” shall have the meaning set
forth in your employment agreement with the Company or any of its Subsidiaries,
or, if you do not have an employment agreement with the Company or any of its
Subsidiaries that defines “Just Cause” or “Cause,” shall mean the termination
of your employment as a result of (i) fraud, misappropriation of or
intentional and material damage to the property or business of the Company
(including its Subsidiaries), (ii) conviction of a felony involving moral
turpitude, or material neglect, failure or refusal to follow the reasonable
directions of our supervisors, to perform the duties reasonably assigned to
you, or to follow material Company policies, if you do not begin to cure such
neglect, failure or refusal within ten (10) days after receiving written
notice from the Company to do so.

 

(p)                                 “Other Transaction” means any
transaction, other than a Change in Control, entered into by the Company
involving either (i) a material investment, whether

 

4

 

debt or equity, in the Company or its Subsidiaries by a Person that is
unaffiliated with the Company or (ii) any Strategic Outcome (as defined in
the Investment Banking Firm Agreement).

 

(q)                                 “Other Transaction Bonus” shall have the
meaning set forth in Section 4.4.

 

(r)                                    “Person” shall have the meaning set forth
in the definition of “Change in Control.”

 

(s)                                  “Release” means the Separation and
General Release Agreement in the form attached hereto as Exhibit “A”.

 

(t)                                    “Retention Bonus” means a bonus payable
under Article II.

 

(u)                                 “Severance Payment” means the payment of
severance compensation as provided in Article III.

 

(v)                                 “Subsidiary” means any corporation or
other Person, a majority of the voting power, equity securities or equity
interest of which is owned directly or indirectly by the Company.

 

(w)                               “Transaction Bonuses” means the Change in
Control Transaction Bonus and

 

(x)                                   the Other Transaction Bonus.

 

(y)                                 “WARN” means the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. § 2101 et seq.

 

ARTICLE II

RETENTION BONUSES

 

If you are an Eligible
Employee in Continuous Service from the Effective Time through and including a
date set forth in this Article II, the Company or one of its Subsidiaries
shall pay you a Retention Bonus in cash of $12,000.00 on such date.  The applicable dates are October 31,
2002, December 15, 2002, December 20, 2002, and December 31,
2002.  The Company has paid each
Eligible Employee his full Retention Bonus through December 31, 2002.

 

ARTICLE III

SEVERANCE PAYMENTS

 

3.1                               Right to Severance Payment; Release

 

Conditioned on the
execution and delivery by you (or your beneficiary or personal representative,
if applicable) of the Release, you shall be entitled to receive a Severance
Payment from the Company in the amount provided in Section 3.2 if you are
an Eligible Employee, and any one of the following occurs:

 

(a)                                  Within 12 months after the occurrence of
the earlier of a Change in Control or an Other Transaction, (i) your
employment is involuntarily terminated by the

 

5

 

Company or any of its Subsidiaries for any reason other than Just
Cause, or (ii) you voluntarily terminate your employment with the Company
and all Subsidiaries for Good Reason within 60 days after the occurrence of
such Good Reason.

 

(b)                                 Within the period beginning 90 days
before the execution by the Company of a definitive agreement to consummate the
earlier of a Change in Control or an Other Transaction and ending upon the
occurrence of the earlier of such Change in Control or Other Transaction,
(i) your employment is involuntarily terminated by the Company or any of
its Subsidiaries for any reason other than Just Cause, or (ii) you
voluntarily terminate your employment with the Company and all Subsidiaries for
Good Reason within 60 days after the occurrence of such Good Reason.

 

(c)                                  Within the period beginning 90 days after
the occurrence of the earlier of a Change in Control or an Other Transaction
and ending 150 days after the occurrence of the earlier of such Change in
Control or Other Transaction, you voluntarily terminate your employment with
the Company and all of its Subsidiaries, with or without Good Reason.

 

Notwithstanding the
foregoing, you will not be entitled to receive a Severance Payment to the
extent you receive payments which the Company or its Subsidiaries are required
to make to you under WARN.

 

3.2                               Amount of Severance Payment

 

If you become entitled to
a Severance Payment under this Plan, the amount of your Severance Payment, when
added to any severance payments which the Company or its Subsidiaries are
required to make to you under your then existing severance arrangements as
contemplated by Section 6.2 and WARN, shall equal your monthly
Compensation, multiplied by:

 

(a)                                  Six in the case of a Change in Control or
in the case of a termination under Section 3.1(c) with respect to an Other
Transaction, for each of Christian K. Bement and David I. Sunkin;

 

(b)                                 Eighteen in the case of a termination
under Section 3.1(a) or (b) with respect to an Other Transaction, for each
of Christian K. Bement and David I. Sunkin;

 

(c)                                  Nine in the case of a Change in Control
or in the case of a termination under Section 3.1(c) with respect to an
Other Transaction, for Charles E. Barrantes; and

 

(d)                                 Twenty-one in the case of a termination
under Section 3.1(a) or (b) with respect to an Other Transaction, for
Charles E. Barrantes.

 

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3.3                               No Mitigation

 

The Company acknowledges
and agrees that you shall be entitled to receive your entire Severance Payment
regardless of any income which you may receive from other sources following
your termination on or after the Effective Time.

 

3.4                               Payment of Severance Payment

 

The Severance Payment to
which you are entitled shall be paid to you, in cash and in full, not later
than eight (8) calendar days after execution and delivery by you (or your
beneficiary or personal representative, if applicable) of the Release, but in
no event before the date on which such Release becomes effective or before the
occurrence of a Change in Control.  If
you should die before all amounts payable to you have been paid, such unpaid
amounts shall be paid to your beneficiary under this Agreement, or, if you have
not designated such a beneficiary in writing to the Company, to the personal
representative(s) of your estate.

