EXHIBIT 10.j

 

 

 

CITY NATIONAL CORPORATION
1995 OMNIBUS PLAN

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(As adopted on February 22, 1995, approved on April 18, 1995 and amended on
April 16 and June 25, 1997)

 

 

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CITY NATIONAL CORPORATION
1995 OMNIBUS PLAN

 

TABLE OF CONTENTS

 

 

 

Page

I.

THE PLAN

1

 

1.1.

PURPOSE

1

 

1.2.

DEFINITIONS

1

 

1.3.

ADMINISTRATION AND AUTHORIZATION; POWER AND PROCEDURE

5

 

1.4.

PARTICIPATION

6

 

1.5.

SHARES AVAILABLE FOR AWARDS

7

 

1.6.

GRANT OF AWARDS

8

 

1.7.

AWARD PERIOD

8

 

1.8.

LIMITATIONS ON EXERCISE AND VESTING OF AWARDS

8

 

1.9.

ACCEPTANCE OF NOTES TO FINANCE EXERCISE

9

 

1.10.

NO TRANSFERABILITY

9

 

 

 

 

II.

EMPLOYEE OPTIONS

10

 

2.1.

GRANTS

10

10

2.2.

OPTION PRICE

10

 

2.3.

LIMITATIONS ON GRANT AND TERMS OF INCENTIVE STOCK OPTIONS

11

 

2.4.

LIMITS ON 10% HOLDERS

11

 

2.5.

OPTION REPRICING; CANCELLATION AND REGRANT; WAIVER OF RESTRICTIONS

11

 

2.6.

DIVIDEND EQUIVALENTS

12

 

2.7.

SURRENDER OF STOCK OPTIONS

12

 

2.8.

SPECIAL REQUIREMENTS FOR DIRECTOR STOCK OPTIONS

12

 

 

 

 

III.

STOCK APPRECIATION RIGHTS

13

 

3.1.

GRANTS

13

 

3.2.

EXERCISE OF STOCK APPRECIATION RIGHTS

13

 

3.3.

PAYMENT

14

 

 

 

 

IV.

RESTRICTED STOCK AWARDS

14

 

4.1.

GRANTS

14

 

4.2.

RESTRICTIONS

15

 

4.3.

RETURN TO THE COMPANY

15

 

 

 

 

V.

PERFORMANCE SHARE AWARDS AND STOCK BONUSES

15

 

5.1.

GRANTS OF PERFORMANCE SHARE AWARDS

15

 

5.2.

GRANTS OF STOCK BONUSES

16

 

5.3.

DEFERRED PAYMENTS

16

 

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VI.

TAX OFFSET BONUS RIGHTS

16

 

6.1.

GRANTS

16

 

 

6.2.

TAX OFFSET BONUS RIGHTS PERIOD

16

 

 

6.3.

EXERCISE OF RIGHTS

17

 

 

6.4.

PAYMENTS

17

 

 

6.5.

TERMINATION OF EMPLOYMENT

17

 

 

 

 

 

 

VII.

OTHER PROVISIONS

17

 

7.1.

RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS AND BENEFICIARIES

17

 

 

7.2.

ADJUSTMENTS; ACCELERATION

18

 

 

7.3.

EFFECT OF TERMINATION OF EMPLOYMENT

19

 

 

7.4.

COMPLIANCE WITH LAWS

20

 

 

7.5.

TAX WITHHOLDING

20

 

 

7.6.

PLAN AMENDMENT, TERMINATION AND SUSPENSION

20

 

 

7.7.

PRIVILEGES OF STOCK OWNERSHIP

21

 

 

7.8.

EFFECTIVE DATE OF THE PLAN

21

 

 

7.9.

TERM OF THE PLAN

21

 

 

7.10.

GOVERNING LAW; CONSTRUCTION; SEVERABILITY

21

 

 

7.11.

CAPTIONS

22

 

 

7.12.

NON-EXCLUSIVITY OF PLAN

22

 

 

 

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CITY NATIONAL CORPORATION
1995 OMNIBUS PLAN

 

I.  THE PLAN

 

I.1. PURPOSE

 

                    The purpose of this Plan is to promote the success of the
Company by providing an additional means through the grant of Awards to attract,
motivate, retain and reward key employees, including officers, whether or not
directors, of the Company with awards and incentives for high levels of
individual performance and improved financial performance of the Company.

 

I.2. DEFINITIONS

 

(a)                                               “Award” shall mean an award of
any Option, Stock Appreciation Right, Restricted Stock Award, Performance Share
Award, Stock Bonus, Dividend Equivalent, Tax Offset Bonus or other right or
security that would constitute a “derivative security” under Rule 16a-l(c) of
the Exchange Act, or any combination thereof, whether alternative or cumulative,
authorized by and granted under this Plan.

 

(b)                                              “Award Agreement” shall mean
any writing setting forth the terms of an Award that has been authorized by the
Committee.

 

(c)                                               “Award Date” shall mean the
date upon which the Committee took the action granting an Award or such later
date as the Committee designates as the Award Date at the time of the Award.

 

(d)                                              “Award Period” shall mean the
period beginning on an Award Date and ending on the expiration date of such
Award.

 

(e)                                               “Beneficiary” shall mean the
person, persons, trust or trusts entitled by will or the laws of descent and
distribution to receive the benefits specified in the Award Agreement and under
this Plan in the event of a Participant’s death, and shall mean the
Participant’s executor or administrator if no other Beneficiary is identified
and able to act under the circumstances.

 

(f)                                                 “Board” shall mean the Board
of Directors of the Company.

 

(g)                                              “Change in Control Event” shall
mean:

 

                                                             (1)              
The acquisition by any individual (other than Bram Goldsmith), entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
“Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (A) the then outstanding shares
of Common Stock (the “Outstanding Common Stock”) or (B) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Voting Securities”);
provided, however, that the following acquisitions shall not constitute a Change
in Control Event: (i) any acquisition directly from the

 

 

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Company (except that an acquisition by virtue of the exercise of a conversion
privilege shall not be considered within this clause (i) unless the converted
security was itself acquired directly from the Company), (ii) any acquisition by
the Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses (A) and (B) of
paragraph (3) below are satisfied;

 

                                                             (2)              
Individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual who becomes a director subsequent to the
date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board; but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; provided, however, that any transaction which
does not constitute a Change in Control Event by reason of an exception
contained in Section 1.2(g)(1), (3) or (4), shall not constitute a Change in
Control Event by reason of this Section 1.2(g)(2); or

 

                                                             (3)              
Approval by the shareholders of the Company of a reorganization, merger or
consolidation (a “transaction”), unless, following such transaction in each
case, (A) more than 80% of, respectively, the then outstanding shares of common
stock of the corporation resulting from such transaction and the combined voting
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Common Stock and
Outstanding Voting Securities immediately prior to such transaction and (B) no
Person (excluding the Company, Bram Goldsmith, any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
transaction and any Person beneficially owning, immediately prior to such
transaction, directly or indirectly, 20% or more of the Outstanding Common Stock
or Outstanding Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such transaction or the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors; or

 

                                                             (4)              
Approval by the shareholders of the Company of (A) a complete liquidation or
dissolution of the Company or (B) the sale or other disposition of all or
substantially all of the assets of the Company, unless such assets are sold to a
corporation and following such sale or other disposition, the conditions
described in clauses (A) and (B) of paragraph (3) above are satisfied with
respect to the acquiring corporation.

