Document:

Exhibit 10.(t)

 

CITY NATIONAL BANK

 

EXECUTIVE
MANAGEMENT BONUS PLAN

 

PLAN YEAR:
2005

 

 

 

I.                                                   Plan Purpose

 

                                                          The purpose of the City National Bank Executive Management Bonus Plan
is to:

 

A.                                        Further the long-term growth in assets and earnings of City National
Bank by providing financial incentives to the executive management of the Bank.

 

B.                                        Focus and coordinate the efforts of executive management on the
attainment of specific financial objectives intended to strengthen the Bank and
enhance its value to the shareholders.

 

C.                                        Attract, retain and reward those individuals who contribute
substantially to the long-term success of the Bank.

 

II.                                               Definitions

 

A.                                        Annual Base Salary: the
semi-monthly salary paid to the Participant in the last pay period of the Award
Period just concluded, excluding any bonuses (including those that may be paid
under this Plan); commissions; overtime; automobile allowances; medical and tax
preparation reimbursements; or any similar non-salary items, multiplied by 24.

 

B.                                        Award: a cash distribution to a
Participant in accordance with the provisions of the Plan.

 

C.                                        Award Period: the period used to
calculate performance under the Plan Year or such other period as defined below
under this Plan.

 

D.                                        Bank: City National Bank.

 

E.                                          Beneficiary or Designated Beneficiary: the
person or persons designated pursuant to Section XIII to
receive the amount, if any, payable under the Plan upon the death of a
Participant.

 

F.                                          Compensation and Directors Nominating Committee: the Compensation and Directors Nominating
Committee of the Board of Directors of the Bank.

 

G.                                        Corporation: City National Corporation.

 

H.                                        Executive Committee:
Executive Committee of the Bank.

 

I.                                             Executive Management: the
officers of the Bank who are appointed as members of the Executive Committee of
the Bank by the Board of Directors of the Bank.

 

J.                                          Human Resources: the Bank’s Human
Resources Division.

 

K.                                        Participant: a member of the Executive
Committee of the Bank designated by the Plan Administrator and approved by the
Compensation and Directors Nominating Committee.

 

L.                                         Plan: this Executive Management
Bonus Plan as it may be amended, administered or interpreted from time to time.

 

M.                                      Plan Administrator: the
Strategy and Planning Committee.

 

 

N.                                        Plan Year: the period from January 1
through December 31 of any year this Plan is in effect.

 

O.                                       Strategy and Planning Committee: the
officers of the Bank who are appointed as members of the Strategy and Planning
Committee of the Bank by the Board of Directors of the Bank.

 

P.                                         Target Award: that amount derived
for each Participant by multiplying such Participant’s Annual Base Salary in
effect at the end of the Plan Year by the Target Award Percentage applicable to
the Participant set forth under the “Award Determination” section of Appendix C.

 

III.                                           Adoption of the Plan

 

                                                          This Plan is effective as of January 1, 2005, for the year ending
December 31, 2005, and for each one-year period commencing January 1, 2005,
thereafter.

 

IV.                                          Administration

 

A.                                        The Plan will be administered by the Plan Administrator, who will
recommend Awards for Participants, subject to approval by the Compensation and
Directors Nominating Committee.

 

B.              The
Plan Administrator, with the concurrence of the Compensation and Directors
Nominating Committee, shall have discretionary authority to interpret the terms
of this Plan, to decide any questions concerning eligibility, and to resolve
any disputes that may arise under or concerning the Plan or any Plan benefit.

 

C.              Awards
to Participants shall be approved by the Compensation and Directors Nominating
Committee.

 

V.                                              Eligibility

 

                                                          Eligibility to participate in the Plan will be limited to individuals
who meet all of the following criteria:

 

A.                                        Classified as a member of the Executive Committee.

 

.
                                                      B.             Must be performing at level “3”
(meets expectations) or higher.  The
Participant must also not have been subject to written warning at any time
during the Award Period.

 

C.            Not a Participant in another
incentive plan.

 

VI.                                          Participation

 

                                                          Participants will be designated prior to the beginning of each Plan
Year.  Additional Participants may be
designated after the beginning of the Plan Year.  A summary of Participants is reflected in Appendix D.