 

3.5                               Health Benefits Coverage

 

If you are entitled to
receive a Severance Payment under Section 3.1, you will also be entitled
to receive health benefits coverage for you and your dependents under the same
plan(s) or arrangement(s) under which you were covered immediately before your
termination of employment or plan(s) established or arrangement(s) provided by
the Company or any of its Subsidiaries thereafter.  Such health benefits coverage shall be paid for by the Company to
the same extent as if you were still employed by the Company, and you will be
required to make such payments to the same extent that you were required to
make such payments while you were employed by the Company.  The benefits provided under this
Section 3.5 shall continue until the earlier of (a) the end of the
twelve-month period following the date of termination (the “Applicable Period”)
or (b) the date you become covered under any other group health plan not
maintained by the Company or any of its Subsidiaries; provided, however, that
if such other group health plan excludes any 
reexisting condition that you or your dependents may have when coverage
under such group health plan would otherwise begin, coverage under this
Section 3.5 shall continue (but not beyond the Applicable Period) with
respect to such pre-existing condition until such exclusion under such other
group health plan lapses or expires.  In
the event you are required to make an election under Sections 601 through 607
of ERISA (commonly known as COBRA) to qualify for the benefits described in
this Section 3.5, the obligations of the Company and its Subsidiaries
under this Section 3.5 shall be conditioned upon your timely making such
an election.  In the event that the
Company and its Subsidiaries cease to maintain any plan or arrangement
providing for health benefits coverage, the Company or one of its Subsidiaries
shall pay you a lump sum equal to an estimate, to be made by The Rule Group, of
the cost to procure for you and your dependents health benefits coverage
substantially similar to that provided and paid for by the Company as of the
Effective Time (including, but not limited to, that provided under the
Company’s medical reimbursement plan) for each remaining month for you were
entitled to receive health benefits coverage under this Section 3.5
(without regard to your becoming covered under any other group health plan not
maintained by the Company or any of its Subsidiaries).

 

7

 

ARTICLE IV

TRANSACTION BONUSES

 

4.1                               Right to Change in Control Transaction
Bonus

 

You shall be entitled to
receive a bonus payment in connection with a Change in Control (a “Change in
Control Transaction Bonus”) in the amount provided in Section 4.2 if you
are an Eligible Employee and either:

 

(a)                                  You are in Continuous Service from the
Effective Time until the day before the occurrence of a Change in Control; or

 

(b)                                 Within the period beginning 90 days
before the execution by the Company of a definitive agreement to consummate a
Change in Control and ending on the occurrence of a Change in Control, your
employment is involuntarily terminated by the Company or any of its
Subsidiaries for any reason other than Just Cause, or you voluntarily terminate
your employment with the Company and all Subsidiaries for Good Reason within 60
days after the occurrence of such Good Reason.

 

4.2                               Amount of Change in Control Transaction
Bonus

 

If the amount of
Aggregate Consideration in connection with a Change in Control is less than
$16,400,000, no Change in Control Transaction Bonus shall be payable to any
Eligible Employee.  If the amount of
Aggregate Consideration equals or exceeds $16,400,000, then the amount of each
Eligible Employee’s Change in Control Transaction Bonus will be equal to the
sum of the following:

 

(a)                                  If the amount of Aggregate Consideration
is at least $16,400,000, $150,000; plus

 

(b)                                 If the amount of Aggregate Consideration
exceeds $16,400,000 but is less than or equal to $18,200,000, four percent
(4.0%) of the amount by which Aggregate Consideration exceeds $16,400,000 but
is less than or equal to $18,200,000; plus

 

(c)                                  If the amount of Aggregate Consideration
exceeds $18,200,000, two percent (2.0%) of the amount by which Aggregate
Consideration exceeds $18,200,000.

 

4.3                               Timing and Method of Payments of Change
in Control Transaction Bonus

 

Payment of the Change in
Control Transaction Bonus shall be made commencing within 10 days after the
Company or its shareholders receive the Aggregate Consideration.  Such payment shall be made in the same form
in which the Company and its Subsidiaries, or the Company’s shareholders,
receive payment of the Aggregate Consideration; provided, however, that the
Committee may determine, in its sole and absolute discretion, that payment of
the amounts specified under Section 4.2 shall be made in cash equal to the
value of any non-cash proceeds received by the Company, its Subsidiaries, or
its shareholders, such good faith value to be determined by the Committee.

 

8

 

4.4                               Right to Other Transaction Bonus

 

You shall be entitled to
receive a cash bonus payment in connection with an Other Transaction (an “Other
Transaction Bonus”) in the amount provided in Section 4.5 if you are an
Eligible Employee and either:

 

(a)                                  You are in Continuous Service from the
Effective Time until the day before the occurrence of an Other Transaction; or

 

(b)                                 Within the period beginning 90 days
before the execution by the Company of a definitive agreement to consummate an
Other Transaction and ending on the occurrence of an Other Transaction, your
employment is involuntarily terminated by the Company or any of its
Subsidiaries for any reason other than Just Cause, or you voluntarily terminate
your employment with the Company and all Subsidiaries for Good Reason within 60
days after the occurrence of such Good Reason.

 

4.5                               Amount of Other Transaction Bonus; Timing
of Payment

 

The amount of the Other
Transaction Bonus payable to each Eligible Employee shall be determined in good
faith by the then-existing outside directors of the Board based upon the efforts
and services provided by such Eligible Employee in connection with completing
the Other Transaction, the ultimate nature of the outcome and its reasonably
perceived value to the Company by the Board; provided that the Other
Transaction Bonus payable to each such Eligible Employee shall not be less than
$100,000. Payment of the Other Transaction Bonus shall be made within thirty
(30) days after completion of the Other Transaction.

 

4.6                               One Transaction Bonus

 

You will be entitled to
receive a Change in Control Transaction Bonus or an Other Transaction Bonus
upon the earlier of a Change in Control Transaction or an Other Transaction,
but not both.

 

ARTICLE V

EXCISE TAX LIMITATION

 

5.1                               Limitation

 

Notwithstanding anything
contained in this Plan to the contrary, (i) in the event that any payment
or benefit (within the meaning of Section 280G(b)(2) of the Code) to you
or for your benefit paid or payable pursuant to the terms of this Plan or
otherwise in connection with, or arising out of, your employment with the
Company or any of its Subsidiaries on a “change of control” within the meaning
of Section 280G of the Code (a “Payment” or “Payments”) would be subject
to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”),
and (ii) (A) the net amount of the Payments you would retain after
payment of the Excise Tax and federal and state income taxes on the Payments
would be less than (B) the net amount of the Payments you would retain,
after payment of the Excise Tax and federal and state income taxes on the
Payments, if the Payments were reduced to the extent necessary that no portion
of the

 

9

 

