SEVERANCE AGREEMENT

(iii) repeated failure to follow the reasonable and lawful directions of the Company after the Employee has received at least one written warning from the Company; or

(iv) any willful and/or intentional material violation of any written Company policy or procedure; or

(v) a material breach of this Agreement

Whether or not Cause exists in clauses (ii) through (v) shall in each case be determined in good faith by the Board.

Notwithstanding the foregoing, Employee shall not be deemed to have been terminated for “Cause” under clauses (ii) through (v) unless and until there shall have been delivered to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the Board then in office at a meeting of the Board.  In addition, before such termination for Cause is effective, the Company shall provide the Employee with written notice detailing why the Company believes a Cause event has occurred and specifying the particulars thereof in detail.  The Board shall also provide the Employee with ten days after his/her receipt of such notice to cure the Cause event(s)(if curable) and the opportunity, together with the Employee’s counsel (if the Employee chooses to have counsel present at such meeting), to be heard before the Board (or, in the Board’s discretion, the Committee or their delegates) during such ten day period.  Nothing herein will limit the right of the Employee to contest the validity or propriety of any such determination.

(e) “Change in Control” means the occurrence of any one or more of the following events:

(1) Approval by the stockholders of the Company of the dissolution or liquidation of the Company, except to the extent the dissolution is in connection with a sale of assets which would not constitute a Change in Control Event under subsection (2) below.

(2) Approval by the stockholders of the Company of an agreement to merge, consolidate or otherwise reorganize, with or into, sell or transfer substantially all of the Company’s business and/or assets as an entirety to one or more entities that are not Subsidiaries, as a result of which 50% or less of the outstanding voting securities of the surviving or resulting entities immediately after the reorganization are, or are to be, owned by former stockholders of the Company immediately before such reorganization (assuming for purposes of such determination that there is no change in the record ownership of the Company’s securities from the record date for such approval until such reorganization, but including in such determination any securities of the other parties to such reorganization held by such affiliates of the Company).

(3) The occurrence of any of the following:

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Any “person,” alone or with “affiliates” and “associates” of such person, without the prior approval of the Board, becomes the “beneficial  owner” of more than 50% of the outstanding voting securities of the Company (the terms “person,” “affiliates,” “associates” and “beneficial owner” are used as such terms are used in the Exchange Act and the General Rules and Regulations thereunder); provided, however, that a “Change in Control Event” shall not be deemed to have occurred if such “person” is/are:

(A) the Company,

(B) any Subsidiary, or

(C) any employee benefit plan or employee stock plan of the Company, or any trust or other entity organized, established or holding shares of such voting securities by, for, or pursuant to the  terms of any such plan.

(4) Individuals who at the beginning of any period of two consecutive calendar years constitute a majority of the Board cease for any reason, during such period, to constitute at least a  majority thereof, unless the election, or the nomination for election by the Company’s stockholders, of each new Board member was approved by a vote of at least two-thirds of the Board members then still in office who were Board members at the beginning of such period.

(f) “Code” means the Internal Revenue Code of 1986, as amended.

(g) “Committee” means the Compensation and Stock Options Committee of the Board.

 (h) “Disability” means disability as defined in the Company’s long-term disability plan in which the Employee participates at the relevant time or, if the Employee does not participate in a Company long-term disability plan at the relevant time, as such term is defined in the Company’s principal long-term disability plan that generally covers the Company’s senior-level employees at that time, or, if neither of the foregoing applies, as defined in Code Section 22(e)(3).

(i) “Employee Benefits” means any Company group health or dental benefit plan; provided, however, that Employee Benefits shall not include contributions made by the Company to any retirement plan, pension plan or profit sharing plan for the benefit of the Employee.

(j) “Employee Benefits Continuation Period” means the 18 month period commencing as of the first day of the month following a Qualifying Termination.

(k) “End Date” means the earlier of: (i) the effective date that the Company and Employee mutually agree in writing to terminate this Agreement, (ii) the date, following a Qualifying Termination, when the Company has fulfilled all of its obligations to Employee under this Agreement, (iii) the Termination Date arising from a non-Qualifying Termination of Employee’s employment, or (iv) the date that is two years after the date when the Company provided written

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notice to the Employee that it is terminating this Agreement provided, however, that the End Date under this clause (iv) can be no earlier than the date that is two years after a Change in Control that occurred during the term of the Agreement or the date determined under clause (ii) if there is a Qualifying Termination.

(l) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(m) “Good Reason” means that any one or more of the following have occurred without the Employee’s prior written consent either in connection with a Change in Control or during the Protected Period:

(i) Employee has, except in connection with termination of employment for Cause or due to Employee’s death or Disability, suffered a material and substantial diminution in Employee’s job responsibilities as in effect immediately prior to the public announcement of a contemplated Change in Control (and where such Change in Control does occur), provided, however, that neither mere changes in title and/or reporting relationship, nor reassignment following a Change in Control to a position that is similar to the position held immediately prior to such public announcement of the contemplated Change in Control shall constitute a material and substantial diminution in job responsibilities.  In addition, if Employee’s job title as of the Effective Date (as specified in the above recitals) is denoted as or is in effect an “Interim” or “Acting” position, then a subsequent reassignment to a position of the same level which Employee held immediately prior to assuming such Interim or Acting position or to a higher level shall not constitute a Good Reason event; or

(ii) Employee has incurred a reduction in his or her Base Pay or his/her Target Bonus opportunity; or

(iii) Employee has been notified that his or her principal place of work will be relocated to a new location that is twenty miles or more from Employee’s principal work location as of immediately before the public announcement of a contemplated Change in Control (and where such Change in Control does occur); or

(iv) The Company has materially breached this Agreement including without limitation the failure to timely comply with Section 3(a).

