Document:

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EXHIBIT 10.22

AMENDED AND RESTATED THORATEC CORPORATION

EXECUTIVE OFFICER SEVERANCE BENEFITS PLAN

AND SUMMARY PLAN DESCRIPTION

INTRODUCTION

Thoratec Corporation (“TC”) established the Thoratec Corporation Executive
Officer Severance Benefits Plan (the “Plan”) effective July 11, 1998, as
amended and restated by the Board of Directors of TC on February 26, 2004, to
provide severance benefits to certain employees whose employment is terminated.

ELIGIBILITY FOR BENEFITS

Employees eligible to receive severance benefits under the Plan are the
following officers of TC: President and Chief Executive Officer, Senior Vice
President and Chief Operating Officer, Division President, Senior Vice
President and Chief Financial Officer, Vice President of Operations, Vice
President of Regulatory Affairs and Quality Assurance, Vice President of
Research and Development, Vice President of Sales and Marketing, Vice President
of Human Resources, Vice President of Business Development, Vice President and
General Counsel and any executive officer subsequently designated by the Board
of Directors (“Executive Officer(s)”). Benefits are provided under the Plan if
the form of Release described below is executed by the Executive Officer and
becomes irrevocable and the additional requirements described below with
respect to a particular benefit are met.

The Board of Directors of TC may amend the Plan at any time after July 1, 2001.

SEVERANCE BENEFITS

Severance Pay Benefit

	 	 	Standard
	 
	 	 	Any Executive Officer whose employment with TC ends due to an involuntary
termination (other than for Cause) and who has not declined another
comparable position with TC, a TC affiliate, successor or assignee shall
be paid in cash a standard severance pay benefit equal to one times the
Executive Officer’s then current annualized base salary payable at the
election of the Executive Officer made before the date of such
termination in either (a) a single lump sum payment, or (b) ratably
during the one year after termination in accordance with TLC’s regular
pay periods.

 

 

Change in Control

Each Executive Officer who is entitled to receive severance benefits under the
Plan, whose employment with TC ends within 18 months after a Change In
Control, either involuntarily (other than for Cause) or voluntarily for Good
Reason, shall be paid in lieu of the standard severance pay benefit a Change
in Control severance pay benefit equal to
two times the Executive Officer’s then current annualized base salary plus two
times the greatest of (a) the prior year’s target bonus, (b) the current
year’s actual bonus, or (c) the current year’s target bonus. Such amount shall
be payable at the election of the Executive Officer made before the date of
such termination in either (i) a single lump sum payment, or (ii) ratably
during the one year after termination in accordance with TC’s regular pay
periods.

Definitions

Cause. “Cause” shall mean (i) any act of personal dishonesty taken by the
Executive Officer in connection with his/her responsibilities as an Executive
Officer which is intended to result in substantial personal enrichment of the
Executive Officer, (ii) the Executive Officer’s conviction of a felony which
TC reasonably believes has had or will have a material detrimental effect on
TC’s reputation or business, or (iii) continued willful violations by the
Executive Officer of the Executive Officer’s obligations to TC after there
has been delivered to the officer a written demand for performance from TC
which describes the basis for its belief that the Executive Officer has not
substantially performed his duties.

Change in Control. “Change of Control” shall mean the occurrence of any of the
following events: (i) any “person” (as such term is used in Sections 13(d) and
14(d) of the 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 TC representing fifty percent (50%) or more of
the total voting power represented by TC’s then outstanding voting securities;
or (ii) the consummation of a sale of substantially all of TC’s assets; or
(iii) the consummation of a merger or consolidation of TC with any other
corporation, other than a merger or consolidation which would result in the
voting securities of TC outstanding immediately prior thereto continuing to
represent (either by remaining out-standing 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 TC or such
surviving entity or its parent outstanding immediately after such merger or
consolidation; or (iv) a change in the composition of the TC Board of Directors
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 (A) are directors of TC as of January 1, 2004 or (B) are
elected, or nominated for election, to the Board of Directors with the

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affirmative votes of at least a majority of those directors whose
election or nomination was not in connection with any transaction
described in subsections (i), (ii), or (iii) above, or in connection with
an actual or threatened proxy contest relating to the election of
directors to TC.