Payments would be subject
to the Excise Tax (the “Section 4999 Limit”), then the Payments shall be
reduced (but not below zero) to the Section 4999 Limit.  If a Payment is made in an amount that
exceeds the Section 4999 Limit (or is deemed to exceed the
Section 4999 Limit under the Treasury Regulations (or under the Proposed
Treasury Regulations, if there are no final Treasury Regulations) under
Section 280G of the Code) and further Payments may be made in the future,
the amount by which such Payment exceeds (or is deemed to exceed) the
Section 4999 Limit (the “Suspense Amount”) shall not be paid to you when
the rest of such Payment is made to you, but shall be placed in a segregated
account owned by the Company (the “Suspense Account”).  If, when all Payments have become due to
you, the total amount of all Payments (including the Suspense Amount) is such
that there would be no reduction in the Payments under the first sentence of
this Section 5.1, the Suspense Amount shall be paid to you, together with
interest thereon from the time of the establishment of the Suspense Account
until the time of payment to you of the Suspense Amount at the discount rate
specified for determining present value in the Treasury Regulations (or in the
Proposed Treasury Regulations, if there are no final Treasury Regulations)
under Section 280G of the Code (the “Regulation Rate”).  The Suspense Account shall be applied in
satisfaction of such payment.  If, when
all Payments have become due to you, the total amount of all Payments
(including the Suspense Amount) is such that there would be a reduction in the
Payments under the first sentence of this Section 5.1, the Suspense Amount
shall not be paid to you, and the Company may close the Suspense Account or use
the Suspense Account for any corporate purpose.  The Suspense Account shall be segregated from other funds of the
Company, but the Company shall hold title to the Suspense Account and shall
have complete discretion in determining how the Suspense Account shall be
invested, and the Suspense Account shall at all times be available to satisfy
any claims of general creditors of the Company.  For purposes of the calculations described above, it shall be
assumed that your tax rate will be the maximum marginal federal and state
income tax rate on earned income.

 

5.2                               Determinations

 

All determinations
required to be made under this Section 5.2 (each, a “Determination”) shall
be made, at the Company’s expense, by the accounting firm which is the
Company’s accounting firm prior to a “change of control” (within the meaning of
Section 280G of the Code) or another nationally recognized accounting firm
designated by the Board (or a committee thereof) prior to the change of control
(the “Accounting Firm”).  The Accounting
Firm shall provide its calculations, together with detailed supporting
documentation, both to the Company and to you before payment of your Severance
Payment and Transaction Bonuses hereunder (if requested at that time by the
Company or you) or such other time as requested by the Company or you (in
either case provided that the Company or you believe in good faith that any of
the Payments may be subject to the Excise Tax).  Within ten (10) calendar days of the delivery of the
Determination to you, you shall have the right to dispute the Determination
(the “Dispute”).  The existence of any
Dispute shall not in any way affect your right to receive the Payments in
accordance with the Determination.  If
there is no Dispute, the Determination by the Accounting Firm shall be final,
binding and conclusive upon the Company and you, subject to the application of
Section 5.3(c).

 

10

 

5.3                               Underpayments and Excess Payments

 

As a result of the
uncertainty in the application of Sections 4999 and 280G of the Code, it is
possible that the Payments either will have been made or will not have been
made by the Company, in either case in a manner inconsistent with the
limitations provided in Section 5.3(a) (an “Excess Payment” or
“Underpayment”, respectively).  If it is
established pursuant to (i) a final determination of a court for which all
appeals have been taken and finally resolved or the time for all appeals has
expired, or (ii) an Internal Revenue Service (the “IRS”) proceeding which
has been finally and conclusively resolved, that an Excess Payment has been
made, such Excess Payment shall be deemed for all purposes to be a loan to you
made on the date you received the Excess Payment and you shall repay the Excess
Payment to the Company on demand, together with interest on the Excess Payment
at the Regulation Rate from the date of your receipt of such Excess Payment
until the date of such repayment.  If it
is determined (i) by the Accounting Firm, the Company (which shall include
the position taken by the Company, together with its consolidated group, on its
federal income tax return) or the IRS, (ii) pursuant to a determination by
a court, or (iii) upon the resolution to your satisfaction of the Dispute,
that an Underpayment has occurred, the Company shall pay an amount equal to the
Underpayment to you within ten (10) calendar days of such determination or
resolution, together with interest on such amount at the Regulation Rate from
the date such amount should have been paid to you pursuant to the terms of this
Plan or otherwise, but for the operation of this Section 5.3(c), until the
date of payment.

 

ARTICLE VI

OTHER RIGHTS AND BENEFITS NOT AFFECTED

 

6.1                               Other Benefits

 

This Plan does not
provide a pension for you, nor shall any payment hereunder be characterized as
deferred compensation.  Neither the
provisions of this Plan nor the Severance Payment provided for hereunder shall
reduce any amounts otherwise payable, or in any way diminish your rights as an
employee, whether existing now or hereafter, under any written benefit,
incentive, retirement, stock option, stock bonus or stock purchase plan or any
written employment agreement or other written plan or arrangement not related
to severance.

 

6.2                               Other Severance Plans Not Superseded

 

Without limiting the
generality of Section 6.1, this Plan will not supersede any other
severance plans of the Company or its Subsidiaries or severance agreements
between you and the Company and its Subsidiaries (including, but not limited
to, any severance provisions of your employment agreement with the Company or
its Subsidiaries), and your participation in any other severance plan of the
Company and its Subsidiaries will not be terminated.

 

ARTICLE VII

SUCCESSOR TO COMPANY

 

The Company shall require
any successor or assignee, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all the business or assets
of the Company, expressly and unconditionally to assume and agree to perform
the Company’s

 

11

 

obligations under this
Plan, in the same manner and to the same extent that the Company would be
required to perform if no such succession or assignment had taken place.  In such event, the term “Company,” as used
in this Plan, shall mean (from and after, but not before, the occurrence of
such event) the Company as herein before defined and any successor or assignee
to the business or assets which by reason hereof becomes bound by the terms and
provisions of this Plan.

