EXHIBIT 10.2
WESTCORP 2001
STOCK INCENTIVE PLAN
1. Purpose.
          The Westcorp 2001 Stock Incentive Plan (the “Plan”) is an amendment
and restatement of the Westcorp 2001 Stock Option Plan that adds a restricted
stock feature to the Plan. The purpose of the Plan is to provide incentives to,
and to encourage the ownership of Westcorp, a California corporation, common
stock (hereinafter “Common Stock”), by certain employees and directors of the
Company and its subsidiaries (collectively, unless the context indicates
otherwise, the “Company”). The Plan provides for stock options which qualify as
Incentive Stock Options (“ISOs”) under Section 422 of the Internal Revenue Code
of 1986, as amended (the “Code”), Non-Statutory Stock Options (“NSOs”) which are
not intended to be ISOs, and Restricted Stock Awards (“Stock Awards”). ISOs and
NSOs are collectively referred to in the Plan as “Options” and ISOs, NSOs and
Stock Awards are collectively referred to in the Plan as “Awards”. The Plan is
not a qualified plan under Section 401(a) of the Code and is not subject to the
provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
2. Administration.
     2.1 The Plan shall be administered by the Board of Directors of the Company
(the “Board”) or, if so designated by the Board, by the Compensation Committee
of the Board, consisting of not less than two members of the Board. The
administrator of the Plan is hereinafter referred to as the “Committee”. In
addition, the composition of the Committee shall be made in an attempt to
satisfy:
     (a) Such requirements as the Securities and Exchange Commission may
establish for administrators acting under plans intended to qualify for
exemption under Rule 16b-3 (or its successor) under the Securities Exchange Act,
and
     (b) Such requirements as the Internal Revenue Service may establish for
outside directors acting under plans intended to qualify for exemption under
Internal Revenue Code §162(m)(4)(C).
     2.2 Subject to the limitations of the Plan, the Committee shall have the
sole and complete authority (a) to select those directors or employees (who may
also be officers or directors of the Company or any subsidiary of the Company)
who shall be eligible to receive Awards under the Plan (“Participants”), (b) to
determine the type and amount of Awards to be granted to each Participant in
conformity with the Plan, (c) to impose such limitations, restrictions, and
conditions upon Awards as it shall deem appropriate, (d) to interpret the Plan,
adopt agreements, and to adopt, amend, and rescind administrative guidelines and
other rules and regulations relating to the Plan, and (e) to make all other
determinations and to take all other actions necessary or advisable for the
proper administration of the Plan. Determinations of fair market value under the
Plan shall be made in accordance with the methods and procedures established by
the Committee. The Committee’s determinations on

 

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matters within its authority shall be conclusive and binding on the Company and
all other parties. No member of the Board or the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
Award made under it. The Committee may select one of its members as its
Chairman, and shall hold meetings at such times and places as it may determine.
Acts by a majority of the Committee, or acts reduced to or approved in writing
by a majority of the members of the Committee without a meeting, shall be the
valid acts of the Committee.
     2.3 The “fair market value” on a specified date shall mean the closing
price for a share of Common Stock on the stock exchange, if any, on which Common
Stock is primarily traded, but if no Common Stock were traded on such date, then
on the last previous date on which a share of Common Stock was so traded, or, if
Common Stock is not primarily traded on a stock exchange, the average of the bid
and asked closing prices at which one share of Common Stock is traded on the
over-the-counter market, as reported on the National Association of Securities
Dealers Automated Quotation System, or, if none of the above is applicable, the
value of a share of Common Stock as established by the Board of Directors for
such date using any reasonable method of valuation.
3. Type of Award.
     Awards under the Plan shall be based on Common Stock and shall be issued as
Options, qualifying as either NSOs or ISOs, or as Stock Awards. No Awards shall
be granted under the Plan after ten years from the date the Plan is approved by
the shareholders of the Company (or, if earlier, the date the Plan is adopted by
the Board), which expiration date shall be February 13, 2011.
4. Shares Subject to Plan and Eligible Employees.
     4.1 At the time of original adoption of the Plan, 3,000,000 shares of
Common Stock of the Company were available for Option grants under the Plan. At
the time of amendment and restatement of the Plan, an additional 1,840,622
shares of Common Stock of the Company are being made available for Awards under
the Plan, so that the total number of shares of Common Stock available for
Awards under the Plan will equal 4,840,622. All such amounts are subject to
adjustment as provided in Section 8 below. In the future, if another company is
acquired by the Company or any of its subsidiaries, any Common Stock covered by
or issued as a result of the assumption or substitution of outstanding grants or
awards of the acquired company shall not be deemed issued under the Plan and
shall not be subtracted from the Common Stock available for grant under the
Plan. The Common Stock deliverable under the Plan shall consist in whole or in
part of authorized and unissued shares of the Company. Notwithstanding the
foregoing, if any Award is forfeited, or an Award is terminated or expires
without issuance of Common Stock or other consideration, the Common Stock
subject to such Award shall again be available for grant pursuant to the Plan.
The maximum number of shares of Common Stock with respect to which an Award or
Awards may be granted to any Participant in any one taxable year of the Company
(the “Maximum Annual Participant Award”) shall not exceed 500,000 shares for
Options or 500,000 shares for Stock Awards.