Good
Reason. “Good Reason” shall mean any material reduction in the
duties or salary or bonus of the Executive Officer or a requirement that
the Executive Officer work at a facility more than 25 miles from TC’s
current headquarters.

Withholding

Notwithstanding any other provision of the Plan, all severance pay benefits
shall be reduced by any applicable federal, state, local, or other withholding.

Gross-Up for Excise Tax

In the event TC determines that any payment hereunder to or for the benefit of
an Executive Officer (determined without regard to any additional payment
required under this paragraph) (a “Payment”) is subject to the excise tax
imposed by section 4999 of the Internal Revenue Code, as amended (the “Excise
Tax”), then the Executive Officer shall be paid an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by the Executive
Officer of all taxes, including, without limitation, any income taxes and
Excise Tax imposed upon the Gross-Up Payment, the Executive Officer retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payment.

Medical Benefits Continuation

With respect to each eligible Executive Officer who is entitled to receive
severance benefits under the Plan, TC shall continue to pay, to the same extent
as paid by TC immediately before termination, for the Executive
Officer’s
existing benefit coverage continuation under COBRA as provided by TC’s group
medical plan for either (i) the calendar month following the calendar month of
termination of employment, if entitled to the standard severance pay benefits,
or (ii) one year, if entitled to the Change in Control severance pay benefit.
The period of such TC-paid COBRA coverage shall be considered part of the
Executive Officer’s COBRA coverage entitlement period.

Release

To receive benefits under the Plan, an Executive Officer must sign a Release of
claims in the form specified by TC within the applicable time limit. Each
eligible Executive Officer age forty or older will have a maximum period of
forty-five days from the date the Executive Officer receives the applicable
Release to consider, accept, sign and return it to TC, and may revoke the
Release in writing within seven days thereafter. Each other Executive Officer
under age 40 will have a maximum period of seven calendar days from the date
the Executive Officer receives the

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applicable Release to consider, accept, sign and return it to TC, which Release
shall be irrevocable. All time limits refer to calendar days unless otherwise
specified. If the expiration of any time limit of the Plan falls on a weekend
or a holiday observed by TC, the time limit will be deemed to end at the close
of business on the next workday.

No Other Similar Benefits

The severance benefits provided by the Plan are in lieu of any other severance
benefits provided by TC under any other applicable practice or policy; provided
that, if an
Executive Officer’s current employment agreement provides superior severance
provisions, such Executive Officer may elect to have the benefit of such
severance provisions in lieu of those comparable benefits provided by the Plan.

Source of Benefits

The benefits provided under the Plan shall be unfunded and payable solely from
the general assets of TC.

Expenses

The expenses of operating and administering the Plan shall be borne entirely by
TC.

Plan Sponsor and Administrator

TC shall be the “Plan Sponsor” and the “Administrator” of the Plan, as such
terms are defined in the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”). The Administrator shall make any and all determinations required to be made in
connection with the operation and administration of the Plan, including
(without limitation) the determination of whether an Executive Officer is an
eligible Executive Officer and the amount of any benefit payable hereunder. The
Administrator shall have the discretionary power to interpret the provisions of
the Plan as it may determine is necessary or appropriate for the operation and
administration of the Plan.

Named Fiduciary

TC is the “named fiduciary” of the Plan within the meaning of ERISA, including
the “named fiduciary” with the power to act with respect to the review of
claims for benefits under the Plan that are denied.

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Allocation and Delegation of Responsibilities

TC may allocate any of its responsibilities for the operation and
administration of the Plan to any officer or employee of TC. It may also
delegate any of its responsibility under the Plan by designating, in writing,
another person to carry out such responsibilities. Any such written designation
shall become effective when executed by the Chief Executive Officer of TC and
the designated person shall then be responsible for carrying out the
responsibilities described in such writing.

No Individual Liability

It is the express purpose and intention of TC that no individual liability
whatsoever shall attach to, or be incurred by, any director, officer, employee,
representative or agent of TC and its affiliated and related entities, under,
or by reason of the operation of, the Plan.

Claims and Review Procedures

Any Executive Officer who believes that the Executive Officer has not received
the proper benefit under the Plan must file a written claim with the
Administrator. The Administrator will review the claim and notify the Executive
Officer of its decision in writing within 60 days after the claim is received.