 

 

 

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(h)                                              “Code” shall mean the Internal
Revenue Code of 1986, as amended from time to time.

 

(i)                                                  “Commission” shall mean the
Securities and Exchange Commission.

 

(j)                                                  “Committee” shall mean the
Compensation and Directors Nominating Committee of the Board, or other
Committee, regardless of name, that acts on matters of compensation for eligible
employees, which Committee shall be comprised only of two or more directors or
such greater number of directors as may be required under applicable law, each
of whom, during such time as one or more Participants may be subject to Section
16 of the Exchange Act, shall be a Disinterested and Outside director.

 

(k)                                               “Common Stock” shall mean the
common stock of the Company, $1.00 par value per share, and such other
securities or property as may become the subject of Awards, or become subject to
Awards, pursuant to an adjustment made under Section 6.2 of this Plan.

 

(l)                                                  “Company” shall mean City
National Corporation and its Subsidiaries.

 

(m)                                            “Disinterested and Outside” shall
mean “disinterested” within the meaning of any applicable regulatory
requirements, including Rule 16b-3, and “outside” within the meaning of Section
162(m) of the Code.

 

(n)                                              “Dividend Equivalent” shall
mean an amount equal to the amount of cash dividends or other cash distributions
paid (or such portion of such dividend or other distribution as may be
designated by the Committee) with respect to each Share after the date of an
Award of a Dividend Equivalent.

 

(o)                                              “Eligible Employee” shall mean
an officer at a level of Vice President or the equivalent (whether or not a
director) of the Company, or any Other Eligible Person, as determined by the
Committee in its discretion. In no event may any member of the Committee or a
committee administering any other stock option, stock appreciation, stock bonus
or other stock plan of the Company be an Eligible Employee.

 

(p)                                              “ERISA” shall mean the Employee
Retirement Income Security Act of 1974, as amended.

 

(q)                                              “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended from time to time.

 

(r)                                                 “Fair Market Value” shall
mean, with respect to Common Stock, the price at which the Stock sold on the
last normal transaction of the trading day on a specified date, or if no trading
occurs on such specified date, on the most recent preceding business day on
which trading occurred, as quoted on the National Market System of the National
Association of Securities Dealers or on any exchange upon which the stock may be
traded.

 

(s)                                               “Incentive Stock Option” shall
mean an Option which is designated as an incentive stock option within the
meaning of Section 422 of the Code and which contains such provisions as are
necessary to comply with that section.

 

 

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(t)                                                 “Nonqualified Stock Option”
shall mean an Option that is designated as a Nonqualified Stock Option and shall
include any Option intended as an Incentive Stock Option that fails to meet the
applicable legal requirements thereof. Any Option granted hereunder that is not
designated as an incentive stock option shall be deemed to be designated a
nonqualified stock option under this Plan and not an incentive stock option
under the Code.

 

(u)                                              “Non-Employee Director” shall
mean a member of the Board who is not an officer or employee of the Company.

 

(v)                                              “Option” shall mean an option
to purchase Shares under this Plan. The Committee shall designate any Option
granted to an Eligible Employee as a Nonqualified Stock Option or an Incentive
Stock Option.

 

(w)                                            “Other Eligible Person” shall
mean any other person (including significant agents and consultants) who
performs substantial services for the Company of a nature similar to those
performed by key employees, selected to participate in this Plan by the
Committee from time to time; provided that in no event shall a Non-Employee
Director be selected as an Other Eligible Person.

 

(x)                                                “Participant” shall mean an
Eligible Employee who has been granted an Award under this Plan.

 

(y)                                              “Performance Share Award” shall
mean an Award made pursuant to the provisions, and subject to the terms and
conditions, of Article V of the Plan.

 

(z)                                                “Personal Representative”
shall mean the person or persons who, upon the Total Disability or incompetence
of a Participant, shall have acquired on behalf of the Participant, by legal
proceeding or otherwise, the power to exercise the rights or receive benefits
under this Plan and who shall have become the legal representative of the
Participant.

 

(aa)                                         “Plan” shall mean this 1995 Omnibus
Plan.

 

(bb)                                       “QDRO” shall mean a qualified
domestic relations order as defined in Section 414 (p) of the Code or Title I,
Section 206(d) (3) of ERISA (to the same extent as if this Plan were subject
thereto), or the applicable rules thereunder.

 

(cc)                                         “Restricted Stock” shall mean
Shares awarded to a Participant subject to payment of such consideration, if
any, and such conditions on vesting and such transfer and other restrictions as
are established in or pursuant to this Plan, for so long as such shares remain
unvested under the terms of the applicable Award Agreement.

 

(dd)                                       “Retirement” shall mean retirement
from active service as an employee or officer of the Company on or after
attaining age 65.

 

(ee)                                         “Rule 16b-3” shall mean Rule 16b-3,
as amended from time to time, as promulgated by the Commission pursuant to the
Exchange Act.

 

 

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(ff)                                             “Section 16 Person” shall mean
a person subject to Section 16(a) of the Exchange Act.

 

(gg)                                       “Securities Act” shall mean the
Securities Act of 1933, as amended from time to time.

 

(hh)                                       “Shares” shall mean shares of Common
Stock of the Company.

 

(ii)                                               “Stock Appreciation Right”
shall mean a right to receive a number of Shares or an amount of cash, or a
combination of shares and cash, the aggregate amount or value of which is
determined by reference to a change in the Fair Market Value of the Shares that
is authorized under this Plan.

 

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

 

(kk)                                         “Total Disability” shall mean a
“permanent and total disability” within the meaning of Section 22(e) (3) of the
Code and such other disabilities, infirmities, afflictions or conditions as the
Committee by rule may include.

 

I.3. ADMINISTRATION AND AUTHORIZATION; POWER AND PROCEDURE

 

(a)                                               Committee. This Plan shall be
administered by, and all Awards to Eligible Employees shall be authorized by,
the Committee. Action of the Committee with respect to the administration of
this Plan shall be taken pursuant to a majority vote or by unanimous written
consent of its members.

 

(b)                                              Plan Awards; Interpretation;
Powers of Committee. Subject to the express provisions of this Plan, the
Committee shall have the authority:

 

                                                             (i)               
To determine, from among those persons eligible, the particular Eligible
Employees who will receive any Awards;

 

                                                             (ii)              
To grant Awards to Eligible Employees, determine the price at which securities
will be offered or awarded and the amount of securities to be offered or awarded
to any of such persons, and determine the other specific terms and conditions of
such Awards consistent with the express limits of this Plan, and establish the
installments (if any) in which such Awards shall become exercisable or shall
vest, or determine that no delayed exercisability or vesting is required, and
establish the events of termination or reversion (if any) of such Awards;

 

                                                             (iii)             
To approve the forms of Award Agreements (which need not be identical either as
to type of Award or among Participants);

 

                                                             (iv)             
To construe and interpret this Plan and any agreements defining the rights and
obligations of the Company and Participants under this Plan, further define the
terms used in this Plan, and prescribe, amend and rescind rules and regulations
relating to the administration of this Plan;

 

 

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                                                          (v)               To
cancel, modify, or waive the Company’s rights with respect to, or modify,
discontinue, suspend, or terminate, any or all outstanding Awards held by
Participants, subject to any required consent under Section 7.6;

 

                                                             (vi)             
To accelerate or extend the exercisability or vesting extend the term of any or
all such outstanding Awards within the maximum ten-year term of Awards under
Section 1.7; and

 

                                                             (vii)            
To make all other determinations and take such other action as contemplated by
this Plan or as may be necessary or advisable for the administration of this
Plan and the effectuation of its purposes.