 

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     4.2 The class eligible to receive Awards under the Plan shall all be
employees and directors of the Company and its subsidiaries who are selected by
the Committee. In general, Participants shall be selected by the Committee from
the directors, executive officers and other key employees of the Company and its
subsidiaries who occupy responsible managerial or professional positions and/or
who have the capacity to or who have already shown their ability to make a
substantial contribution to the success of the Company.
     4.3 The form of an Award shall be determined from time to time by the
Committee. The terms and provisions of an Option shall be set forth in writing
in a Stock Option Certificate Agreement (the “Stock Option Agreement”), signed
by the Option holder and on behalf of the Company by the Chairman of the Board
or an authorized officer. The Agreement shall state whether or not the Option is
an Incentive Stock Option. The terms and provisions of a Stock Award shall be
set forth in writing in a Restricted Stock Agreement (the “Stock Award
Agreement”), signed by the recipient and on behalf of the Company by the
Chairman of the Board or an authorized officer. The Committee may establish such
other condition(s) as it may determine provided that, with respect to a grant of
Incentive Stock Options, such condition(s) are not inconsistent with Section 422
of the Internal Revenue Code.
5. Stock Options.
All Options granted under the Plan shall be subject to the following terms and
conditions:
     5.1 The Committee may, from time to time, subject to the provisions of the
Plan and such other terms and conditions as the Committee may prescribe, grant
to any Participant Options to purchase Common Stock, which Options may, but need
not, be ISOs. As more fully set forth in Section 14, the grant of an Option
shall be evidenced by a signed written Stock Option Agreement containing such
terms and conditions, not inconsistent with this Plan, as the Committee may from
time to time prescribe. Options granted under the Plan as ISOs shall be
designated as ISOs in the Stock Option Agreement covering such Options.
     5.2 Each Stock Option Agreement shall specify the exercise price of each
Option. The price per share of the shares subject to each Option shall be set by
the Committee; provided, however, that with respect to ISOs, such price shall
not be less than one hundred percent (100%) of the fair market value of a share
of Common Stock as of the date the Option is granted; and provided further, that
such price shall be no less than one hundred ten percent (110%) of the fair
market value of a share of Common Stock as of the date the Option is granted if
such Option is granted to a person who owns ten percent (10%) or more of the
issued and outstanding Common Stock of the Company as of such date. The exercise
price under an NSO shall in no event be less than 85% of the fair market value
of a share of Common Stock as of the date the Option is granted. In the case of
an NSO, a Stock Option Agreement may specify an exercise price that varies in
accordance with a predetermined formula while the NSO is outstanding.

 