 

 

VII.             Funding

 

                                                          Following the beginning of each Award Period, a bonus pool will be
established to calculate the maximum amount of funds to be made available under
the Plan.  The size of the pool will be
linked to the Corporation’s operating net income established annually in Appendix A, and subject to adjustment pursuant to Appendix C.

 

VIII.                                  Discretionary Funding

 

                                                          The Compensation and Directors Nominating Committee, with the
concurrence of the Board of Directors, may elect to make additional funds
available for Awards if the operating net income of the Corporation has been
exceeded by a significant amount in the Award Period.

 

IX.                                          Award Determination and Performance
Measurement Guidelines

 

A.                                        At the conclusion of each Award Period, the Plan Administrator, in its
sole discretion, will recommend to the Compensation and Directors Nominating
Committee, Awards to Participants. 
Consideration will be given to the Participant’s contribution to meeting
the overall goals of the Bank, as well as the Participant’s performance of
basic job responsibilities and achievement of individual and/or departmental
objectives.

 

B.                                        Initially, the Plan Administrator will base its recommendations on the Participant Award Guidelines contained in Appendix C.

 

C.                                        Next, the Plan Administrator will review the Participant’s overall
performance, quality of work performed during the Award Period and its overall
satisfaction with the Participant’s accomplishments.  This qualitative assessment may include such
factors as an evaluation of the Participants responses to opportunities
presented, judgment exercised, ability and willingness to work as part of a
team and the possession of leadership and management skills expected to be
found at the executive level of management. 
Based upon such qualitative assessment, the Plan Administrator shall
assign each Participant a performance level rating between 5 (highest) and 2
(lowest).  The Plan Administrator, in its
sole discretion, will then make upward or downward adjustments, or no
adjustment, to the recommended Award based upon the Performance
Guidelines contained in Appendix B.

 

D.                                        Finally, the recommended Awards will be reviewed by the Compensation
and Directors Nominating Committees, who will, in their sole discretion,
approve all Awards.  The Compensation and
Directors Nominating Committee has the unilateral right to modify or cancel any
recommended Award, with no liability to the Bank, at any time prior to its
final approval of Awards.  Only upon
final approval of Awards shall all Awards become fully vested, and payable as
provided in Section X, below.

 

X.                                              Timing and Payment of Awards

 

A.                                        Awards, if any, will be calculated and paid to Participants no later
than March 15 following the close of the Award Period ended on the
preceding December 31.

 

B.                                        Awards will be paid annually.

 

 

C.                                        Awards will be reduced by any legally required or voluntary
withholding.

 

D.                                        In order to receive an Award the Participant must be employed and
actively providing service at the time of the payout, except as otherwise
provided in Sections XII and XIII, below.

 

XI.                                          No Right of Employment

 

This
Plan shall not constitute a contract of employment between the Bank and any
person eligible for participation in the Plan. 
Each Participant is an at-will employee.  Nothing contained in this Plan (or any Award
made pursuant to this Plan) shall confer upon any eligible Participant any
right to continue in the employment of the Bank, or guarantee of payment of
future incentives, or shall interfere with, affect or restrict in any way, the
rights of the Bank, which are expressly reserved, to discharge any employee
Participants, any time for any reason whatsoever, with or without cause.

 

XII.                                      Change of Status

 

A.                                          Transfer

 

                                                                           If a Participant
is transferred to a position not eligible for an Award prior to the completion
of an Award Period, any Award shall be prorated for the number of days the
Participant participated in the Plan during the Award Period.

 

B.                                          Leave
of Absence

 

Unless otherwise required by law, if a
Participant requests and is granted a leave of absence for any reason during an
Award Period, the Plan Administrator, in his/her sole discretion, with the
concurrence of the Compensation and Directors Nominating Committee, may make
such Participant an Award, prorated for the number of days during the Award
Period that the Participant was not on an approved leave of absence.