 

ARTICLE VIII

CONFIDENTIALITY

 

8.1                               Nondisclosure of Confidential Material

 

In the performance of
your duties, you have previously had, and may in the future have, access to
confidential records and information, including, but not limited to,
development, marketing, purchasing, organizational, strategic, financial,
managerial, administrative, manufacturing, production, distribution and sales
information, data, specifications and processes presently owned or at any time
hereafter developed by the Company or its agents or consultants or used
presently or at any time hereafter in the course of its business, that are not
otherwise part of the public domain (collectively, the “Confidential
Material”).  All such Confidential
Material is considered secret and has been and/or will be disclosed to you in
confidence.  By your acceptance of your
Severance Payment under this Plan, you shall be deemed to have acknowledged
that the Confidential Material constitutes proprietary information of the
Company which draws independent economic value, actual or potential, from not
being generally known to the public or to other persons who could obtain economic
value from its disclosure or use, and that the Company has taken efforts
reasonable under the circumstances, of which this Section 8.1 is an
example, to maintain its secrecy. 
Except in the performance of your duties to the Company, you shall not,
directly or indirectly for any reason whatsoever, disclose or use any such
Confidential Material, except that the foregoing disclosure prohibition shall
not apply as to Confidential Material that (i) has been publicly disclosed
or was within your possession prior to its being furnished to you by the
Company or becomes available to you on a nonconfidential basis from a third
party (in any of such cases, not due to a breach by you of your obligations to
the Company or by breach of any other person of a confidential, fiduciary or
confidential obligation, the breach of which you know or reasonably should
know), (ii) is required to be disclosed by you pursuant to applicable law,
and you provide notice to the Company of such requirement as promptly as
possible, or (iii) was independently acquired or developed by you without
violating any of the obligations under this Plan and without relying on
Confidential Material of the Company. 
All records, files, drawings, documents, equipment and other tangible
items, wherever located, relating in any way to the Confidential Material or
otherwise to the Company’s business, which you have prepared, used or
encountered or shall in the future prepare, use or encounter, shall be and
remain the Company’s sole and exclusive property and shall be included in the
Confidential Material.  Upon your
termination of employment with the Company, or whenever requested by the
Company, you shall promptly deliver to the Company any and all of the Confidential
Material and copies thereof, not previously delivered to the Company, that may
be, or at any previous time has been, in your possession or under your control.

 

12

 

8.2                               Nonsolicitation of Employees

 

By your acceptance of
your Severance Payment under this Plan, you agree that, for a period of
two (2) years following your termination of employment with the Company or
its Subsidiaries, neither you nor any Person or entity in which you have an
interest shall solicit any person who was employed on the date of your
termination of employment by the Company or any of its Subsidiaries to leave
the employ of the Company or any of its Subsidiaries.  Nothing in this Section 8.2, however, shall prohibit you or
any Person or entity in which you have an interest from placing advertisements
in periodicals of general circulation soliciting applications for employment,
or from employing any person who answers any such advertisement.  For purposes of this Section 8.2, you
shall not be deemed to have an interest in any corporation whose stock is
publicly traded merely because you are the owner of not more than two
percent (2%) of the outstanding shares of any class of stock of such
corporation, provided you have no active participation in the business of such
corporation (other than voting your stock) and you do not provide services to
such corporation in any capacity (whether as an employee, an independent
contractor or consultant, a board member, or otherwise).

 

8.3                               Equitable Relief

 

By your acceptance of
your Severance Payment under this Plan, you shall be deemed to have
acknowledged that violation of Sections 8.1 or 8.2 would cause the Company
irreparable damage for which the Company cannot be reasonably compensated in
damages in an action at law, and that therefore in the event of any breach by
you of Sections 8.1 or 6.2, the Company shall be entitled to make application
to a court of competent jurisdiction for equitable relief by way of injunction
or otherwise (without being required to post a bond).  This provision shall not, however, be construed as a waiver of
any of the rights which the Company may have for damages under this Plan or
otherwise, and, except as limited in Article IX, all of the Company’s
rights and remedies shall be unrestricted.

 

ARTICLE IX

ARBITRATION

 

Except for equitable
relief as provided in Section 8.3, any claim or controversy between the
parties which the parties are unable to resolve themselves and which is not
resolved through the claims procedure of Section 10.10, including any
claim arising out of your employment or the termination of that employment, and
including any claim arising out of, connected with, or related to the
formation, interpretation, performance or breach of any provision of this Plan,
and any claim or dispute as to whether a claim is subject to arbitration, shall
be submitted to and resolved exclusively by expedited arbitration by a single
arbitrator in accordance with the following procedures:

 

9.1                                 In the event of a claim or controversy
subject to this arbitration provision, the complaining party shall promptly
send written notice to the other party identifying the matter in dispute and
the proposed remedy.  Following the
giving of such notice, the parties shall meet and attempt in good faith to
resolve the matter.  In the event the
parties are unable to resolve the matter within 21 days, the parties shall meet
and attempt in good faith to select a single arbitrator acceptable to both
parties.  If a single arbitrator is not
selected by mutual consent within 10

 

13

 

business days following
the giving of the written notice of dispute, an arbitrator shall be selected
from a list of nine persons each of whom shall be an attorney who is either
engaged in the active practice of law or a recognized arbitrator and who, in
either event, is experienced in serving as an arbitrator in disputes between
employers and employees, which list shall be provided by the main Los Angeles
office of the American Arbitration Association (“AAA”) or of the Federal
Mediation and Conciliation Service.  If,
within three business days of the parties’ receipt of such list, the parties
are unable to agree upon an arbitrator from the list, then the parties shall
each strike names alternatively from the list, with the first to strike being
determined by the flip of a coin.  After
each party has had four strikes, the remaining name on the list shall be the
arbitrator.  If such person is unable to
serve for any reason, the parties shall repeat this process until an arbitrator
is selected.

 

9.2                                 Unless the parties agree otherwise,
within 60 days of the selection of the arbitrator, a hearing shall be conducted
before such arbitrator at a time and a place in Los Angeles County agreed upon
by the parties. In the event the parties are unable to agree upon the time or
place of the arbitration, the time and place within Los Angeles County shall be
designated by the arbitrator after consultation with the parties.  Within 30 days of the conclusion of the
arbitration hearing, the arbitrator shall issue an award, accompanied by a
written decision explaining the basis for the arbitrator’s award.

 

9.3                                 In any arbitration hereunder, the Company
shall pay all administrative fees of the arbitration and all fees of the
arbitrator, except that you may, if you wish, pay up to one half of those
amounts.  Each party shall pay its own
attorneys’ fees, costs, and expenses, unless the arbitrator orders
otherwise.  The prevailing party in such
arbitration, as determined by the arbitrator, and in any enforcement or other
court proceedings, shall be entitled, to the extent permitted by law, to
reimbursement from the other party for all of the prevailing party’s costs
(including but not limited to the arbitrator’s compensation), expenses, and
attorneys’ fees.  The arbitrator shall
have no authority to add to or to modify this Plan, shall apply all applicable
law, and shall have no lesser and no greater remedial authority than would a
court of law resolving the same claim or controversy.  The arbitrator shall, upon an appropriate motion, dismiss any
claim without an evidentiary hearing if the party bringing the motion
establishes that it would be entitled to summary judgement if the matter had
been pursued in court litigation.  The
parties shall be entitled to reasonable discovery subject to the discretion of
the arbitrator.