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     5.3 The term of an Option shall be set by the Committee in its discretion;
provided, however, that the term shall not be more than seven years from the
date an ISO is granted, or, in the case of an Option granted to a person who
owns ten percent (10%) or more of the issued and outstanding Common Stock of the
Company as of the date the Option is granted, the term shall not be more than
five years from the date an ISO is granted.
     5.4 At any time after grant of an Option, the Committee may, in its sole
discretion, subject to whatever terms and conditions it selects, and to the
extent applicable, accelerate the period during which an Option vests.
     5.5 No portion of an Option which is unexercisable at the time a
Participant terminates employment with the Company or a subsidiary of the
Company shall thereafter become exercisable. However, for purposes of
understanding the previous sentence, an Option shall not be considered
unexercisable if at that time a Participant terminates the only impediment to
his or her exercise of the Option is the fact that the Participant is subject to
a closed window period which restricts the exercise of the Option as a matter of
law. Further, the existence of a closed window period will not extend the time
within which Options hereunder may be exercised.
     5.6 For those Participants who are employees of the Company or any of its
subsidiaries, an Option shall be exercisable by a Participant only while he or
she is an employee and up to three months following the cessation or termination
of employment with the Company and any and all subsidiaries or no later than
three months after the Participant ceases to be a Director. The preceding
notwithstanding, the Committee may determine that an Option may be exercised
subsequent to a Participant’s termination of employment or directorship, subject
to the following limitations:
     (a) An Option, to the extent not previously exercised, shall terminate no
later than seven (7) years from the grant date (the “Option Term”). If
Participant ceases to be employed by the Company because of Participant’s
retirement, disability or death, the option may, to the extent it was
outstanding and exercisable on the date of such retirement, disability or death,
be exercised only during the following periods: (i) if the termination was due
to Participant’s disability (within the meaning of Section 22(e)(3) of the
Code), the one-year period following the date of such termination; (ii) if the
termination was due to Participant’s death, the six-month period following the
date of issuance of letters testamentary or letters of administration to the
executor or administrator of Participant’s estate, but not later than one year
after Participant’s death; and (iii) if the termination was due to Participant’s
retirement after attaining age 65, or to Participant’s disability other than as
described in (i) above, the three-month period following the date of such
termination. In no event, however, shall any such period set forth in the
previous sentence extend beyond the Option Term.
     (b) In the event of Participant’s death, an Option may be exercised by
Participant’s legal representative(s), but only to the extent that the Option
would otherwise have been exercisable by Participant.

 

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     (c) A transfer of Participant’s employment between the Company and any
subsidiary of the Company, or between any subsidiaries of the Company, shall not
be deemed to be a termination of Participant’s employment.
     (d) Notwithstanding any other provisions set forth herein or in any Stock
Option Agreement, if a Participant shall (i) commit any act of malfeasance or
wrongdoing affecting the Company or any subsidiary or affiliate of the Company,
(ii) breach any covenant not to compete, or employment contract, with the
Company or any subsidiary or affiliate of the Company, or (iii) engage in
conduct that would warrant Participant’s discharge for cause (excluding general
dissatisfaction with the performance of Participant’s duties, but including any
act of disloyalty or any conduct clearly tending to bring discredit upon the
Company or any subsidiary or affiliate of the Company), any unexercised portion
of the Option shall immediately terminate and be void.
     5.7 An exercisable Option may be exercised in whole or in part. However, an
Option shall not be exercisable with respect to fractional shares and the
Committee may require that, by the terms of the Option, a partial exercise only
be with respect to a minimum number of shares.
     5.8 All or a portion of an exercisable Option shall be deemed exercised
upon:
     (a) Delivery of all of the following to the Secretary of the Company or his
or her office:
     (i) A written notice complying with the applicable rules established by the
Committee or the Company stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Participant or other person then
entitled to exercise the Option or such portion;
     (ii) Such representations and documents as the Committee, in its absolute
discretion, deems necessary or advisable to effect compliance with all
applicable federal or state securities laws or regulations. The Committee may,
in its absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance, including, without limitation, placing
legends on share certificates and issuing stop-transfer notices to agents and
registrars; and
     (iii) In the event that the Option shall be exercised pursuant to
Section 5.6(b) by any person or persons other than the Participant, appropriate
proof of the right of such person or persons to exercise the Option; and
     (b) Full cash payment to the Secretary of the Company for the shares with
respect to which the Option, or portion thereof, is exercised. However, at the
discretion of the Committee, the terms of the Option may allow, or provide the
Committee with the continuous discretion to allow: (i) a delay in payment up to
thirty days from the date the Option, or portion thereof, is exercised,
(ii) payment, in whole or in part, through the delivery of Common Stock owned by
the Participant for at least six months, (iii) delivery

 