If the Administrator denies a claim, in whole or in part, the Administrator’s
notice will set forth:

	 	 	 
	1.

	 	The specific reason(s) for the denial;
	 
	 	 
	2.

	 	The Plan provision(s) on which the denial is based;
	 
	 	 
	3.

	 	A description of any material or information necessary for the claimant
to perfect the claim, and an explanation of why such material or
information is necessary; and
	 
	 	 
	4.

	 	Information concerning the steps to be taken if the claimant wishes to
submit the claim for further review.

If the claimant feels the denial of the claim is improper, the claimant, or the
claimant’s duly authorized representative, must file a written request for a
full review of the claim. A request for review must be filed with the
Administrator within 90 days after the claimant receives the notice of denial
and should set forth all of the grounds upon which it is based, all facts in
support of the request and any other matters the claimant (or the claimant’s
representative) deems pertinent. The Administrator will give the claimant, or
the claimant’s representative, the opportunity to review pertinent Plan
documents in preparing a request for review. The Administrator will furnish the
claimant with a final written decision within 60 days after receipt of the
request for review.

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Questions Regarding the Plan

An Executive Officer having questions regarding the Plan or its application
should direct them to Wayne Boylston, Chief Financial Officer, at (925)
847-8600.

TO EVIDENCE THE ADOPTION OF THE AMENDED AND RESTATED THORATEC CORPORATION
EXECUTIVE OFFICER SEVERANCE BENEFITS PLAN, this document has been executed by
an authorized officer of TC.

	 	 	 
	

	 	Thoratec Corporation
	 
	 	 
	Dated: ____________________________

	 	By: ____________________________

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Your Rights Under ERISA

As a participant in the Plan, you are entitled to certain rights and
protections under ERISA. Under ERISA, all participants are entitled to:

	 	 	 
	1.

	 	Examine, without charge, at the office of the Administrator of the Plan,
all Plan documents and copies of all documents filed by the Plan with the
U.S. Department of Labor, such as detailed annual reports; and
	 
	 	 
	2.

	 	Obtain copies of all Plan documents and other Plan information upon
written request to the Administrator. The Administrator may make a
reasonable charge for the copies.

In addition to creating rights for Plan participants, ERISA imposes duties upon
the people who are responsible for the operation of the Plan. The people who
operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest
of you and the other Plan participants and their beneficiaries.

No one, including your employer or any other person, may discriminate against
you in any way to prevent you from obtaining a benefit 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 the denial, and you
have the right to have the Administrator review and reconsider your claim. (See
“Claims and Review Procedures” above.)

Under ERISA, there are steps you can take to enforce your rights. For instance,
if you request materials from the Administrator and do not receive them within
thirty days, you may file suit in a federal court. In such a case, the court
may require the Administrator to provide the materials and pay you up to $100 a
day until you receive the materials, unless the materials were not sent because
of reasons beyond the Administrator’s control. If you have a claim for benefits
which is denied or ignored, in whole or in part, you may file suit in state or
federal court.

If it should happen that you are discriminated against for asserting your
rights under ERISA, you may seek assistance from the U.S. Department of Labor,
or you may file suit in a federal court. The court will decide who should pay
court costs and legal fees. If you lose, the court may order you to pay these
costs and fees, for example, if it finds your claim is frivolous.

If you have questions about this statement or about your rights under ERISA,
you should contact the nearest Area Office of the U.S. Labor Management
Services Administration, Department of Labor.

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ERISA INFORMATION

Plan Name

     Amended and Restated Thoratec Corporation Executive Officer Severance
Benefits Plan

Plan Identification Number

     502

Plan Sponsor

Thoratec Corporation

6035 Stoneridge Drive

Pleasanton, CA 94588

Telephone: (925) 847-8600

Administrator

     Same as Plan Sponsor

Employer Identification Number

     94-2340464

Agent for Service of Legal Process

     Service of legal process may be made upon the Plan Administrator at the
address shown above.