 

(c)                                               Binding Determinations. Any
action taken by, or inaction of, the Company, the Board or the Committee
relating or pursuant to this Plan shall be within the absolute discretion of
that entity or body and shall be conclusive and binding upon all persons. No
member of the Board or Committee, or officer of the Company, shall be liable for
any such action or inaction of the entity or body, of another person or, except
in circumstances involving bad faith, of himself or herself. Subject only to
compliance with the express provisions hereof, the Board and Committee may act
in their absolute discretion in matters within their authority related to this
Plan.

 

(d)                                              Reliance on Experts. In making
any determination or in taking or not taking any action under this Plan, the
Committee or the Board, as the case may be, may obtain and may rely upon the
advice of experts, including professional advisors to the Company. No director,
officer or agent of the Company shall be liable for any such action or
determination taken or made or omitted in good faith.

 

(e)                                               Delegation. The Committee may
delegate ministerial, non-discretionary functions to individuals who are
officers or employees of the Company.

 

(f)                                                 Substitute Options.
Notwithstanding any provision to the contrary in this Plan, including, without
limitation, Section 2.2(a) hereof, in the context of a merger, acquisition,
consolidation or other business combination transaction in which the Company
desires to acquire, extinguish, replace, exchange or buy out any stock option or
other rights (collectively, the “Target Company Options”) of a shareholder of
another constituent entity to such merger, acquisition, consolidation or other
business combination transaction, (i) the Committee shall have the authority to
grant Options to Eligible Employees in exchange for Target Company Options, (ii)
the Committee shall have discretion to grant such Options in such numbers and at
such exercise prices as is in accordance with the exchange ratio or other
exchange mechanism or formula for the consideration in any such merger,
acquisition, consolidation or other business combination transaction and (iii)
the Committee shall have the authority to deem such Options immediately
exercisable and vested on the Award Date.

 

.1.  PARTICIPATION

 

                    Awards may be granted by the Committee only to those persons
that the Committee determines to be Eligible Employees. An Eligible Employee who
has been granted an Award may, if otherwise eligible, be granted additional
Awards if the Committee shall so determine. Non-Employee Directors

 

 

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shall be eligible to receive Awards under this Plan only as specified in Section
2.8.

 

.2.  SHARES AVAILABLE FOR AWARDS

 

                    Subject to the provisions of Section 7.2, the capital stock
that may be delivered under this Plan shall be shares of the Company’s
authorized but unissued Common Stock. The shares may be delivered for any lawful
consideration.

 

(a)                                               Number of Shares. The maximum
number of shares of Common Stock that may be delivered pursuant to Awards
granted to Eligible Employees under this Plan shall not exceed 3,000,000 Shares
subject to subsection (c) below and the adjustments contemplated by Section 7.2.
The maximum number of Options and Stock Appreciation Rights (whether payable in
Shares, cash or any combination thereof) that may be granted to an Eligible
Employee during any one-year period shall not exceed 500,000, subject to
adjustment as contemplated in Section 7.2.

 

(b)                                              Reservation of Shares. Common
Stock subject to outstanding Awards of derivative securities (as defined in Rule
16a-l(c) under the Exchange Act) shall be reserved for issuance. If a Stock
Appreciation Right or similar right based on the increased market value of a
specified number of Shares is exercised or a Performance Share Award is paid,
the number of Shares to which such exercise or payment relates under the
applicable Award shall be charged against the maximum amount of Shares that may
be delivered pursuant to Awards under this Plan and, if applicable, such Award.
If the Company withholds Shares pursuant to Section 2.2(b) or 7.5, the number of
shares that would have been deliverable with respect to an Award shall be
reduced by the number of shares withheld and such shares shall not be available
for additional Awards under this Plan. To the extent a Performance Share Award
constitutes an equity security (as this phrase is defined in Rule 16a-1 under
the Exchange Act) issued by the Company and is paid in Shares the number of
Shares (if any) subject to such Performance Share Award shall be charged (but in
the case of tandem or substituted Awards, without duplication) against the
maximum number of Shares that may be delivered pursuant to Awards under this
Plan.

 

(c)                                               Cash Only Award Limit. Awards
payable solely in cash under the Plan and Awards payable either in cash or
shares that are actually paid in cash shall constitute and be referred to as
“Cash Only Awards”. The number of Cash Only Awards shall be determined by
reference to the number of Shares by which the Award is measured. The maximum
number of Cash Only Awards that may be paid shall not, together with the
aggregate number of Shares that may be delivered under subsection (a), exceed
3,000,000, subject to adjustments under Section 7.2. Awards payable either in
cash or shares shall not be counted against the Cash Only Award limit if charged
against the share limit in subsection (a). Notwithstanding the foregoing, if an
Award paid or payable solely in cash satisfies the requirements for the
exclusion from the definition of a derivative security in Rule 16a-l(c) that
does not require that the award be made under a Rule 16b-3 plan, the Award shall
not be counted against any of the limits of this Section.

 

(d)                                              Reissue of Awards. Subject to
any restrictions under Rule 16b-3, the shares which are subject to any
unexercised, unconverted, unvested or undistributed portion of any expired,
canceled, terminated or forfeited Award, or any alternative form of
consideration under an Award that is not paid in connection with the settlement
of an Award or any portion of an Award shall again be

 

 

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                                                             available for Award
under subsection (a) or (c) above, as applicable, provided the Participant has
not received dividends or Dividend Equivalents during the period in which the
Participant’s ownership was restricted or otherwise not vested. Shares that are
issued pursuant to Awards and subsequently reacquired by the Company pursuant to
the terms and conditions of the Awards also shall be available for reissuance
under the Plan. Nothing in this paragraph shall be interpreted to allow shares
which are in the possession of the Company pursuant to either Section 2.2(b) or
7.5 to be available for reissuance under the Plan.

 

(e)                                               Interpretive Issues.
Additional rules for determining the number of shares or Cash Only Awards
authorized under the Plan may be adopted by the Committee as it deems necessary
or appropriate; provided that such rules are consistent with Rule 16b.

 

.3.  GRANT OF AWARDS

 

                    Subject to the express provisions of this Plan, the
Committee shall determine the number of Shares subject to each Award, and the
price (if any) to be paid for the Shares or the Award and, in the case of
Performance Share Awards, in addition to matters addressed in Section 1.3(b),
the specific objectives, goals and performance criteria (such as an increase in
revenues, market value, earnings or book value over a base period, the years of
service before vesting, the relevant job classification or level of
responsibility or other factors) that further define the terms of the
Performance Share Award. Each Award shall be evidenced by an Award Agreement
signed by the Company and, if required by the Committee, by the Participant.

 

.4.  AWARD PERIOD

 

                    Each Award and all executory rights or obligations under the
related Award Agreement shall expire on such date (if any) as shall be
determined by the Committee, but, in the case of Options or other rights to
acquire Shares, not later than ten (10) years after the Award Date.

 

5.  LIMITATIONS ON EXERCISE AND VESTING OF AWARDS

 

(a)                                               Provisions for Exercise.
Except as may otherwise be provided in an Award Agreement or herein, no Award
shall be exercisable or shall vest until at least six months after the initial
Award Date. Once exercisable an Award shall remain exercisable until the
expiration or earlier termination of the Award, unless the Committee otherwise
provides.