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(in a form prescribed or approved by the Committee or the Company) of an
irrevocable direction to a securities broker to sell all or part of the Common
Stock being purchased under the Plan and to deliver all or part of the sales
proceeds to the Company to cover the exercise price and any applicable
withholding taxes; or (iv) payment, in whole or in part, through the delivery of
property of any kind which constitutes good and valuable consideration.
     (c) If Participant fails to pay for any or all of the Option shares
specified in the notice of exercise or fails to accept delivery thereof,
Participant’s right to purchase such Option shares may be terminated by the
Company, without notice. The date specified in Participant’s notice of exercise
as the date of exercise shall be deemed the date of exercise of the Option,
provided that payment in full for the Option shares to be purchased upon such
exercise shall have been received by such date.
     5.9 As soon as practicable after receipt by the Company, pursuant to
Section 5.8(b), of full cash payment for the shares with respect to which an
Option, or portion thereof, is exercised by a Participant, with respect to each
such exercise, the Company shall transfer to the Participant the number of
shares equal to the quotient of:
     (a) The amount of the payment made by the Participant to the Company
pursuant to Section 5.8(b), and
     (b) The price per share of the shares subject to the Option as determined
pursuant to Section 5.2.
     5.10 The Company shall not be required to issue or to deliver any
certificate or certificates for shares of stock purchased upon the exercise of
any Option or portion thereof prior to fulfillment of all of the following
conditions:
     (a) The completion of any registration or other qualification of such
shares under any state or federal law, or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental regulatory body
which the Committee shall, in its absolute discretion, deem necessary or
advisable;
     (b) Obtaining any approval or other clearance from any state or federal
governmental agency that the Committee shall, in its absolute discretion,
determine to be necessary or advisable;
     (c) The lapse of such reasonable period of time following the exercise of
the Option as the Committee may establish from time to time for reasons of
administrative convenience; and
     (d) The receipt by the Company of full payment for such shares, including
payment of any applicable withholding tax.

 

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     (e) The execution and delivery by Participant of a counterpart Stock Option
Agreement between the Company and Participant.
     5.11 To the extent that the aggregate fair market value of Common Stock
with respect to which any ISOs are exercisable for the first time by a
Participant during any calendar year (under the Plan and all other incentive
stock option plans of the Company or any Company subsidiary) exceeds $100,000,
such Options shall be treated as NSOs to the extent required by Section 422 of
the Code. For purposes of this Section 5.11, the fair market value of stock
shall be determined as of the time the Option, with respect to such stock, is
granted.
     5.12 Within the limitations of the Plan, the Committee may modify, extend
or assume outstanding Options or may accept the cancellation of outstanding
Options (whether granted by the Company or by another issuer) in return for the
grant of new Options for the same or a different number of shares and at the
same or a different exercise price. The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Participant, alter
or impair his or her rights or obligations under such Option.
6. Restricted Stock Awards.
     6.1 Stock Awards may be granted either alone, in addition to, or in tandem
with other Awards granted under the Plan. After the Committee determines that it
will offer a Stock Award, it will advise the Participant in writing, by means of
a Stock Award Agreement, of the terms, conditions and restrictions, including
vesting, if any, related to the offer, including the number of shares of Common
Stock that the Participant shall be entitled to receive or purchase, the price
to be paid, if any, and, if applicable, the time within which the Participant
must accept the offer. The offer shall be accepted by execution of a Stock Award
Agreement in the manner determined by the Committee.
     6.2 Unless the Committee determines otherwise, the Stock Award Agreement
shall provide for the forfeiture of the nonvested shares of Common Stock
underlying such Stock Award when the Participant ceases to be an employee or
director of the Company. To the extent that the Participant purchased the shares
of Common Stock granted under such Stock Award and any such shares remain
nonvested at the time the Participant ceases to be an employee or director, the
termination of employment or status as a director shall cause an immediate sale
of such nonvested shares to the Company at the original price per share paid by
the Participant. The Stock Award Agreement shall contain such other terms,
provisions and conditions not inconsistent with the Plan as may be determined by
the Committee in its sole discretion.
     6.3 The vesting period of a Stock Award shall be set by the Committee in
its discretion; provided, however, that the vesting period shall not be more
than seven years from the date a Stock Award is granted. At any time after grant
of a Stock Award, the Committee may, in its sole discretion, subject to whatever
terms and conditions it selects, and to the extent applicable, accelerate the
period during which a Stock Award vests.