Plan Year

     Calendar Year

Type of Plan

     Welfare Plan

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EXHIBIT 10.23

THORATEC CORPORATION

DEFERRED COMPENSATION PLAN

SECTION 1. ESTABLISHMENT AND PURPOSES

     1.1 Establishment. Thoratec Corporation established effective as of
January 1, 2004, a deferred compensation plan for executives as described
herein, known as the “THORATEC CORPORATION DEFERRED COMPENSATION PLAN”
(hereinafter called the “Plan”).

     1.2 Purposes. The purposes of the Plan are to (i) enable the Corporation
to attract and retain persons of outstanding competence; (ii) provide means
whereby certain amounts payable by the Corporation to selected executives and
directors may be deferred to some future period; and (iii) provide a means for
possible future allocation of a matching credit by the Corporation to selected
executives and directors. The Plan is intended to constitute an unfunded plan
primarily for the purpose of providing deferred compensation for a select
group of management or highly compensated employees.

SECTION 2. DEFINITIONS

     2.1 Definitions. Whenever used herein, the following terms shall have the
meanings set forth below:

     (a) “Board” means the Board of Directors of the Corporation.

     (b) “Committee” means the Nonqualified Deferred Compensation Committee
appointed by the Board.

     (c) “Compensation” means the gross Salary, Bonus and Board Fees payable to
a Participant during a Year.

     (i) Salary. “Salary” means all regular, basic compensation, before
reduction for amounts deferred pursuant to this Plan or any other plan of the
Corporation, payable in cash to a Participant for services rendered during the
Year, exclusive of any bonuses or incentive compensation, special fees or
awards, allowances, or amounts designated by the Corporation as payments toward
or reimbursement of expenses.

     (ii) Bonus. “Bonus” means the Plan bonus payable in cash by the
Corporation to a Participant in a Year under the Corporation’s Bonus Plan.

     (iii) Board Fees. “Board Fees” means the cash compensation payable to
Directors, including any annual retainer and meeting and committee fees.

 

 

     (d) “Corporation” means Thoratec Corporation, a California corporation.

     (e) “Director” means a member of the Corporation’s Board of Directors.

     (f) “Early Retirement Date” means the later of the date the Participant
completes ten years of service with the Company or attains age 55.

     (g) “Growth Increment” means the net amount of income, appreciation, loss,
etc., earned or suffered on a Participant’s deferred amounts.

     (h) “Normal Retirement Date” means the date the Participants turn age 65.

     (i) “Participant” means an individual eligible to participate in the Plan
pursuant to Section 3.1.

     (j) “Trust” means the Thoratec Corporation Grantor Trust Agreement
attached hereto as Exhibit A.

     (k) “Year” means a calendar year.

     2.2 Gender and Number. Except when otherwise indicated by the context,
any masculine terminology used herein also shall include the feminine gender,
and the definition of any term herein in the singular also shall include the
plural.

SECTION 3. ELIGIBILITY AND PARTICIPATION

     3.1 Eligibility. The Plan is primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees and Directors. Subject to the preceding sentence, the following
persons shall be eligible to participate in the Plan:

     (a) the elected officers and appointed officers of the Corporation;

     (b) cardiovascular division senior directors and above;

     (c) Directors; and

     (d) any other employee of the Corporation or any direct or indirect
subsidiary of the Corporation designated by the Chair of the Committee or by
the Chief Executive Officer of the Corporation from time to time.

     3.2 Ceasing Eligibility. In the event a Participant no longer meets the
requirements for participation in this Plan, he shall become an inactive
Participant. An

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inactive Participant shall retain all rights described under this Plan,
except the right to make any further deferrals and the right to receive any
further matching credits, until the time that he again meets the eligibility
requirements of Section 3.1 (and, if applicable, Section 5.1).

SECTION 4. ELECTION TO DEFER

     4.1 Deferral Election.

     (a) Subject to the following provisions, prior to the beginning of the
Year, a Participant irrevocably may elect, by written notice to the
Corporation, to defer Salary, Bonus, or Board Fees as set forth below.

     (i) With respect to Salary deferrals, the deferral percentage elected must
be at least 2% but no greater than 50%, or a flat dollar amount of no less than
$2,000 and no more than 50% of salary. The deferral amount shall be applied to
the Participant’s Salary for each pay period of the Year to which the deferral
election applies and must be made before November 30 of the year immediately
preceding the Year for which such deferral election applies.