 

(b)                                              Procedure. Any exercisable
Award shall be deemed to be exercised when the Secretary of the Company receives
written notice of such exercise from the Participant, together with any required
payment made in accordance with Section 2.2(b).

 

(c)                                               Fractional Shares/Minimum
Issue. Fractional share interests shall be disregarded, but may be accumulated.
The Committee, however, may determine that cash, other securities or other
property will be paid or transferred in lieu of any fractional share interests.
No fewer than 100 Shares may be purchased on exercise of any Award at one time
unless the number purchased is the total number at the time available for
purchase under the Award.

 

 

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.6.  ACCEPTANCE OF NOTES TO FINANCE EXERCISE

 

                    The Company may, with the Committee’s approval, accept one
or more notes from any Participant in connection with the exercise or receipt of
any outstanding Award; provided that any such note shall be subject to the
following terms and conditions:

 

                                                             (a)              
The principal of the note shall not exceed the amount required to be paid to the
Company upon the exercise or receipt of one or more Awards under the Plan and
the note shall be delivered directly to the Company in consideration of such
exercise or receipt.

 

                                                             (b)              
The initial term of the note shall be determined by the Committee; provided that
the term of the note, including extensions, shall not exceed a period of 10
years.

 

                                                             (c)              
The note shall provide for full recourse to the Participant and shall bear
interest at a rate determined by the Committee but not less than the applicable
imputed interest rate specified by the Code.

 

                                                             (d)              
Except as otherwise provided by the Committee, if the employment of the
Participant terminates, the unpaid principal balance of the note shall become
due and payable on the 10th business day after such termination; provided,
however, that if a sale of any Shares acquired by the Participant in connection
with an Award to which the note relates would cause such Participant to incur
liability under Section 16(b) of the Exchange Act, the unpaid balance shall
become due and payable on the 10th business day after the first day on which a
sale of such shares could have been made without incurring such liability
assuming for these purposes that there are no other transactions by the
Participant subsequent to such termination.

 

                                                             (e)              
If required by the Committee or by applicable law, the note shall be secured by
a pledge of any shares or rights financed thereby or any other collateral
determined by the Committee in compliance with applicable law.

 

                                                             (f)               
The terms, repayment provisions, and collateral release provisions of the note
and the pledge securing the note shall conform with applicable rules and
regulations of the Federal Reserve Board as then in effect and any other
applicable banking rules and regulations.

 

.7.  NO TRANSFERABILITY

 

(a)                                               Awards may be exercised only
by the Participant or, if the Participant has died, the Participant’s
Beneficiary or, if the Participant has suffered a Total Disability, the
Participant’s Personal Representative, if any, or if there is none, the
Participant, or (to the extent permitted by applicable law and Rule 16b-3) a
third party pursuant to such conditions and procedures as the Committee may
establish. Other than by will or the laws of descent and distribution or
pursuant to a QDRO or other exception to transfer restrictions under Rule 16b-3
(except to the extent not permitted in the case of an Incentive Stock Option),
no right or benefit under this Plan or any Award, including, without limitation,
any Option or shares of Restricted Stock, that has not

 

 

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                                                             vested shall be
transferable by the Participant or shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge (other than to the Company) and any such attempted action shall be void.
The Company shall disregard any attempt at transfer, assignment or other
alienation prohibited by the preceding sentences and shall pay or deliver such
cash or Shares in accordance with the provisions of this Plan.

 

(b)                                              The restrictions on exercise
and transfer above shall not be deemed to prohibit the authorization by the
Committee of “cashless exercise” procedures with unaffiliated third parties who
provide financing for the purpose of (or who otherwise facilitate) the exercise
of Awards consistent with applicable legal restrictions and Rule 16b-3, nor, to
the extent permitted by the Committee, transfers for estate and financial
planning purposes, notwithstanding that the inclusion of such features may
render the particular Awards ineligible for the benefits of Rule 16b-3, nor, in
the case of Participants who are not Section 16 Persons, transfers to such other
persons or in such other circumstances as the Committee may in the Award
Agreement or other writing expressly permit.

 

I.  EMPLOYEE OPTIONS

 

I.1. GRANTS

 

                    One or more Options may be granted under this Article to any
Eligible Employee, subject to the provisions of Section 1.5. Each Option granted
may be either an Option intended to be an Incentive Stock Option or an Option
not so intended, and such intent shall be indicated in the applicable Award
Agreement.

 

I.2. OPTION PRICE

 

(a)                                               Pricing Limits. Subject to
Section 2.4, the purchase price per share of the Common Stock covered by each
Option shall be determined by the Committee at the time the Option is granted,
but shall not be less than 100% of the Fair Market Value of the Common Stock on
the date of grant.

 

(b)                                              Payment Provisions. The
purchase price of any shares purchased on exercise of an Option granted under
this Article shall be paid in full at the time of each purchase in one or a
combination of the following methods: (i) in cash or by electronic funds
transfer; (ii) by check payable to the order of the Company; (iii) if authorized
by the Committee or specified in the applicable Award Agreement, in cash in an
amount equal to the par value of the shares being purchased, and, in the form of
a promissory note (consistent with the requirements of Section 1.9) of the
Participant in an amount equal to the difference between said cash amount and
the purchase price of such shares; (iv) by notice and third party payment in
such manner as may be authorized by the Committee; (v) by the delivery of Shares
already owned by the Participant, provided, however, that the Committee may in
its absolute discretion limit the Participant’s ability to exercise an Award by
delivering such Shares; or (vi) if authorized by the Committee or specified in
the applicable Award Agreement, by reduction in the number of Shares otherwise
deliverable upon exercise by that number of Shares which have a then Fair Market
Value equal to such purchase price. Previously owned Shares used to satisfy the
exercise price of an Option

 

 

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                    under clause (v) shall be valued at their Fair Market Value
on the date of exercise.

 

I.3. LIMITATIONS ON GRANT AND TERMS OF INCENTIVE STOCK OPTIONS

 

                                                             (a)              
$100,000 Limit. To the extent that the aggregate “fair market value” of Common
Stock with respect to which Incentive Stock Options first become exercisable by
a Participant in any calendar year exceeds $100,000, taking into account both
Common Stock subject to Incentive Stock Options under this Plan and stock
subject to incentive stock options under all other plans of the Company, such
options shall be treated as Nonqualified Stock Options. For this purpose, the
“fair market value” of the Common Stock subject to Options shall be determined
as of the date the Options were awarded. In reducing the number of Options
treated as Incentive Stock Options to meet the $100,000 limit, the most recently
granted Options shall be reduced first. To the extent a reduction of
simultaneously granted Options is necessary to meet the $100,000 limit, the
Committee may, in the manner and to the extent permitted by law, designate which
shares of Common Stock are to be treated as shares acquired pursuant to the
exercise of an Incentive Stock Option.

 

                                                             (b)              
Option Period. Subject to Section 2.4, each Option and all rights thereunder
shall expire no later than ten years after the Award Date.

 

                                                             (c)              
Other Code Limits. There shall be imposed in any Award Agreement relating to
Incentive Stock Options such terms and conditions as from time to time are
required in order that the Option be an “incentive stock option” as that term is
defined in Section 422 of the Code.

 

I.4. LIMITS ON 10% HOLDERS

 

                    No Incentive Stock Option may be granted to any person who,
at the time the Option is granted, owns (or is deemed to own under Section
424(d) of the Code) shares of outstanding Common Stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company,
unless the exercise price of such Option with respect to the Common Stock
covered by the Option is at least 110% of the Fair Market Value of the Common
Stock subject to the Option and such Option by its terms is not exercisable
after the expiration of five years from the date such Option is granted.