 

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     6.4 No portion of a Stock Award which is unvested at the time a Participant
terminates employment with the Company or ceases to be a director of the Company
shall thereafter become vested.
     6.5 Notwithstanding any other provisions set forth herein or in any Stock
Award Agreement, if a Participant shall (i) commit any act of malfeasance or
wrongdoing affecting the Company or any subsidiary or affiliate of the Company,
(ii) breach any covenant not to compete, or employment contract, with the
Company or any subsidiary or affiliate of the Company, or (iii) engage in
conduct that would warrant Participant’s discharge for cause (excluding general
dissatisfaction with the performance of Participant’s duties, but including any
act of disloyalty or any conduct clearly tending to bring discredit upon the
Company or any subsidiary or affiliate of the Company), any nonvested portion of
the Stock Award shall immediately be forfeited. To the extent that the
Participant purchased the shares granted under such Stock Award and any such
shares remain nonvested at the time of any action described in the prior
sentence, such action shall cause an immediate sale of such nonvested shares to
the Company at the original price per share paid by the Participant.
     6.6 The Participant shall make such representations and provide such
documents as the Committee, in its absolute discretion, deems necessary or
advisable to effect compliance with all applicable federal or state securities
laws or regulations. The Committee may, in its absolute discretion, also take
whatever additional actions it deems appropriate to effect such compliance,
including, without limitation, placing legends on share certificates and issuing
stop-transfer notices to agents and registrars.
     6.7 The Participant shall make full cash payment to the Secretary of the
Company of the purchase price, if any, for the shares subject to the Stock
Award. However, at the discretion of the Committee, the terms of the Stock Award
may allow, or provide the Committee with the continuous discretion to allow:
(i) a delay in payment up to thirty days from the date the Stock Award is
granted, or (ii) payment, in whole or in part, through the delivery of property
of any kind which constitutes good and valuable consideration. If Participant
fails to pay the amount, if any, specified for the shares specified in the Stock
Award Agreement or fails to accept delivery thereof, Participant’s right to
acquire such shares may be terminated by the Company, without notice. The date
specified in Participant’s Stock Award Agreement as the date of acquisition
shall be deemed the date of acquisition of the shares, provided that any payment
required by the Stock Award Agreement shall have been received by such date.
     6.8 As soon as practicable after Participant executes the Stock Award
Agreement and provides the Company, pursuant to Section 6.7, with full payment
of any purchase price required under the terms of a Stock Award Agreement, the
Company shall transfer to the Participant the number of shares purchased. If no
purchase price is required under the Stock Award Agreement, the Company shall
transfer to the Participant the number of shares issued under the Stock Award
Agreement after the Participant executes the Stock Award Agreement.

 

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     6.9 Notwithstanding the foregoing, the Company shall not be required to
issue or to deliver any certificate or certificates for shares of stock
purchased under a Stock Award Agreement prior to fulfillment of all of the
following conditions:
     (a) The completion of any registration or other qualification of such
shares under any state or federal law, or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental regulatory body
which the Committee shall, in its absolute discretion, deem necessary or
advisable; and
     (b) Obtaining any approval or other clearance from any state or federal
governmental agency that the Committee shall, in its absolute discretion,
determine to be necessary or advisable.
7. Nonassignability of Awards.
     No Award granted under the Plan shall be assigned, transferred, pledged, or
otherwise encumbered by a Participant, otherwise than by will or by the laws of
descent and distribution and, in the case of NSOs only, by instrument to an
inter vivos or testamentary trust in which the Option is to be passed to
beneficiaries upon the death of the Participant, or by gift to a member of
Participant’s immediate family (as such term is defined in Rule 16a-1(e) of the
Exchange Act) or pursuant to a qualified domestic relations order. Each Award
shall be exercisable during the Participant’s lifetime only by the Participant.
Any attempt to assign, transfer, pledge or otherwise encumber any such Award or
of any right or privilege conferred thereby, contrary to this Section 7, or the
sale or levy or similar process upon the rights and privileges conferred
thereby, shall be null and void.
8. Protection Against Dilution.
     8.1 Reorganizations. In the event of any change affecting the Common Stock
by reason of any sale, merger, consolidation, spin-off, or other reorganization
of the Company or any subsidiary or affiliated company, the Committee may, but
shall not be obligated to, make such substitution or adjustment in the aggregate
number or class of shares which may be distributed under the Plan and in the
number, class, and price of shares subject to the outstanding Awards granted
under the Plan or in any vesting schedule as the Committee in its sole
discretion deems to be appropriate in order to maintain the purpose of the
original grant. Any determination of the Committee as to any question that may
arise with respect to any adjustment or lack of adjustment of shares or vesting
shall be final. The Committee shall be authorized to make adjustments in the
terms and conditions of other Awards in recognition of unusual or non-recurring
events affecting the Company or its financial statements or changes in
applicable laws, regulations, or accounting principles. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent it shall deem desirable to
carry it into effect.
     8.2 Adjustments. If any change is made to the Common Stock as a result of a
subdivision of the outstanding Common Stock, a declaration of a dividend payable
in