 

9.4                                 The decision of the arbitrator shall be
final, binding, and non-appealable, and may be enforced as a final judgment in
any court of competent jurisdiction.

 

9.5                                 This arbitration provision of the Plan
shall extend to claims against any parent, subsidiary, or affiliate of each
party, and, when acting within such capacity, any officer, director,
shareholder, or agent of each party, or of any of the above, and shall apply as
well to claims arising out of state and federal statutes and local ordinances
as well as to claims arising under the common law or under this Plan.

 

9.6                                 Notwithstanding the foregoing, and unless
otherwise agreed between the parties, either party may, in an appropriate
matter, apply to a court for provisional relief, including a temporary
restraining order or preliminary injunction, on the ground that the arbitration
award to which the applicant may be entitled may be rendered ineffectual
without provisional relief.

 

14

 

9.7                                 Any arbitration hereunder shall be
conducted in accordance with the employment rules and procedures of the AAA
then in effect; provided, however, that, in the event of any inconsistency
between the rules and procedures of the AAA and the terms of this Plan, the
terms of this Plan shall prevail.

 

9.8                                 If any of the provisions of this
Article 9 are determined to be unlawful or otherwise unenforceable, in
whole or in part, such determination shall not affect the validity of the
remainder of this Article 9, and this Article 9 shall be reformed to
the extent necessary to carry out its provisions to the greatest extent
possible and to insure that the resolution of all conflicts between the parties,
including those arising out of statutory claims, shall be resolved by neutral,
binding arbitration.  If a court should
find that the provisions of this Article 9 are not absolutely binding,
then the parties intend any arbitration decision and award to be fully admissible
in evidence in any subsequent action, given great weight by any finder of fact,
and treated as determinative to the maximum extent permitted by law.

 

ARTICLE X

MISCELLANEOUS

 

10.1                        Applicable Law

 

To the extent not
preempted by the laws of the United States, the laws of the State of California
shall be the controlling law in all matters relating to this Plan, regardless
of the choice-of-law rules of the State of California or any other
jurisdiction.

 

10.2                        Construction

 

No term or provision of
this Plan shall be construed so as to require the commission of any act
contrary to law, and wherever there is any conflict between any provision of
this Plan and any present or future statute, law, ordinance, or regulation, the
latter shall prevail, but in such event the affected provision of this Plan
shall be curtailed and limited only to the extent necessary to bring such
provision within the requirements of the law.

 

10.3                        Severability

 

If a provision of this
Plan shall be held illegal or invalid, the illegality or invalidity shall not
affect the remaining parts of this Plan and this Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

 

10.4                        Headings

 

The Section headings
in this Plan are inserted only as a matter of convenience, and in no way
define, limit, or extend or interpret the scope of this Plan or of any
particular Section.

 

10.5                        Assignability

 

Your rights or interests
under this Plan shall not be assignable or transferrable (whether by pledge,
grant of a security interest, or otherwise) by you, your beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.

 

15

 

10.6                        Term

 

If no Change in Control
or Other Transaction has theretofore occurred, this Plan shall expire and be of
no further force and effect two years after the Effective Time; provided that
the Board may, at any time prior to the expiration hereof, extend the term of
this Plan.  If a Change in Control or
Other Transaction occurs on or before the second anniversary of the Effective
Time (or before the expiration of the extended term if the Board had extended
the term of this Plan), this Plan shall continue in full force and effect until
its terms and provisions are completely carried out.

 

10.7                        Amendment

 

This Plan may be amended
in any respect by resolution adopted by the Board until a Change in Control or
Other Transaction occurs; provided, however, that this Section 10.7 shall
not be amended, and no amendment to the Plan shall delay the payment of the
Retention Bonuses, the Severance Payments or the Transaction Bonuses, or reduce
the amount of the Retention Bonuses, the Severance Payments, the Transaction
Bonuses, or any other benefits under this Plan, or change any Eligible
Employee’s entitlement to any of the same, without the prior written consent of
the Eligible Employee(s) to be affected. 
After a Change in Control or an Other Transaction occurs, this Plan
shall no longer be subject to amendment, change, substitution, deletion,
revocation or termination in any respect whatsoever.  No agreement or representations, written or oral, express or
implied, with respect to the subject matter hereof, have been made by the Company
which are not expressly set forth in this Plan.

 

10.8                        Notices

 

For purposes of this
Plan, notices and all other communications provided for herein shall be in
writing and shall be deemed to have been duly given when personally delivered,
telecopied, or sent by certified or overnight mail, return receipt requested,
postage prepaid, addressed to the respective addresses, or sent to the
respective telecopier numbers, last given by each party to the other, provided
that all notices to the Company shall be directed to the attention of the Board
with a copy to the General Counsel.  All
notices and communications shall be deemed to have been received on the date of
delivery thereof if personally delivered, upon return confirmation if
telecopied, on the third business day after the mailing thereof, or on the date
after sending by overnight mail, except that notice of change of address shall
be effective only upon actual receipt. 
No objection to the method of delivery may be made if the written notice
or other communication is actually received.

 

10.9                        Administration

 

(a)                                  This Plan constitutes a welfare benefit
plan within the meaning of Section 3(1) of ERISA.  This letter constitutes the governing
document of the Plan.  The Administrator
of the Plan, within the meaning of Section 3(16) of ERISA, and the Named
Fiduciary thereof, within the meaning of Section 402 of ERISA, is the
Committee.  Attached hereto as Exhibit
“B” is a statement of your rights under ERISA.