 

I.5. OPTION REPRICING; CANCELLATION AND REGRANT; WAIVER OF RESTRICTIONS

 

                    Subject to Section 1.5 and Section 7.6 and the specific
limitations on Awards contained in this Plan, the Committee from time to time
may authorize, generally or in specific cases only, for the benefit of any
Eligible Employee, any adjustment in the exercise or purchase price, the number
of shares subject to, the restrictions upon or the term of, an Award granted
under this Article by cancellation of an outstanding Award and a subsequent
regranting of an Award, by amendment, by substitution of outstanding Award, by
waiver or by other legally valid means. Such amendment or other action may
result among other changes in an exercise or purchase price which is higher or
lower than the exercise or purchase price of the original or prior Award,
provide for a greater or lesser number of shares subject to the Award, or
provide for a longer or shorter vesting or exercise period. Notwithstanding the
foregoing,

 

 

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any amendment or other action must contain terms and provisions permitted under
the terms of this Plan as if the Option were granted on the date of the
amendment.

 

I.6. DIVIDEND EQUIVALENTS

 

                    The Committee may, at the time of granting an Option, grant
Dividend Equivalents attributable to Shares subject to the Option. Dividend
Equivalents shall be paid in cash only to the extent the Option is unexercised
as of the dividend record date, as specified in the Award Agreement, as follows:
the Dividend Equivalent per Share shall be multiplied by the number of Shares
subject to Option and an amount equal to the product so derived shall be paid in
cash to the Participant on the dividend payment date. The Committee may, in the
Award, specify that Dividend Equivalents shall be paid only for a specified time
period or only as to that portion of the Option that has vested.

 

I.7. SURRENDER OF STOCK OPTIONS

 

                    The Committee, in its sole discretion, shall have the
authority under the circumstances set forth herein to agree mutually with a
Participant to grant such Participant the right on such terms and conditions as
the Committee may prescribe, to surrender such Participant’s Options to the
Company for cancellation and to receive upon such surrender a cash payment equal
to the Spread applicable to such surrendered Option. Such right shall be made
available only in the event of an Offer (as defined in the following paragraph).

 

                    The term “Offer” as used in this Section means any tender
offer or exchange offer for Shares, other than one made by the Company, provided
that the corporation, person or other entity making the offer acquires Shares
pursuant to such offer.

 

                    The term “Offer Price per Share” as used in this Section
means the highest price per share paid on any Offer which is in effect at any
time during the period beginning on the sixtieth day prior to the date on which
the Option is surrendered pursuant to this Section and ending on such date of
surrender. Any securities or property which are part or all of the consideration
paid for shares in the Offer shall be valued in determining the Offer Price per
Share at the higher of (a) the valuation placed on such securities or property
by any other corporation, person or entity making the Offer or (b) the valuation
placed on such securities or property by the Committee.

 

                    The term “Spread” as used in this Section means with respect
to any surrendered Option and associated right, if any, an amount equal to the
product computed by multiplying (i) the excess of (A) the Offer Price per Share
or the highest market price per share of the Company’s Common Stock during the
period beginning on the sixtieth day prior to the date on which the Stock Option
is surrendered pursuant to this Section and ending on such date of surrender
over (B) the purchase price per share at which the surrendered Option is then
exercisable, by (ii) the number of shares subject to such Option with respect to
which it has not theretofore been exercised.

 

I.8. SPECIAL REQUIREMENTS FOR DIRECTOR STOCK OPTIONS

 

(a)                                               Eligibility. All directors of
the Company who are not employees of the Company shall be eligible to receive
Director Stock Options, as set forth in this Section 2.8. Notwithstanding the

 

 

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                                                             foregoing, any
director who is, or who during the preceding calendar year was, a member of the
Committee or any committee administering any other stock option, stock
appreciation, stock bonus or other stock plan of the Company or any Subsidiary
will not be eligible to receive Director Stock Options hereunder if, in the
opinion of counsel for the Company, the receipt of Director Stock Options will
cause such director to be a “disinterested person” with respect to the Plan or
any other stock option, stock appreciation, stock bonus or other stock plan of
the Company or any Subsidiary pursuant to Rule 16b-3 of the Securities and
Exchange Commission, or will otherwise disqualify the Plan or any other such
plan from compliance with said rule.

 

(b)                                              Grant of Director Options.
Every eligible director will receive five hundred (500) Director Stock Options
on the date of each annual meeting of shareholders. Director Stock Options shall
be granted automatically to each such eligible director on the business day
following such annual meeting of stockholders, without further action of the
Committee or the Board.

 

(c)                                               Stock Option Price. The
purchase price of the stock pursuant to a Director Stock Option shall be $1.00
per share.

 

(d)                                              Other Terms of Director Stock
Options. Each Director Stock Option shall become exercisable six (6) months
after the date of grant. Unless otherwise determined by the Committee, if the
holder of Director Stock Options ceases to serve as a director of the Company
for any reason other than for cause, the Director Stock Options shall expire at
the end of their fixed term, or three months after the date of such termination,
and until then shall be exercisable in full, regardless of any vesting schedule
otherwise applicable. Except as set forth in this Section 2.8, all terms and
provisions of the Director Stock Options shall be as set forth in the Plan with
respect to options which are not Director Stock Options.

 

II.  STOCK APPRECIATION RIGHTS

 

II.1. GRANTS

 

                    In its discretion, the Committee may grant to any Eligible
Employee Stock Appreciation Rights either concurrently with the grant of another
Award or in respect of an outstanding Award, in whole or in part, or
independently of any other Award. Any Stock Appreciation Right granted in
connection with an Incentive Stock Option shall contain such terms as may be
required to comply with the provisions of Section 422 of the Code and the
regulations promulgated thereunder.

 

II.2. EXERCISE OF STOCK APPRECIATION RIGHTS

 

(a)                                               Exercisability. A Stock
Appreciation Right related to another Award shall be exercisable at such time or
times, and to the extent, that the related Award shall be exercisable, provided,
however, that any exercise of any Stock Appreciation Right hereunder shall be
made beginning on the third business day following the date of release of the
financial data specified in paragraph (e)(1)(ii) of Rule 16b-3 of the
regulations promulgated under the Securities Exchange Act of 1934 and ending on
the twelfth business day following such date or at such other time as may be
permitted under an agreement or successor rule.

 

 

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(b)                                              Effect on Available Shares. In
the event that a Stock Appreciation Right is exercised, the number of Shares
subject to the Award shall be charged against the number of Shares subject to
the Stock Appreciation Right and the related Option of the Participant.

 

(c)                                               Stand-Alone SARs. A Stock
Appreciation Right granted independently of any other Award shall be exercisable
pursuant to the terms of the Award Agreement but, unless the Committee
determines otherwise, in no event earlier than six months after the Award Date.

 

II.3. PAYMENT

 

(a)                                               Amount. Unless the Committee
otherwise provides, upon exercise of a Stock Appreciation Right, the Participant
shall be entitled to receive payment of an amount determined by multiplying

 

                                                             (i)               
The difference obtained by subtracting the exercise price per Share under the
related Award (if applicable) or the initial share value specified in the Award
from the Fair Market Value of a Share on the date of exercise of the Stock
Appreciation Right, by

 

                                                             (ii)              
The number of Shares with respect to which the Stock Appreciation Right shall
have been exercised.