     (ii) With respect to Bonus deferrals, the deferral percentage elected
shall be 0% to 100% (and/or a flat amount) and shall apply only to the
Participant’s Bonus payable with respect to service to be performed in the Year
and must be made before November 30 of such Year.

     (iii) With respect to Board Fees, the deferral percentage elected shall be
0% to 100% and shall apply only to the Participant’s Board Fees payable with
respect to service to be performed in the Year and must be made before November
30 of the year immediately preceding the Year for which such deferral election
applies.

     (b) An individual who becomes a Participant at or after the beginning of
the Year may irrevocably elect, by written notice to the Corporation, to defer
all or a percentage of (i) the annual Salary or Board Fees earned by such
Participant for such Year after such election, if such election is made within
sixty (60) days after becoming a Participant, and (ii) the Participant’s Bonus,
if any, payable with respect to service performed during such Year, if such
election is made before November 30 of such Year.

     4.2 Deferral Period.

     (a) The Participant may elect a deferral period for each separate
deferral. The deferral period may be until a payment date beginning prior to
termination of employment, the date of termination of employment or the
Participant’s Early or Normal Retirement date. This election, if made, must be
made at least 12 months prior to the scheduled payout date. Notwithstanding
the foregoing, Directors who are not also employees must defer payment until
after their service on the Board ends.

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     (b) However, notwithstanding the above, payments of deferred amounts shall
be made on the earliest to occur of:

     (i) Death,

     (ii) Total and permanent disability (as defined in the Corporation’s long
term disability plan), or

     (iii) Termination of employment other than Early or Normal Retirement.

     (c) The Participant may elect to receive an “unscheduled withdrawal” at
any time, subject to a penalty equal to 10% of the amount received. The
penalty shall be retained by the Corporation or paid from the Trust to the
Corporation. Any Participant who makes an unscheduled withdrawal may not
participate in the Plan until the January 1 following the 12 month anniversary
of the unscheduled withdrawal.

     4.3 Manner of Payment Election. Generally, payments are to be made in one
lump sum. However, in the case of Early or Normal Retirement the Participant
also may elect to have the deferred amount paid either in a lump sum or in up
to ten (10) (or, if less, his total years of service with the Corporation)
substantially equal annual installments; provided, however, at such time a
Participant may also specify a date within the installment period to receive
all then remaining deferred amounts in a lump sum. Also a Participant may
elect to receive pre-termination payments in equal annual installments for up
to four (4) years. Notwithstanding the foregoing, any Participant with less
than two years of service with the Corporation must receive a lump cash sum
distribution.

     4.4 Modification, Corporate Discretion. Notwithstanding the foregoing, a
Participant may change the timing of any post-employment payments of deferred
amounts by written election made prior to the Year in which deferred amounts
are to be paid. Once a Participant has elected to receive a payment after he
or she terminates employment with the Corporation, that election may not be
changed to a commencement date prior to termination except for unscheduled or
hardship withdrawals. Also, while a Participant’s election with respect to
pre-termination payments is irrevocable once it is made, the Corporation may in
its sole discretion defer any pre-termination payment of deferred amounts to
the first Year in which the deduction of the payment would not actually be
limited by Section 162(m) of the Internal Revenue Code. As of the end of each
calendar quarter, a Participant may elect to cease any further deferrals, but
in such case may not make any deferrals for the remainder of the calendar year.

     4.5 Denial of Participation. In the event payment of deferred amounts
commences because of long term disability or hardship, no deferrals may be made
for a

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period of twelve months following the last payment date in connection with
such disability or hardship.

SECTION 5. MATCHING CREDITS

     5.1 Effective Date and Eligibility. Effective at such date as determined
by the Board, the Corporation shall credit matching credits to Participants
under this Plan.

     (a) Time and Amount of Matching Contributions. At such time, if any, that
this Section 5 is activated by the Board the Corporation shall credit matching
credits under this Plan during each calendar quarter for the benefit of each
eligible Participant. The matching formula shall be determined by the Board at
the time it activates this Section 5.

     5.2 Payment.

     Payment of matching credits shall begin at the same time the deferrals to
which they relate are paid or would have been paid in the case of financial
hardship or unscheduled withdrawals.