 

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Common Stock, a combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise) into a lesser number of shares of Common Stock, a
recapitalization, or a similar occurrence or change in the capitalization of the
Company which occurrence or change is neither a rights offering nor related to a
merger, sale or other reorganization set forth in Section 8.1, appropriate
adjustments shall be made to (i) the maximum number and/or class of securities
issuable under the Plan, (ii) the number and/or class of securities and/or the
price per share covered by outstanding Awards under the Plan, and (iii) the
Maximum Annual Participant Award. Any fractional shares shall be payable in
cash.
     8.3 Certain Corporate Events.
     (a) Corporate Reorganizations. Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation of the Company as a
result of which the outstanding securities of the class then subject to Awards
hereunder are changed into or exchanged for cash or property or securities not
of the Company’s issue, or any combination thereof, or upon a sale of
substantially all the property of the Company to, or the acquisition of stock
representing both (i) more than fifty percent (50%) of the voting power of the
stock of the Company then outstanding by, another corporation or person and
(ii) a change in the “Effective Control” (as defined below) of the Company (any
of which being a “Corporate Event”), the Plan shall terminate, and all Awards
theretofore granted hereunder shall terminate, unless provision is made in
writing in connection with such transaction for the continuance of the Plan
and/or for the assumption of Awards covering the stock of a successor
corporation, or a parent or a subsidiary thereof (such successor corporation or
parent or subsidiary, as the case may be, being the “successor corporation”),
with appropriate adjustments as to the number and kind of             shares and
prices, in which event the Plan and Awards theretofore granted shall continue in
the manner and under the terms so provided. If the Plan and Awards shall
terminate pursuant to the foregoing sentence, all outstanding Stock Awards shall
become fully vested immediately prior to the consummation of such transaction
and all persons entitled to exercise any unexercised portions of Options then
outstanding shall have the right, at such time prior to the consummation of the
transaction causing such termination as the Company shall designate, to exercise
the unexercised portions of their Options, including the portions thereof which
would, but for this Section entitled “Corporate Reorganizations,” not yet be
exercisable. For purposes of this paragraph, the term “Effective Control” shall
mean a change in share ownership such that the person or persons in Control (as
defined in Rule 405 under the Securities Act of 1933, as amended (the
“Securities Act”)) of the Company before the Corporate Event are not in Control
of the Company after the Corporate Event.
     (b) Termination of Employment Following Corporate Event. If a Participant’s
employment is terminated (other than for reasons set forth in Section 5.6(d)
herein) by the Company or a successor employer corporation (or a parent or a
subsidiary of either of them) within two (2) years following the effective date
of a Corporate Event (as defined in subparagraph (a) above) in which Awards are
assumed, such Participant’s Options (or replacement options) will immediately
become exercisable, including the

 

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portions thereof which would, but for this Section entitled “Termination of
Employment Following Corporate Event,” not yet be exercisable, and such
Participant’s Stock Awards will immediately become fully vested. Any such Option
will remain exercisable until the expiration of the Option or earlier
termination of the Option in accordance with its terms.
     (c) Termination of Plan or Options Following Corporate Event. If either the
Plan is continued by a successor corporation (as defined in subparagraph
(a) above) to the Company or Awards are assumed by such successor corporation,
or both, as provided in subparagraph (a) above, and thereafter within two
(2) years following the effective date of a Corporate Event (as described under
subparagraph (a) above), the Plan and unexercised Options (or replacement
options) or unvested Stock Awards are proposed to be terminated for any reason
(including but not limited to a successor corporation’s Corporate Event), then
all such Stock Awards shall become fully vested immediately prior to termination
of the Plan or Stock Awards and all persons entitled to exercise any unexercised
portions of Options then outstanding shall have the right, until seven (7) days
prior to the termination of the Plan and unexercised Options (or replacement
options), or such later time as the successor corporation shall designate, to
exercise the unexercised portions of their Options (or replacement options),
including the portions thereof which would, but for this Section entitled
“Termination of Plan or Options Following Corporate Event,” not yet be
exercisable.
          Notwithstanding the foregoing, a transaction shall not constitute a
Corporate Event if its sole purpose is to change the state of the Company’s
incorporation or to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company’s securities
immediately before such transaction.
9. Withholding.
     At the Committee’s discretion, the recipient of any Award under the Plan
may pay to the Company, in cash, Common Stock (provided it has been held by the
Participant for at least six months) or other property, or a combination
thereof, the amount of any taxes required to be withheld with respect to such
Award or, in the case of an Award in the form of Common Stock, the Company shall
have the right to retain from such Award a sufficient number of shares of Common
Stock to satisfy the applicable withholding tax obligation.
10. Subsidiaries.
     For purposes of the Plan, a “subsidiary” of the Company means any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.