 

                                                             Notwithstanding the
above, the Committee may place a maximum limitation on the amount payable upon
exercise of a Stock Appreciation Right. Such limitation, however, must be
determined as of the date of the grant and noted on the instrument evidencing
the Stock Appreciation Right granted hereunder.

 

(b)                                              Form of Payment. The Committee,
in its sole discretion, shall determine the form in which payment shall be made
of the amount determined under paragraph (a) above, either solely in cash,
solely in Shares (valued at Fair Market Value on the date of exercise of the
Stock Appreciation Right), or partly in such Shares and partly in cash, provided
that the Committee shall have determined that such exercise and payment are
consistent with applicable law. If the Committee permits the Participant to
elect to receive cash or Shares (or a combination thereof) on such exercise, any
such election shall be subject to such conditions as the Committee may impose
and, in the case of any Section 16 Person, any election to receive cash shall be
subject to any applicable limitations under Rule 16b-3.

 

III. RESTRICTED STOCK AWARDS

 

III.1. GRANTS

 

                    The Committee may, in its discretion, grant one or more
Restricted Stock Awards to any Eligible Employee. Each Restricted Stock Award
Agreement shall specify the number of Shares to be issued, the date of such
issuance, the consideration for such Shares (but not less than the minimum
lawful consideration) to be paid, if any, by the Participant and the
restrictions imposed on such Shares and the conditions of release or lapse of
such restrictions. Such restrictions shall not lapse earlier than six months
after the Award Date, except to the extent the Committee may otherwise provide.

 

 

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Stock certificates evidencing shares of Restricted Stock pending the lapse of
the restrictions (“restricted shares”) shall bear a legend making appropriate
reference to the restrictions imposed hereunder and shall be held by the Company
or by a third party designated by the Committee until the restrictions on such
shares shall have lapsed and the shares shall have vested in accordance with the
provisions of the Award and Section 1.8. Upon issuance of the Restricted Stock
Award, the Participant may be required to provide such further assurance and
documents as the Committee may require to enforce the restrictions.

 

III.2. RESTRICTIONS

 

(a)                                               Pre-Vesting Restraints. Except
as provided in Section 1.10 and 4.1, restricted shares comprising any Restricted
Stock Award may not be sold, assigned, transferred, pledged or otherwise
disposed of or encumbered either voluntarily or involuntarily, until such shares
have vested.

 

(b)                                              Dividend and Voting Rights.
Unless otherwise provided in the applicable Award Agreement, a Participant
receiving a Restricted Stock Award shall be entitled to cash dividend and voting
rights for all shares issued even though they are not vested, provided that such
rights shall terminate immediately as to any restricted shares which cease to be
eligible for vesting.

 

(c)                                               Cash Payments. If the
Participant shall have paid or received cash (including any dividends) in
connection with the Restricted Stock Award, the Award Agreement shall specify
whether and to what extent such cash shall be returned (with or without an
earnings factor) as to any restricted shares which cease to be eligible for
vesting.

 

III.3. RETURN TO THE COMPANY

 

                    Unless the Committee otherwise expressly provides, shares of
Restricted Stock that are subject to restrictions at the time of termination of
employment or are subject to other conditions to vest that have not been
satisfied by the time specified in the applicable Award Agreement shall not vest
and shall be returned to the Company in such manner and on such terms as the
Committee shall therein provide.

 

IV.  PERFORMANCE SHARE AWARDS AND STOCK BONUSES

 

IV.1. GRANTS OF PERFORMANCE SHARE AWARDS

 

                    The Committee may, in its discretion, grant one or more
Performance Share Awards to any Eligible Employee based upon such factors, which
in the case of any Award to a Section 16 Person shall include but not be limited
to the contributions, responsibilities and other compensation of the person, as
the Committee shall deem relevant in light of the specific type and terms of the
Award. An Award Agreement shall specify the maximum number of Shares (if any)
subject to the Performance Share Award, the consideration (but not less than the
minimum lawful consideration) to be paid for any such Shares as may be issuable
to the Participant, the duration of the Award and the conditions upon which
delivery of any Shares or cash to the Participant shall be based. The amount of
Shares that may be deliverable pursuant to such Award shall be based upon the
degree of attainment over a specified period (a “performance cycle”) as may be
established by the Committee of such measure(s) of the performance of the
Company (or any part thereof) or the Participant as may be established by the
Committee. The Committee may provide for full or partial credit, prior to
completion of such performance cycle or the

 

 

15

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attainment of the performance achievement specified in the Award, in the event
of the Participant’s death, Retirement, or Total Disability, a Change in Control
Event or in such other circumstances as the Committee, consistent with Section
7.10(c)(2), if applicable, may determine.

 

IV.2. GRANTS OF STOCK BONUSES

 

                    The Committee may grant a stock bonus to any Eligible
Employee to reward exceptional or special services, contributions or
achievements in the manner and on such terms and conditions (including any
restrictions on such shares) as determined from time to time by the Committee.

 

                    The number of Shares so awarded shall be determined by the
Committee. The stock bonus may be granted independently or in lieu of a cash
bonus.

 

IV.3. DEFERRED PAYMENTS

 

                    The Committee may authorize for the benefit of any Eligible
Employee the deferral of any payment of cash or Shares that may become due or of
cash otherwise payable under this Plan, and provide for accreted benefits
thereon based upon such deferment, at the election or at the request of such
Participant, subject to the other terms of this Plan. Such deferral shall be
subject to such further conditions, restrictions or requirements as the
Committee may impose, subject to any then vested rights of Participants.

 

V.  TAX OFFSET BONUS RIGHTS

 

V.1. GRANTS

 

                    The Committee may, in its discretion, grant Tax Offset Bonus
Rights to selected Participants. Such rights shall be evidenced by Tax Offset
Bonus Rights agreements on the terms and conditions set forth in the Plan, which
agreements shall specify the amount or method of calculating the amount of the
rights being granted and may contain such other terms and conditions as are not
inconsistent with the purposes and provisions of the Plan. Each Tax Offset Bonus
Right must relate to a specific Nonqualified Stock Option granted under Section
II of the Plan. Tax Offset Bonus Rights granted in relation to a specific
Nonqualified Stock Option shall be granted either concurrently or at such later
time as determined by the Committee. The amount of any Tax Offset Bonus Right
may be, but is not required to be, calculated as a specified percentage of the
excess of the Fair Market Value of a share of the Company’s Common Stock on the
date when the right is exercised over the price per share under the Option
exercised concurrently with the exercise of such right.

 

V.2. TAX OFFSET BONUS RIGHTS PERIOD

 

                    Each Tax Offset Bonus Right and all rights or obligations
thereunder shall expire upon the expiration of the related Nonqualified Stock
Option. In no event may a Tax Offset Bonus Right be exercised later than the
tenth anniversary of the date on which the Tax Offset Bonus Right is granted,
and shall be subject to earlier termination as hereinafter provided.

 

 

16

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V.3. EXERCISE OF RIGHTS

 

                    Tax Offset Bonus Rights shall be exercisable to the extent,
and only to the extent, the related Nonqualified Stock Option is exercisable.
Tax Offset Bonus Rights shall only be exercisable concurrently with the exercise
of the related Nonqualified Stock Option; any exercise of the Nonqualified Stock
Option shall also be deemed an exercise of the equivalent number of Tax Offset
Bonus Rights.