SECTION 6. DEFERRED COMPENSATION AND

MATCHING CREDITS ACCOUNTS

     6.1 Participant Accounts.

     (a) Deferred Compensation Accounts. The Corporation shall establish and
maintain individual bookkeeping accounts in respect of deferrals made by a
Participant called a “Deferral Account.” A Participant shall have separate
Deferral Accounts for deferred amounts to be paid after termination of
employment and those paid during employment. A Participant’s Deferral Account
shall be credited with the dollar amount of any amount deferred as of the date
the amount deferred otherwise would have become due and payable.

     (b) Matching Credits Accounts. The Corporation shall establish and
maintain an individual bookkeeping account in respect of matching credits by
the Corporation for the benefit of an eligible Participant to be known as a
“Matching Account”.

     6.2 Growth Increments on Accounts. The Corporation will provide the
opportunity for Growth Increments to be earned on the balance of a
Participant’s Cash and Matching Accounts. The Committee will have the
authority to select, from time to time, funds or investment for use in indexing
and thus determining the Growth Increment. Each Account shall be credited
daily with a Growth Increment (which can be a negative number to reflect a loss
of value) computed on the balance in the Accounts

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during the immediately preceding month. The Growth Increment shall be the
sum of the income, capital growth, loss, etc., as selected and determined by
the Committee.

     6.3 Charges Against Accounts. There shall be charged against a
Participant’s Account any payments (excluding payments for fractional shares)
made to the Participant or to his beneficiary in accordance with Section 7.

SECTION 7. PAYMENT OF DEFERRED AND MATCHING AMOUNTS

     7.1 Payment of Deferred and Matching Amounts.

     (a) Except in the case of a scheduled pre-employment withdrawal date,
Normal or Early Retirement, the Participant’s Account balance, including
accumulated Growth Increments attributable thereto, shall be valued as of the
event date provided in Section 4.1 or approval of financial hardship in 7.3.
For scheduled withdrawal, Normal or Early Retirement the Participant’s Account
Balance will be valued as of November 30 of the year of Retirement. The
payments shall be made in the manner selected by the Participant under Section
4.3 or, in the absence thereof, in a lump sum. The amount of each installment
payment shall be equal to a Participant’s then distributable Account balance
multiplied by a fraction, the numerator of which is one and the denominator of
which is the number of installment payments remaining. In the case of a
scheduled withdrawal, Normal or Early Retirement, payment shall commence the
first business day in the following January. In the case of hardship, payment
shall be made as soon as administratively practical after termination of
employment. In all other cases, payment shall commence on the beginning of the
month after the date which is 30 days after the event date provided in Section
4.1.

     7.2 Acceleration of Payments. If prior to the payment of all or a portion
of his Account, the Participants dies, suffers a total and permanent disability
or terminates employment for other than Early or Normal Retirement, the balance
of any amounts payable shall be paid in a lump sum to the Participant or in the
case of death, to the beneficiaries designated under Section 8. Also,
regardless of the event triggering payment, if a Participant’s Account balances
total less than Fifty Thousand and No/100 Dollars ($50,000.00) at the time for
the payment specified, such amount shall be paid to the Participant in a lump
sum.

     7.3 Financial Emergency. The Committee, in its sole discretion, may alter
the timing or manner of payment of deferred amounts and/or matching amounts in
the event that the Participant establishes, to the satisfaction of the
Committee, severe financial hardship. In such event, the Committee may:

     (a) provide that all, or a portion of, the amount previously deferred by
the Participant immediately shall be paid in a lump sum payment,

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     (b) provide that all, or a portion of, the installments payable over a
period of time immediately shall be paid in a lump sum, or

     (c) provide for such other installment payment schedules as it deems
appropriate under the circumstances, as long as the amount distributed shall
not be in excess of that amount which is necessary for the Participant to meet
the financial hardship.

     Severe financial hardship will be deemed to have occurred in the event of
the Participant’s impending bankruptcy, a dependent’s long and serious illness,
or other events of similar magnitude. The Committee’s decision in passing on
the severe financial hardship of the Participant and the manner in which, if at
all, the payment of deferred amounts or matching credits shall be altered or
modified shall be final, conclusive, and not subject to appeal.

