Document:

exv10w1

 

Exhibit 10.1

Severance Pay Policy

When associates are terminated due to departmental closures, restructuring, or elimination of
a position, applicable severance pay may be provided as a temporary continuation of earnings to
assist associates in the transition to new employment. Associates who are terminated for another
reason, or who voluntarily resign, are not eligible for severance pay under this policy.

Severance pay is calculated using the associate’s regular, base rate of pay on the termination
date. Base pay does not include bonus, incentives, overtime pay or any other remuneration.

Eligibility for Severance Pay

Associates must be actively employed at the time of termination in order to be eligible for
severance pay. An associate whose employment with the Company or any of its affiliated companies is
terminated will not be entitled to severance pay under this policy if he or she is offered an
alternate position with the Company, any of its affiliated companies, or any successor thereto,
with job duties and responsibilities (determined in relation to his or her current employers’
business), compensation, benefits, perquisites and other terms and conditions of employment that
are substantially similar to those in effect immediately prior to his or her date of termination. A
change in an associate’s title in these circumstances will not, standing alone, entitle him or her
to severance pay under this policy.

Associates who are eligible for severance pay as part of their termination are provided an
agreement that releases the Company from any claims related to the associate’s employment with the
Company, the execution of which is a condition precedent to receiving the severance pay.

The Company reserves the right to determine when severance pay will or will not be paid.

Calculating Severance Pay

Associates may receive severance as follows:

	 	 	 	 	 
	Associate	 	Eligible for	 	Maximum
	Non-Exempt

	 	1 week base salary per year of service
	 	14 weeks base pay
	 
	 	 	 	 
	Exempt

	 	6 weeks base salary, plus 2 weeks per
year of service, plus equivalent COBRA
	 	6 months base pay
	 
	 	 	 	 
	AVP

	 	6 weeks base salary, plus 2 weeks per
year of service, plus equivalent COBRA
	 	6 months base pay
	 
	 	 	 	 
	VP

	 	6 months base salary, plus 3 weeks per
year of service, plus equivalent COBRA
	 	12 months base pay
	 
	 	 	 	 
	SVP

	 	12 months base salary, plus 3 weeks per
year of service, plus equivalent COBRA up
to 18 months
	 	24 months base pay
18 months maximum COBRA
	 
	 	 	 	 
	EVP

	 	24 months base salary plus 18 months COBRA	 	 

 

 

The Company reserves the right to amend this severance pay schedule at any time.

Calculating Rates for Full-Time Associates

Severance pay is calculated at the associate’s regular, base rate of pay on the termination date.

Base pay does not include bonus, commissions, incentives, overtime pay, or any other remuneration.
The rate of pay is calculated as follows for full-time associates:

	 	 	 
	Type of Associate	 	Formula for Calculations
	Exempt

	 	Weeks = Divide the associate’s annual base pay by 52.

Months = Divide the associate’s annual base pay by 12.
	 
	 	 
	Non-exempt

	 	Weekly = Multiply the associate’s regular hourly rate by 40.

Part-Time Associates

Part-time associates may be entitled to pro-rated severance pay, based on the severance

schedule established for full-time associates. The pro-rated percentage will be calculated by
obtaining an average number of hours worked per week, based on the six-month period immediately
preceding the date that severance benefits are calculated by the Associate Relations Department.

	 	 	 
	

	 	NOTE: Associates who have been employed on both a full time and part time basis receive severance
pay based on the applicable combination of the full time and part time severance formulas.

Severance pay is calculated using the associate’s regular, base rate of pay on the termination
date. Base pay does not include bonus, incentives, overtime pay or any other remuneration.

Severance and Final Pay at Termination

Associates eligible for severance pay under this policy are paid final regular pay and accrued,
unused vacation according to the requirements of the state in which they are employed. Any earned
bonus or incentive pay is paid in accordance with the applicable plan and agreement. Severance pay
is normally paid in a separate check according to timeframes noted in the release agreement. The
Company will withhold all applicable federal, state, local, and other taxes as well as any required
payroll deductions from all severance pay that is paid under this policy.

Severance Pay for Rehired Associates

If an associate returns to work for the Company after receiving severance pay as part of the
original termination, the returning associate must reimburse the Company for any unused severance
pay.

Outplacement Assistance

As appropriate, the Company may also offer outplacement assistance to help associates find new jobs
and/or transition to new careers.

Administration of Severance Pay Policy

The Company has sole and absolute discretion to interpret and apply the terms of this policy. The
Company’s determinations under this policy shall be final and binding on all persons. The Company
reserves the right to amend or terminate this policy at any time and without prior notice.exv10w2

 

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

 

 

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.

 

 

     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.

 

 

     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.

 

 

     (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

 

 

(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.

 

 

     (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.

 

 

     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.

 

 

     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

 

 

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

 

 

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.

 

 

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.

 

 

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.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}]]