 

                    Each holder of a Tax Offset Bonus Right shall agree to give
the Committee prompt written notice of an election made by such holder to
exercise said Tax Offset Bonus Rights subject to the approval of the Committee.

 

                    Despite any other provision of the Plan, the Committee may
impose such conditions on exercise of Tax Offset Bonus Rights as may be required
to satisfy the requirements of Rule 16b-3 (or any successor rule), promulgated
by the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934.

 

                    Any exercise of a Tax Offset Bonus Right hereunder shall be
made beginning on the third business day following the date of release of the
financial data specified in paragraph (e)(1)(ii) of Rule 16b-3 of the
regulations promulgated under the Securities Exchange Act of 1934 and ending on
the twelfth business day following such date or at such other time as may be
permitted under an amendment or successor rule.

 

V.4. PAYMENTS

 

                    Upon the exercise of a Tax Offset Bonus Right, the Company
shall deliver to the person exercising such right the amount of the right being
exercised, calculated as specified in the Tax Offset Bonus Right agreement with
respect thereto. Payment shall be in either cash, Common Stock or a combination
thereof, as the Committees shall determine. No fractional shares will be issued.

 

V.5. TERMINATION OF EMPLOYMENT

 

                    Unless otherwise determined by the Committee, in the event a
Participant ceases to be an employee of the Company for any reason, any Tax
Offset Bonus Right will be exercisable only to the extent that any related
Nonqualified Stock Option is exercisable under the applicable provisions of the
Plan and related Award Agreement.

 

VI.  OTHER PROVISIONS

 

VI.1. RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS AND BENEFICIARIES

 

(a)                                               Employment Status. Status as
an Eligible Employee shall not be construed as a commitment that any Award will
be made under this Plan to an Eligible Employee or to Eligible Employees
generally.

 

 

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(b)                                           No Employment Contract. Nothing
contained in this Plan (or in any other documents related to this Plan or to any
Award) shall confer upon any Eligible Employee or Participant any right to
continue in the employ or other service of the Company or constitute any
contract or agreement of employment or other service, nor shall interfere in any
way with the right of the Company to change such person’s compensation or other
benefits or to terminate the employment of such person, with or without cause,
but nothing contained in this Plan or any document related hereto shall
adversely affect any independent contractual right of such person without his or
her consent thereto.

 

(c)                                               Plan Not Funded. Awards
payable under this Plan shall be payable in Shares or from the general assets of
the Company, and no special or separate reserve, fund or deposit shall be made
to assure payment of such Awards. No Participant, Beneficiary or other person
shall have any right, title or interest in any fund or in any specific asset
(including shares of Common Stock except as expressly otherwise provided) of the
Company by reason of any Award hereunder. Neither the provisions of this Plan
(or of any related documents), nor the creation or adoption of this Plan, nor
any action taken pursuant to the provisions of this Plan shall create, or be
construed to create, a trust of any kind or a fiduciary relationship between the
Company and any participant, Beneficiary or other person. To the extent that a
Participant, Beneficiary or other person acquires a right to receive payment
pursuant to any Award hereunder, such right shall be no greater than the right
of any unsecured general creditor of the Company.

 

VI.2. ADJUSTMENTS; ACCELERATION

 

(a)                                               Adjustments. If the
outstanding shares of Common Stock are changed into or exchanged for cash, other
property or a different number or kind of shares or securities of the Company,
or if additional shares or new or different securities are distributed with
respect to the outstanding shares of Common Stock, through a reorganization or
merger in which the Company is the surviving entity, or through a combination,
consolidation, recapitalization, reclassifi-cation, stock split, stock dividend,
reverse stock split, stock consolidation, dividend or distribution of cash or
property to the shareholders of the Company or if there shall occur any other
extraordinary corporate transaction or event in respect of the Common Stock or a
sale of substantially all the assets of the Company as an entirety which in the
judgment of the Committee materially affects the Common Stock, then the
Committee shall, in such manner and to such extent (if any) as it deems
appropriate and equitable (1) proportionately adjust any or all terms of
outstanding Awards including, but not limited to (A) the number and kind of
shares of Common Stock or other consideration that is subject to or may be
delivered under this Plan and pursuant to outstanding Awards, (B) the
consideration payable with respect to Awards granted prior to any such change
and the price, if any, paid in connection with Restricted Stock Awards or (C)
the performance standards appropriate to any outstanding Awards; or (2) in the
case of an extraordinary dividend or other distribution, merger, reorganization,
consolidation, combination, sale of assets, split up, exchange, or spin off,
make provision for a cash payment or for the substitution or exchange of any or
all outstanding Awards or the cash, securities or property deliverable to the
holder of any or all outstanding Awards based upon the distribution or
consideration payable to holders of Common Stock upon or in respect of such
event; provided, however, in each case, that with respect to Awards of Incentive
Stock Options, no such adjustment shall be made which would cause the Plan to
violate Section 422 or 424(a) of the

 

 

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                                                             Code or any
successor provisions thereto. Corresponding adjustments shall be made with
respect to any Stock Appreciation Rights based upon the adjustments made to the
Options to which they are related. In any of such events, the Committee may take
such action sufficiently prior to such event if necessary to permit the
Participant to realize the benefits intended to be conveyed with respect to the
underlying shares in the same manner as is available to shareholders generally.

 

(b)                                              Acceleration of Awards Upon
Change in Control. As to any or all Participants, upon the occurrence of a
Change in Control Event (i) each Option and Stock Appreciation Right shall
become immediately exercisable, (ii) Restricted Stock shall immediately vest
free of restrictions, and (iii) each Performance Share Award shall become
payable to the Participant; provided, however, that in no event shall any Award
be accelerated as to any Section 16 Person to a date less than six months after
the Award Date of such Award. Notwithstanding the foregoing, prior to a Change
in Control Event, the Committee may determine that, upon its occurrence, there
shall be no acceleration of benefits under Awards or determine that only certain
or limited benefits under Awards shall be accelerated and the extent to which
they shall be accelerated, and/or establish a different time in respect of such
event for such acceleration. In that event, the Committee will make provision in
connection with such transaction for continuance of the Plan and the assumption
of Options and Awards theretofore granted, or the substitution for such with new
Options and Awards covering the stock of a successor employer corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to number and kind
of shares and prices. In addition, the Committee may override the limitations on
acceleration in this Section 7.2(b) by express provision in the Award Agreement
and may accord any Participant a right to refuse any acceleration, whether
pursuant to the Award Agreement or otherwise, in such circumstances as the
Committee may approve. Any acceleration of Awards shall comply with applicable
regulatory requirements. including without limitation Section 422 of the Code.

 

(c)                                               Possible Early Termination of
Accelerated Awards. If any Option or other right to acquire Shares under this
Plan has not been exercised prior to (i) a dissolution of the Company, (ii) a
reorganization event described in Section 7.2(a) that the Company does not
survive, or (iii) the consummation of a reorganization event described in
Section 7.2(a) that results in a Change in Control Event approved by the Board
and no provision has been made for the survival, substitution, exchange or other
settlement of such Option or right, such Option or right shall thereupon
terminate.

 

VI.3. EFFECT OF TERMINATION OF EMPLOYMENT

 

                    The Committee shall establish in respect of each Award
granted to an Eligible Employee the effect of a termination of employment on the
rights and benefits thereunder and in so doing may make distinctions based upon
the cause of termination, e.g., retirement, early retirement, termination for
cause, disability or death. Notwithstanding any terms to the contrary in an
Award Agreement or this Plan, the Committee may decide in its complete
discretion to extend the exercise period of an Award (although not beyond the
period described in Section 2.3(b)) and the number of shares covered by the
Award with respect to which the Award is exercisable or vested.