 

16

 

(b)                                 The Committee shall enforce the Plan in
accordance with its terms, shall be charged with the general administration of
the Plan and shall have full discretion, power, and authority necessary to
accomplish its purposes, including, but not by way of limitation, the
following:

 

(i)                                     To construe and interpret the terms and
provisions of this Plan;

 

(ii)                                  To compute and certify to the amount and
kind of benefits payable to Eligible Employees and their beneficiaries;

 

(iii)                               To maintain all records that may be
necessary for the administration of the Plan;

 

(iv)                              To provide for disclosure of all
information and the filing or provision of all reports and statements to
Eligible Employees, beneficiaries or governmental agencies as shall be required
by law;

 

(v)                                 To make and publish such rules for the
regulation of the Plan and procedures for the administration of the Plan as are
not inconsistent with the terms hereof;

 

(vi)                              To appoint a plan administrator or any
other agent, and to delegate to them such powers and duties in connection with
the administration of the Plan as the Committee may from time to time
prescribe; and

 

(vii)                           To determine who are Eligible Employees,
and the amount of benefits that shall be paid to each of them, subject to the
limitations described in the Plan.

 

(c)                                  The Committee shall have full discretion
to construe and interpret the terms and provisions of this Plan, which
interpretation or construction shall be final and binding on all parties,
including but not limited to the Company and any Eligible Employee or
beneficiary.

 

10.10                 Claims

 

(a)                                  If you, your beneficiary, or the personal
representative of your estate (hereinafter, “you” shall include your
beneficiary and the personal representative of your estate) do not receive
payment of the benefits to which you believe you are entitled to under the
Plan, or have any other grievance with respect to your benefits under the Plan,
you may make a claim for benefits in the manner herein provided.  You shall not be charged a fee or be liable
for any costs associated with making a claim or appealing an adverse benefit
determination with respect to benefits under the Plan.

 

(b)                                 All claims under the Plan shall be made
in writing, signed by you, and submitted to the Company.  The Company will, upon request and within a
reasonable period of time, provide you with a benefits claim form (the “Claim
Form”).  The Claim

 

17

 

Form shall (i) specify the claim, (ii) specify the date the
claim is filed, (iii) specify the date by which a decision must be
rendered by the Company, (iv) summarize the rules regarding extensions of
benefit determinations as described herein, and (v) list the records,
documents, and other information (other than information available to the
Company from its own records) you are required to submit with the Claim
Form.  The date you submit the Claim
Form to the Company shall be the date the claim is filed and shall be the date
specified as such on the Claim Form, without regard to whether all the information
necessary to make a determination accompanies the filing (the “Filing Date”).

 

(c)                                  Once you file your claim, the Company
shall provide to you a written notice of its determination within a reasonable
time but not later than 90 days from the Filing Date.  However, the Company may determine that special circumstances
require an extension of time for making a determination on your claim.  If the Company determines that an extension
of time is required, the Company shall provide to you a written notice prior to
the termination of the initial 90-day period. 
In the extension notice, the Company shall indicate the date the
extension notice is sent to you, (ii) the special circumstances requiring
an extension of time, and (iii) the date by which the Company expects to
render the determination. In no event shall an extension exceed a period of 180
days from the Filing Date.  However, in
the event the Company extends the determination period due to your failure to
submit information necessary to decide your claim, the period for making the
determination shall be tolled from the date the notification of the extension
is sent to you until the date the Company receives the information.

 

(d)                                 If a claim is granted, the Company shall
provide you with a written notice of such determination and the appropriate
distribution, adjustment, or other action shall be made or taken within a
reasonable period of time.  If the
Company denies your claim in whole or in part, you will receive a written
determination which shall set forth the following information:

 

(i)                                     The date the Company made the
determination and the date the notice is sent to you;

 

(ii)                                  The specific reasons for the denial;

 

(iii)                               Specific references to the pertinent Plan
provisions upon which the denial is based;

 

(iv)                              A description of any additional information
or material necessary to perfect the claim and why such material or information
is necessary;

 

(v)                                 An explanation of the appeals procedure
set forth in this Section 10.10 and the time limits applicable to such
procedures;

 

(vi)                              A statement of your right to bring a
civil action under Section 502 of ERISA following an adverse benefit
determination on review; and

 

18

 

(vii)                           An Appeals Form (as defined below)
addressed to the Company that clearly specifies the date by which an appeal
must be filed with respect to the adverse determination.

 

(e)                                  If the Company denies your claim in whole
or in part, you may appeal from such denial by filing a signed benefit
determination appeals form (the “Appeals Form”) with the Secretary of the
Company no later than 60 days from the date the notice of denial of your claim
is sent to you.  The date an appeal is
filed shall be the date the Company receives the Appeals Form, without regard
to whether all the information necessary to make a benefit determination is
filed with the Appeals Form (the “Appeals Filing Date”).  The Company shall provide you with an
opportunity to submit written comments, documents, records, and other information
relating to your appeal of an adverse determination on your claim for
benefits.  The Company shall review and
take into account all comments, documents, records, and other information
submitted by you relating to your appeal, without regard to whether such
information was submitted or considered in the initial benefit
determination.  You shall be provided
upon request and free of charge, reasonable access to, and copies of, all
documents, records, and other information relevant to your claim for benefits.  A document, record, or other information
shall be considered relevant for purposes of the preceding sentence if such
document, record, or information was (i) relied upon by the Company in
making the initial benefit determination, (ii) was submitted, considered,
or generated in the course of making the benefit determination, without regard
to whether such document, record, or other information was relied upon by the
Company in making the benefit determination, or (iii) demonstrates
compliance with the administrative processes and safeguards required under
Department of Labor Regulations Section 2560.501-1.

 

(f)                                    The Company shall issue its written
decision on your appeal no later than 60 days from the Appeals Filing
Date.  If special circumstances (such as
the need to hold a hearing or obtain additional information) require an
extension of the time for processing the appeal, the Company shall issue its
decision as soon as possible but not later than 120 days from the Appeals
Filing Date.  If the Company determines
that an extension of time is required, the Company shall provide to you a
written notice, in accordance with Section 10.10(c) of the Plan, prior to
the termination of the initial 60-day period. 
In the event the Company requires an extension of time to make its
determination due to your failure to submit information necessary to decide the
claim, the period for making a benefit determination on appeal shall be tolled
from the date the notification of the extension is sent to you until the date
the Company receives the information.

 

(g)                                 In the event of an adverse benefit
determination on appeal by the Company, the Company shall provide you access
to, and copies of, documents, records, and other information relating to the
adverse benefit determination on appeal, whether or not such information was
relied on by the Company in reaching a determination on the claim.