 

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11. Financial Assistance.
     The Company is vested with authority under this Plan to assist any employee
to whom an Award is granted hereunder (including any director or officer of the
Company or any of its subsidiaries) in the payment of the purchase price payable
with respect to that Award, by lending the amount of such purchase price to such
employee on such terms and at such rates of interest and upon such security (or
unsecured) as shall have been authorized by or under authority of the Board.
12. Limitations of Rights of Participants.
     12.1 A person to whom an Award is granted under this Plan shall not have
any interest in the shares available with respect to that Award or in any
dividends paid thereon, and shall not have any of the rights or privileges of a
stockholder with respect to such shares until the certificates therefor have
been issued and delivered to him or her.
     12.2 No shares of stock issuable under the Plan shall be issued and no
certificate therefor delivered unless and until, in the opinion of legal counsel
for the Company, such securities may be issued and delivered without causing the
Company to be in violation of or to incur any liability under any federal, state
or other securities law, or any other requirement of law or of any regulatory
body having jurisdiction over the Company.
     12.3 The receipt of an Award does not give the Participant any right to
continued employment by the Company or a subsidiary for any period, nor shall
the granting of the Award or the issuance of shares in accordance with the Award
give the Company or any subsidiary any right to the continued services of the
Participant for any period.
     12.4 Nothing contained in this Plan shall constitute the granting of an
Award hereunder, which shall occur only pursuant to express authorization by the
Committee and under the terms of a Stock Option Agreement or Stock Award
Agreement.
13. Amendment and Termination.
     The Board may alter, amend, suspend or terminate this Plan, provided that
no such action shall, without the consent of a Participant, alter or impair any
rights or obligations under any Award granted to such Participant. An amendment
of the Plan shall be subject to the approval of the Company’s shareholders only
to the extent required by applicable laws, regulations or rules.
14. Award Agreements.
     Each Award granted to a Participant shall be evidenced by a written Stock
Option Agreement or Stock Award Agreement in a form approved by the Committee,
which shall be executed by the Participant and an authorized officer of the
Company and which shall contain such terms and conditions as the Committee shall
determine, consistent with this Plan. Stock Option Agreements evidencing ISOs
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.

 

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15. Governing Law.
     The place of administration of the Plan and all Stock Option Agreements and
Stock Award Agreements shall be in the State of California. The corporate law of
the Company’s state of incorporation shall govern issues related to the validity
and issuance of shares. Otherwise, this Plan and each Stock Option Agreement and
Stock Award Agreement shall be construed and administered in accordance with the
laws of the State of California, without giving effect to principles relating to
conflict of laws.
16. Use of Proceeds.
     Any cash proceeds received by the Company from the sale of shares pursuant
to grants made under this Plan shall be used for general corporate purposes.
17. Regulatory Approvals.
     The implementation of the Plan, the granting of any Award hereunder, and
the issuance of stock in accordance with any Award shall be subject to the
Company’s procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the Awards granted under it, and
the stock issued pursuant to it.
18. Restrictions on Resale.
     Certain officers and directors of the Company may be deemed to be
“affiliates” of the Company, as that term is defined under the Securities Act.
Common Stock acquired under the Plan by an affiliate may only be re-offered or
resold pursuant to an effective registration statement or pursuant to Rule 144
under the Securities Act or another exemption from the registration requirements
of the Securities Act.
19. Effective Date.
     This Plan, as amended and restated, shall become effective upon adoption by
the Company’s Board of Directors, subject to the subsequent approval of the
amended and restated Plan by the stockholders of the Company within 12 months
from the date of said adoption. Awards may be granted prior to such stockholder
approval, provided that any Stock Awards shall not vest prior to the time that
this amended and restated Plan is approved by the stockholders, and provided
further that if such approval has not been obtained at the end of said 12 month
period, all Stock Awards previously granted under this amended and restated Plan
shall thereupon be cancelled and become null and void.
20. Financial Statements.
     Participant shall receive financial statements of the Company at least
annually.