Before “Good Reason” has been deemed to have occurred, Employee must give the Company written notice detailing why the Employee believes a Good Reason event has occurred and such notice must be provided to the Company within sixty days of the initial occurrence of such alleged Good Reason event(s) or else such Good Reason event(s) will be deemed to have been irrevocably waived by Employee.  The Company shall then have thirty days after its receipt of written notice to cure or remedy the items cited in the written notice so that “Good Reason” will not have formally occurred with respect to the event(s) in question.  If the Company does not timely remedy or cure the Good Reason events, then Employee’s employment shall be terminated for Good Reason as of the end of the thirty day cure period.

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(n) “Protected Period” means the two year period immediately following (and commencing on) a Change in Control.

(o) “Qualifying Termination” means termination of the Employee’s employment either by the Company without Cause or by the Employee for Good Reason, in each case occurring either in connection with a Change in Control (or an impending Change in Control) or during the Protected Period.  For avoidance of doubt, termination of employment due to Employee’s death or Disability is not a Qualifying Termination.

(p) “Release Agreement” means a separation agreement containing the release of all employment related claims against the Company and its affiliates along with Employee’s covenant not to sue the Company or its affiliates in substantially the following form and where such separation agreement will also contain only those covenants expressed in Section 12 below.

The release of claims will provide that in exchange for good and valuable consideration, the “Employee hereby covenants not to sue and releases and forever discharges the Company, its parents, subsidiaries, attorneys, insurers, agents, employees, shareholders, directors, officers, affiliates, predecessors and successors of and from any and all employment related rights, claims, actions, demands, causes of action, obligations, attorneys’ fees, costs, damages, and liabilities of whatever kind or nature arising from his service with the Company, in law or in equity, that Employee may have (whether known or not known) (collectively, “Claims”), accruing to Employee as of the Termination Date, that Employee has ever had, including but not limited to Claims based on and/or arising under Title VII of the Civil Rights Act of 1964, as amended, The Americans with Disabilities Act, The Family Medical Leave Act, The Equal Pay Act, The Employee Retirement Income Security Act, The Fair Labor Standards Act, and/or the California Fair Employment and Housing Act; The California Constitution, The California Government Code, The California Labor Code, The Industrial Welfare Commission’s Orders, The Securities Act of 1933, The Securities Exchange Act of 1934, the Worker Adjustment and Retraining Notification Act, California Labor Code sections 1400-1408, and any and all other Claims Employee may have under any other federal, state or local Constitution, Statute, Ordinance and/or Regulation; and all other Claims arising under common law including but not limited to tort, express and/or implied contract and/or quasi-contract, arising out of or, in any way, related to Employee’s previous relationship with the Company as an employee, consultant and/ or director.  Furthermore, Employee acknowledges that Employee is waiving and releasing any rights Employee may have under the Older Workers Benefit Protection Act, Age Discrimination in Employment Act of 1967 (“ADEA”), as amended, and that this waiver and release is knowing and voluntary.  Employee acknowledges that the consideration given for this waiver and release is in addition to anything of value to which Employee was already entitled.  Employee further acknowledges that Employee has been advised by this writing that:

(a)      Employee should consult with an attorney prior to executing this Agreement;

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(b)     Employee has at least twenty-one (21) days within which to consider this Agreement;

(c)      Employee has up to seven (7) days following the execution of this Agreement by the Parties to revoke the Agreement; and

(d)     this Agreement shall not be effective until the revocation period in subsection (c) has expired without revocation by Employee.

The Company and Employee agree that this release shall be and remain in effect in all respects as a complete general release as to the matters released.”

Such Release Agreement will not require a release of the Employee’s rights to indemnification and contribution by the Company or to coverage under the Company’s directors and officers liability insurance coverage if applicable or any claims that may not be released as a matter of law.

(q) “Subsidiary” means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company.

(r) “Target Bonus” means the targeted annualized cash-based incentive compensation opportunity for the Employee during each Company fiscal year.  Solely for the purposes of determining whether Good Reason applies, this Target Bonus amount can not be reduced from any prior fiscal year without the Employee’s express prior written consent, although the actual amount of any bonus earned and paid to Employee for any year shall be determined pursuant to the terms of each year’s bonus arrangement.

(s) “Termination Date” means the last date of Employee’s employment with the Company (and any Subsidiary).

2. Qualifying Termination Consequences.  If a Qualifying Termination occurs during the term of this Agreement and also occurs eit