 

19

 

(h)                                 If the claim is granted on appeal, the
Company shall provide you with written notice of such determination and the
appropriate distribution, adjustment, or other action shall be made or taken
within a reasonable period of time.  If
the Company denies the claim on appeal in whole or in part, the Company shall
provide you with written notification of its determination as soon as possible,
but no later than five days after the adverse benefit determination is
made.  The written notice issued by the
Company shall set forth the following:

 

(i)                                     The date the Company made the adverse
determination and the date the notice was sent to you;

 

(i)                                     The specific reasons for the adverse
determination;

 

(ii)                                  The specific references to the pertinent
Plan provisions on which the decision is based;

 

(iii)                               A statement that you are entitled to
receive, upon request and free of charge, reasonable access to, and copies of,
all documents, records, and other information relevant to your claim for
benefits; and

 

(iv)                              A statement of your right to bring a
civil action under Section 502(a) of ERISA.

 

10.11                 Withholding of Taxes

 

The Company may withhold
from any amounts payable under this Plan all federal, state, city or other
taxes required by applicable law to be withheld by the Company.

 

10.12                 Employment Status

 

This Plan does not
constitute a contract of employment or impose on you any obligation to remain
in the employ of the Company, nor does it impose on the Company or any of its
Subsidiaries any obligation to retain you in your present or any other
position, nor does it change the status of your employment as an employee at
will.  Nothing in this Plan shall in any
way affect the right of the Company or any of its Subsidiaries in its absolute
discretion to change or reduce your compensation at any time, or to change at
any time one or more benefit plans, including but not limited to pension plans,
dental plans, health care plans, savings plans, bonus plans, vacation pay
plans, disability plans, and the like.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  EARL SCHEIB, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAVID I. SUNKIN

  	
   

  
	
   

  	
  Name:

  	
  David I. Sunkin

  	
   

  	 

	
   

  	
  Its:

  	
  Vice President and General Counsel

  	
   

  
						

 

20

 

EXHIBIT A

 

 

SEPARATION AND GENERAL
RELEASE AGREEMENT

 

PLEASE READ THIS AGREEMENT CAREFULLY.  IT CONTAINS A RELEASE OF

ALL KNOWN AND UNKNOWN CLAIMS.

 

This Separation and
General Release Agreement (the “Agreement”) is made this     day
of
              ,
              ,
by and between Earl Scheib, Inc., a Delaware corporation (the “Company”) and
                                        
(“Employee”), with reference to the following facts:

 

10.1                        The Company has adopted the Earl Scheib, Inc. Modified
Executive Retention and Incentive Plan dated April 2, 2003 (the “Plan”), under
which Employee is an
Eligible Employee.

 

10.2                        Employee’s rights to receive the Severance Payment and
certain other benefits under the Plan are conditioned upon Employee’s execution
and delivery of this Agreement.

 

NOW, THEREFORE, the
Company and Employee hereby agree as follows:

 

(a)                                  SEVERANCE PAYMENT.  Subject to the terms and limitations of the
Plan, Employee shall receive the Severance Payment and all other benefits under
Article III of the Plan if a Change in Control occurs and Employee
satisfies all conditions set forth in the Plan to the receipt of the Severance
Payment and such other benefits.  The
Severance Payment and all other benefits under Article III of the Plan are
conditioned upon (among other things), and will not be payable until
(a) Employee’s execution and delivery of this Agreement,
(b) Employee’s termination of employment with the Company and all of its
Subsidiaries, and (c) if Employee is at least forty (40) years old, on the
expiration of the revocation period set forth in paragraph 4(e) of this
Agreement.

 

(b)                                 RELEASE. 
In consideration of the terms and provisions of this Agreement, Employee
hereby knowingly and voluntarily on behalf of Employee and Employee’s spouse
and dependents, if any, as well as Employee’s descendants, ancestors,
representatives, heirs, executors, administrators, grantees, assigns and
successors-in-interest, and each of them, forever relieves, releases and
discharges the Company and its Subsidiaries and their respective predecessors,
successors, heirs, assignees, owners, members, attorneys, representatives,
affiliates, officers, directors, agents, employees, servants, executors,
administrators, accountants, shareholders, investigators, employee benefit
plans and trustees and any and all other related individuals and entities, from
any and all claims, debts, liabilities, demands, obligations, liens, promises,
acts, agreements, costs and expenses (including, but not limited to, attorney’s
fees), damages, actions and causes of action, of whatever kind or nature,
including, without limitation, any statutory, civil or administrative claim, or
any claim, arising out of acts, whether known or unknown, suspected or
unsuspected, fixed or contingent, apparent or not, including, but not limited
to, any claims based on, arising out of, related to or connected with
Employee’s

 

1

 

employment with, or
termination of employment from, the Company or any of its Subsidiaries,
including, but not limited to, any claims arising from federal, state or local
laws which prohibit discrimination of the basis of race, national origin,
religion, age, sex, marital status, pregnancy, disability, perceived
disability, ancestry, sexual orientation, family or personal leave, or any
other form of discrimination, or from laws such as worker’s compensation laws
which provide rights and remedies for injuries sustained in the workplace, or
from any common law claims of any kind, including, but not limited to,
contract, tort, or property rights, including, but not limited to, breach of
contract, breach of the implied covenant of good faith and fair dealing,
tortious interference with contract or current or prospective economic
advantage, fraud, deceit, breach of privacy, misrepresentation, defamation,
wrongful termination, tortious infliction of emotional distress, loss of
consortium and breach of fiduciary duty, violation of public policy and any other
common law claim of any kind whatever, any claims for severance pay, sick
leave, family leave, vacation, life insurance, bonuses, health insurance,
disability or medical insurance or any other fringe benefit or compensation, or
from any and all rights or claims arising under the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. § 2101 et  seq.
(“WARN”) and the Employee Retirement Income Security Act of 1974 (“ERISA”); provided,
however, that the foregoing Release shall not extend to amounts to be
paid or benefits to be provided to Employee under the express terms of the Plan
nor shall it extend to any amounts otherwise payable under any written benefit,
incentive, retirement, stock option, stock bonus or stock purchase plan or any
written employment agreement or other written plan or arrangement related to
severance (the foregoing released matters, excluding the excluded matters
referred to in the foregoing proviso, are referred to as the “Released
Matters”).