SECTION 8. BENEFICIARY DESIGNATION

     8.1 Designation of Beneficiary. A Participant shall designate a
beneficiary or beneficiaries who, upon the Participant’s death, are to receive
the amounts that otherwise would have been paid to the Participant. All
designations shall be in writing to the Corporation in such form as it
requires or accepts and signed by the Participant. The designation shall be
effective only if and when delivered to the Corporation during the lifetime of
the Participant. The Participant also may change his beneficiary or
beneficiaries by a signed, written instrument delivered to the Corporation.
However, if a married Participant maintains his primary residence in a state
that has community property laws, the Participant’s spouse shall join in any
designation of a beneficiary or beneficiaries other than the spouse. The
payment of amounts shall be in accordance with the last unrevoked written
designation of beneficiary that has been signed and delivered to the
Corporation.

     8.2 Death of Beneficiary. In the event that all of the beneficiaries
named in Section 8.1 predecease the Participant, the amounts that otherwise
would have been paid to the Participant shall be paid to the Participant’s
estate, and in such event, the term “beneficiary” shall include his estate.

     8.3 Ineffective Designation. In the event the Participant does not
designate a beneficiary, or if for any reason such designation is ineffective,
in whole or in part, the amounts that otherwise would have been paid to the
Participant shall be paid to the Participant’s estate, and in such event, the
term “beneficiary” shall include his estate.

SECTION 9. RIGHTS OF PARTICIPANTS

     9.1 Contractual Obligation. It is intended that the Corporation is under
a contractual obligation to make payments from a Participant’s account when
due.

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Payment of account balances payable in cash shall be made out of the
general funds of the Corporation as determined by the Board.

     9.2 Unsecured Interest. No Participant or beneficiary shall have any
interest whatsoever in any specific asset of the Corporation. To the extent
that any person acquires a right to receive payments under this Plan, such
receipt shall be no greater than the right of any unsecured general creditor of
the Corporation. Notwithstanding the above, the Corporation intends to
informally fund for the obligations under this Plan through the Trust. While
contributions to the Trust are discretionary prior to a Change in Control, full
contribution is required in accordance with Section 16.2 upon a Change in
Control.

     9.3 Employment. Nothing in the Plan shall interfere with or limit in any
way the rights of the Corporation to terminate any Participant’s employment at
any time, nor confer upon any Participant any right to continue in the employ
of the Corporation.

     9.4 Participation. No employee shall have a right to be selected as a
Participant or, having been so selected, to be selected again as a Participant.

SECTION 10. NONTRANSFERABILITY

     10.1 Nontransferability. In no event shall the Corporation make any
payment under this Plan to any assignee or creditor of a Participant or a
beneficiary. Prior to the time of a payment hereunder, a Participant or a
beneficiary shall have no rights by way of anticipation or otherwise to assign
or otherwise dispose of any interest under this Plan nor shall such rights be
assigned or transferred by operation of law.

SECTION 11. ADMINISTRATION

     11.1 Administration. This Plan shall be administered by the Committee.
The Committee may from time to time establish rules for the administration of
this Plan that are not inconsistent with the provisions of this Plan.

     11.2 Finality of Determination. The Committee has sole discretion in
interpreting the provisions of the Plan. The determination of the Committee as
to any disputed questions arising under this Plan, including questions of
construction and interpretation, shall be final, binding, and conclusive upon
all persons.

     11.3 Expenses. The cost of payments from this Plan and the expenses of
administering the Plan shall be borne by the Corporation.

     11.4 Action by the Corporation. Any action required or permitted to be
taken under this Plan by the Corporation shall be by resolution of the Board,
by the duly authorized Committee of the Board, or by a person or persons
authorized by resolution of the Board or the Committee.

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SECTION 12. AMENDMENT AND TERMINATION

     (a) Amendment and Termination. The Corporation expects the Plan to be
permanent but, since future conditions affecting the Corporation cannot be
anticipated or foreseen, the Corporation necessarily must and does hereby
reserve the right to amend, modify, or terminate the Plan at any time by action
of the Board. Notwithstanding the foregoing, upon the occurrence of a Change
in Control (as hereinafter defined) the Plan may not be terminated or amended
in such a manner as to decrease any benefits or rights accrued as of the date
of the Change of Control without the approval of the majority of the
Participants.