 

 

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VI.4. COMPLIANCE WITH LAWS

 

                    This Plan, the granting and vesting of Awards under this
Plan and the offer, issuance and delivery of Shares and/or the payment of money
under this Plan or under Awards granted hereunder are subject to compliance with
all applicable federal and state laws, rules and regulations (including, but not
limited to, state and federal securities laws and federal margin requirements)
and to such approvals by any listing, regulatory or governmental authority as
may, in the opinion of counsel for the Company, be necessary or advisable in
connection therewith. Any securities delivered under this Plan shall be subject
to such restrictions, and the person acquiring such securities shall, if
requested by the Company, provide such assurances and representations to the
Company as the Company may deem necessary or desirable to assure compliance with
all applicable legal requirements.

 

VI.5. TAX WITHHOLDING

 

(a)                                               Cash or Shares. Upon any
exercise, vesting, or payment of any Award, the Company shall have the right at
its option to (i) require the Participant (or Personal Representative or
Beneficiary, as the case may be) to pay or provide for payment of the amount of
any taxes which the Company may be required to withhold with respect to such
transaction or (ii) deduct from any amount payable in cash the amount of any
taxes which the Company may be required to withhold with respect to such cash
amount. In any case where a tax is required to be withheld in connection with
the delivery of Shares under this Plan, the Committee may grant (either at the
time of the Award or thereafter) to the Participant the right to elect, or the
Committee may require (either at the time of the Award or thereafter), pursuant
to such rules and subject to such conditions as the Committee may establish, to
have the Company reduce the number of shares to be delivered by the appropriate
number of shares valued at their then Fair Market Value, to satisfy such
withholding obligation.

 

(b)                                              Tax Loans. The Committee may,
in its discretion, authorize a loan to an Eligible Employee in the amount of any
taxes which the Company may be required to withhold with respect to Shares
received (or disposed of, as the case may be) pursuant to a transaction
described in subsection (a) above. Such a loan shall be for a term, at a rate of
interest and pursuant to such other terms and conditions as the Committee, under
applicable law, may establish and such loan need not comply with the provisions
of Section 1.9.

 

VI.6. PLAN AMENDMENT, TERMINATION AND SUSPENSION

 

(a)                                               Board Authorization. The Board
may, at any time, terminate or, from time to time, amend, modify or suspend this
Plan, in whole or in part. No Awards may be granted during any suspension of
this Plan or after termination of this Plan, but the Committee shall retain
jurisdiction as to Awards then outstanding in accordance with the terms of this
Plan. Any suspension will not affect the expiration of the Plan set forth in
Section 7.9.

 

(b)                                              Shareholder Approval. If any
amendment would (i) materially increase the benefits accruing to participants
under this Plan, (ii) materially increase the aggregate number of securities
that may be issued under this Plan, or (iii) materially modify the requirements
as to eligibility for participation in this Plan, then to the extent then
required by Rule 16b-3 to secure benefits

 

 

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thereunder or to avoid liability under Section 16 of the Exchange Act (and Rules
thereunder) or required under Section 424 of the Code or any other applicable
law, or deemed necessary or advisable by the Board, such amendment shall be
subject to shareholder approval. Notwithstanding the foregoing, the provisions
of Section 2.8 shall not be amended more than once every six months other than
to comport with changes in the Code, ERISA or the rules thereunder.

 

(c)                                               Amendments to Awards. Without
limiting any other express authority of the Committee under, but subject to the
express limits of, this Plan, the Committee by agreement or resolution may waive
conditions of or limitations on Awards that the Committee in the prior exercise
of its discretion has imposed, without the consent of the Participant, and may
make other changes to the terms and conditions of Awards that do not affect in
any manner materially adverse to the Participant his or her rights and benefits
under an Award.

 

(d)                                              Limitations on Amendments to
Plan and Awards. No amendment, suspension or termination of the Plan or change
of or affecting any outstanding Award shall, without written consent of the
Participant, affect in any manner materially adverse to the Participant any
rights or benefits of the Participant or obligations of the Company under any
Award granted under this Plan prior to the effective date of such change.
Changes contemplated by Section 7.2 shall not be deemed to constitute changes or
amendments for purposes of this Section 7.6.

 

VI.7. PRIVILEGES OF STOCK OWNERSHIP

 

                    Except as otherwise expressly authorized by the Committee or
this Plan, a Participant shall not be entitled to any privilege of stock
ownership as to any Shares not actually delivered to and held of record by him
or her. No adjustment will be made for dividends or other rights as a
shareholder for which a record date is prior to such date of delivery.

 

VI.8. EFFECTIVE DATE OF THE PLAN

 

                    This Plan shall be effective as of February 22, 1995, the
date of Board approval, subject to shareholder approval within 12 months
thereafter.

 

VI.9. TERM OF THE PLAN

 

                    No Award shall be granted more than ten years after the
effective date of this Plan (the “termination date”). Unless otherwise expressly
provided in this Plan or in an applicable Award Agreement, any Award thereto
granted may extend beyond such date, and all authority of the Committee with
respect to Awards hereunder shall continue during any suspension of this Plan
and in respect of outstanding Awards on such termination date.

 

VI.10. GOVERNING LAW; CONSTRUCTION; SEVERABILITY

 

(a)                                               Choice of Law. This Plan, the
Awards, all documents evidencing Awards and all other related documents shall be
governed by, and construed in accordance with the laws of the State of
California applicable to contracts made and performed within such State, except
as such laws

 

 

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                                                             may be supplanted
by the laws of the United States of America, which laws shall then govern its
effect and its construction to the extent they supplant California law.

 

(b)                                              Severability. If any provision
shall be held by a court of competent jurisdiction to be invalid and
unenforceable, the remaining provisions of this Plan shall continue in effect.

 

(c)                                               Plan Construction.

 

                                                             (i)               
It is the intent of the Company that this Plan and Awards hereunder satisfy and
be interpreted in a manner that in the case of Participants who are or may be
subject to Section 16 of the Exchange Act satisfies the applicable requirements
of Rule 16b-3 so that such persons will be entitled to the benefits of Rule
16b-3 or other exemptive rules under Section 16 of the Exchange Act and will not
be subjected to avoidable liability thereunder. If any provision of this Plan or
of any Award or any prior action by the Committee would otherwise frustrate or
conflict with the intent expressed above, that provision to the extent possible
shall be interpreted and deemed amended so as to avoid such conflict, but to the
extent of any remaining irreconcilable conflict with such intent as to such
persons in the circumstances, such provision shall be deemed void.

 

(ii)                It is the further intent of the Company that options or
Stock Appreciation Rights with an exercise or base price not less than Fair
Market Value on the date of grant, that are granted to or held by a Section 16
Person, shall qualify as performance-based compensation under Section 162(m) of
the Code, and this Plan shall be interpreted consistent with such intent.

 

VI.11. CAPTIONS

 

                    Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provision thereof.

 

VI.12. NON-EXCLUSIVITY OF PLAN

 

                    Nothing in this Plan shall limit or be deemed to limit the
authority of the Board or the Committee to grant awards or authorize any other
compensation, with or without reference to the Common Stock under any other plan
or authority.

 

 

 

 

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