 

(c)                                  GENERAL RELEASE; WAIVER OF RIGHTS.  Employee hereby waives all rights under
California Civil Code Section 1542 solely with respect to claims directly
or indirectly arising from and/or related to the Released Matters (it being
understood that Employee is not waiving or releasing claims with respect to any
other matters), which provides as follows:

 

“A GENERAL RELEASE DOES
NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OF SUSPECT TO EXIST IN
HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE WHICH, IF KNOWN BY HIM, MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

 

(d)                                 ADEA RELEASE. If Employee is at least
forty (40) years old, Employee agrees and expressly acknowledges that this
Agreement includes a waiver and release of all claims which Employee has or may
have under the Age Discrimination in Employment Act of 1967, as amended, 29
U.S.C. § 621, et seq. (“ADEA”).  If
Employee is at least forty (40) years old, the following terms and conditions
apply to and are part of the waiver and release of ADEA claims under this
Agreement:

 

(i)                                     The waiver and release of claims under
the ADEA contained in this Agreement do not cover rights or claims that may
arise after the date on which Employee signs this Agreement.

 

2

 

(ii)                                  This Agreement involves consideration in
addition to anything of value to which Employee is already entitled.

 

(iii)                               Employee is advised to consult an
attorney before signing this Agreement. 
If Employee executes this Agreement prior to the expiration of the
period specified in paragraph 4(d) below, Employee does so voluntarily and
after having had the opportunity to consult with an attorney.

 

(iv)                              Employee is granted twenty-one (21) days
after Employee is presented with this Agreement to decide whether or not to
sign this Agreement.

 

(v)                                 Employee will have the right to revoke
the waiver and release of claims under the ADEA within seven (7) days after
Employee’s termination of employment with the Company and all of its
Subsidiaries and execution of this Agreement. 
This paragraph 4 shall not become effective or enforceable until that
revocation period has expired and Employee understands and agrees that no
consideration shall be paid to Employee pursuant to this Agreement or under the
Plan until the revocation period has expired without this Agreement having been
revoked (or, if any consideration has been previously paid, Employee shall
refund such consideration to the Company if Employee revokes the waiver and
release of ADEA claims).

 

(e)                                  ENTIRE AGREEMENT.  This Agreement contains the entire agreement
and understanding concerning the subject matters between the parties and
supersedes and replaces all prior agreements, whether written or oral, express
or implied, concerning the subject matters hereof.

 

(f)                                    RIGHT TO CONSULT ATTORNEY. 
Employee represents and agrees that Employee fully understands the right
to discuss all aspects of this Agreement with the Employee’s private attorney, that to the extent desired
Employee has availed himself or herself of this right, and that Employee is
voluntarily entering into this Agreement. Employee acknowledges that by being
given this Agreement to review, Employee has been advised in writing to consult
with counsel prior to executing this Agreement.

 

(g)                                 CAPITALIZED TERMS.  All capitalized terms used in this Agreement
and not otherwise defined herein shall have the same meaning as in the Plan.

 

(h)                                 NO ADMISSION.  Employee understands this Agreement is not an admission of
liability by any party.

 

3

 

EMPLOYEE ACKNOWLEDGES
THAT EMPLOYEE HAS READ THIS AGREEMENT, UNDERSTANDS IT AND IS VOLUNTARILY
ENTERING INTO IT.

 

	
   

  	
   

  	
   

  	
   

  
	
  Signature of Employee

  	
  Dated

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Printed Name of
  Employee

  	
  Address of Employee

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature and Title of
  Company

  Representatives

  	
  Dated

  

 

4

 

EXHIBIT B

 

 

ERISA INFORMATION AND RIGHTS

 

Information Provided
Under ERISA.  The Plan is an unfunded welfare benefit
plan, maintained on a calendar year basis. The Company is the Plan sponsor.  The Committee is the Plan Administrator and
agent for service of legal process.  The
Company bears the costs of all benefits under the Plan.

 

The “Company” is Earl
Scheib, Inc., whose address, telephone number, and employer identification
number are as follows:

 

Earl Scheib, Inc.

15206 Ventura Boulevard, Suite 200

Sherman Oaks, CA 91403

Telephone No.: (818) 981-9992

Employer Identification No.: 95-1759002

 

The Plan number of this
Plan is 50   .

 

Statement of ERISA Rights. 
A Participant in the Plan is entitled to certain rights and protections
under a federal law known as “ERISA.” 
ERISA provides that all Plan Participants shall be entitled to examine,
without charge, at the Plan Administrator’s office, all Plan documents and the
Plan’s annual report, if any.  Copies of
these documents and other Plan information may also be obtained upon written
request to the Plan Administrator.  A
reasonable charge may be made for copies.

 

In addition to creating
rights for Plan Participants, ERISA imposes duties upon the people who are
responsible for the operation of this Plan. 
The people who operate this Plan, called “fiduciaries” of the Plan, have
a duty to do so prudently and in the interest of you and other Plan Participants.  No one, including your employer or any other
person, may fire you or otherwise discriminate against you in any way to
prevent you from obtaining benefits or exercising your rights under ERISA.  If your claim for benefits is denied in
whole or in part, you must receive a written explanation of the reason for this
denial.  You have the right to have the
Plan Administrator review and reconsider your claim, as described in the
Plan.  Under ERISA, there are steps you
can take to enforce the above rights. 
For instance, if you request materials from the Plan Administrator and
do not receive them within 30 days, you may file a claim as provided in the
Plan, or initiate an arbitration proceeding. 
In such a case, the arbitrator may require the Plan Administrator to
provide the materials and pay you up to $110 a day until you receive the
materials, unless the materials were not sent because of reasons beyond the
control of the Plan Administrator.  If
you have a claim for benefits which is denied or ignored, in whole or in part,
you may file a claim as provided in the Plan, or initiate an arbitration
proceeding.  If you are discriminated
against for asserting your rights, you may seek assistance from the U.S.
Department of Labor, you may file a claim as provided in the Plan, or you may
initiate an arbitration proceeding.  An
arbitrator will decide who should pay the costs and legal fees of the
claim.  If you are successful, the
arbitrator may order the person you have sued to pay these costs and fees.  If you lose, the arbitrator may order you to
pay these costs and fees, for example, if he or she finds your claim is
frivolous.

 

1

 

If you have any questions
about the Plan, you should contact the Plan Administrator.  If you have any questions about this
statement or about your rights under ERISA, you should contact the nearest
office of the Pension and Welfare Benefits Administration, U.S. Department of
Labor listed in your telephone directory or the Division of Technical
Assistance and Inquiries, Pension and Welfare Benefits Administration, U.S.
Department of Labor, 200 Constitution Avenue N.W., Washington D.C. 20210.

 

2

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