Each of “Change in Control,” “Person” and “Beneficial Owner” shall have the
meaning set forth in Section 16.1.

SECTION 13. APPLICABLE LAW

     13.1 Applicable Law. This Plan shall be governed and construed in
accordance with the laws of the State of California.

SECTION 14. WITHHOLDING OF TAXES

     14.1 Tax Withholding. The Corporation shall have the right to deduct from
all contributions made to, or payments made from, the Plan any federal, state,
or local taxes required by law to be withheld with respect to such
contributions or payments.

SECTION 15. NOTICE

     15.1 Notice. Any notice required or permitted to be given under the Plan
shall be sufficient if in writing and hand-delivered, or sent by a registered
or certified mail, and if given to the Corporation, delivered to the principal
office of the Corporation. Such notice shall be deemed given as of the date of
delivery or, if delivery is made by mail, as of the date shown on the postmark
or the receipt for registration or certification.

SECTION 16. CHANGE IN CONTROL

     16.1 Change in Control. For purposes of this Plan, a “Change in Control”
shall be deemed to have occurred on the first to occur of any one of the events
set forth in the following paragraphs:

     (a) any Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Corporation (not including in the securities Beneficially
Owned by such Person any securities acquired directly from the Corporation or
its Affiliates) representing 50% or more of either the then outstanding shares
of Common Stock or the combined voting power of the Corporation’s then
outstanding voting

9

 

securities, excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clause (i) of paragraph (c) below;
or

     (b) 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 (A)
are directors of the Company as of November 1, 2003 or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least two
thirds of those directors whose election or nomination was not in connection
with any transaction described in this section 16.1, or in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company.

     (c) there is consummated a merger or consolidation of the Corporation or
any direct or indirect subsidiary of the Corporation with any other
corporation, other than (i) a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately prior to such
merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity or any parent thereof) at least 50% of the combined voting power of the
voting securities of the Corporation or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the
Corporation (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Corporation (not
including in the securities Beneficially Owned by such Person any securities
acquired directly from the Corporation or its Affiliates) representing 50% or
more of either the then outstanding shares of Common Stock or the combined
voting power of the Corporation’s then outstanding voting securities; or

     (d) the stockholders of the Corporation approve a plan of complete
liquidation or dissolution of the Corporation or there is consummated an
agreement for the sale or disposition by the Corporation of all or
substantially all of the Corporation’s assets (in one transaction or a series
of related transactions within any period of 24 consecutive months), other than
a sale or disposition by the Corporation of all or substantially all of the
Corporation’s assets to an entity, at least 50% of the combined voting power of
the voting securities of which are owned by stockholders of the Corporation in
substantially the same proportions as their ownership of the Corporation
immediately prior to such sale.

Notwithstanding the foregoing, no “Change in Control” shall be deemed to have
occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the Common Stock
immediately prior to such transaction or series of transactions continue to
have substantially the same proportionate ownership in an entity which owns all
or substantially all of the assets of the Corporation immediately following
such transaction or series of transactions.

10

 

For purposes of the definition of Change in Control, “Affiliate” shall have the
meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange
Act; “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under
the Exchange Act; “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended; and “Person” shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Corporation or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (iv) a corporation owned, directly or indirectly, by the
shareholders of the Corporation in substantially the same proportions as their
ownership of stock of the Corporation or (v) any individual, entity or group
which is permitted to, and actually does, report its Beneficial Ownership on
Schedule 13G (or any successor schedule); provided that if any such individual,
entity or group subsequently becomes required to or does report its Beneficial
Ownership on Schedule 13D (or any successor schedule), such individual, entity
or group shall be deemed to be a Person for purposes hereof on the first date
on which such individual, entity or group becomes required to or does so report
Beneficial Ownership of all of the voting securities of the Corporation
Beneficially Owned by it on such date.

     16.2 Effect of Change in Control. Upon a Change in Control, the
Corporation must contribute to the Trust as provided in the Trust.

     16.3 Successors. Any successor in interest to the Corporation, including
a purchaser of a substantial portion of its assets, must assume the obligations
of this Plan.

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