 

XIII.                                  Termination of Employment

 

A.                                        Death of Participant

 

1.                                                Participants are encouraged to file with the Bank a “Designation of
Beneficiary or Beneficiaries” on a form provided and maintained by Human
Resources.  The designation may be changed
or revoked by the Participant at any time, in writing delivered to Human
Resources.  If the Participant is married
and designates a beneficiary other than a spouse, spousal consent is required.  If no designation is filed with Human
Resources, any Award will be paid to the Participant’s estate.

 

2.                                                If a Participant dies prior to the completion of an Award Period, the
Participant’s participation in the Plan shall immediately cease.  The Bank will pay to the designated
beneficiary, in accordance with Section IX, an
Award prorated for the number of days the Participant participated in the Plan.

 

3.                                                If a Participant dies after the completion of an Award Period, but
before payment of an Award for which the Participant was eligible, such Award
shall be paid to the Participant’s beneficiary, or, if no beneficiary has been
designated, to the Participant’s estate.

 

 

4.                                                If the Plan Administrator is in doubt as to who receives an Award, the
Bank may retain the Award, without liability for interest thereon, until the
Plan Administrator determines the rights thereto, or until the Bank pays such
Award into a court of appropriate jurisdiction, which payment shall be a
complete discharge of the liability of the Bank therefor.

 

5.                                                If a Participant dies having failed to designate a Beneficiary, or if
no designated Beneficiary survives the Participant as of the date of payment of
an Award, the Award shall be paid to the Participant’s estate.

 

B.                                        Total and Permanent Disability of Participant

 

                                                                           If, prior to
completion of an Award Period, a Participant becomes totally and permanently
disabled, as defined in the City National Bank Long Term Disability Plan, such
Participant’s participation in the Plan shall immediately cease and any Award
shall be prorated for the number of days the Participant participated in the
Plan during the Award Period.

 

C.                                        Involuntary Termination Due to
Job Elimination or Staff Reduction

 

                                                                           If a Participant
is involuntarily terminated because of job elimination or staff reduction
during the course of an Award Period, the Plan Administrator, in his/her sole
discretion, with the concurrence of the Compensation and Director’s Nominating
Committee, may elect to prorate any Award for the number of days the
Participant participated in the Plan during the Award Period.

 

D.                                        Other Involuntary Termination of Employment

 

                                                                           If the employment of a
Participant is involuntarily terminated for any reason other than those
described in Parts A, B, or C of this Section XIII,
the Participant shall forfeit all rights to any Award.

 

E.                                          Voluntary Termination of Employment

 

                                                                           If a Participant
voluntarily terminates employment, such Participant shall forfeit all rights to
any Award.  However, the Plan
Administrator, in his/her sole discretion, with the concurrence of the Compensation
and Directors Nominating Committee, may elect to grant all or any portion of
such Award to the terminating Participant.

 

XIV.                                 Amendment, Modification, Suspension,
Reinstatement, Termination of Plan

 

                                                          The Plan may be modified, suspended, reinstated, or terminated at any
time by the Compensation and Directors Nominating Committee in its sole
discretion without prior notice to the Participant.

 

 

 

XV.                                     Annual Plan Review

 

                                                          Whenever necessary during the course of Plan Year, and annually
following the close of each Plan Year, the Compensation and Directors
Nominating Committee may review the Plan for possible modification, suspension,
termination, or reinstatement.

 

XVI.                                 Miscellaneous

 

A.           No
Award shall be deemed to be salary or compensation for the purpose of computing
benefits under any employee benefit plan or other arrangement of the Bank,
unless the Plan Administrator, in his/her sole discretion, shall determine
otherwise.

 

B.           The
Human Resources Department shall make available copies of the Plan and all
amendments and any administrative rules or procedures to all Participants at
reasonable times upon request.

 

C.           The
Plan and the payment of Awards shall be subject to all applicable federal and
state laws, rules, and regulations, including the withholding of any federal,
state, local or foreign taxes, and to such approvals by any government or
regulatory agency as may be required.

 

D.           The
terms of the Plan shall be binding upon the Bank and its successors and
assigns.

 

E.            Any
disputes arising under or relating in any way to this Plan shall be first
submitted in writing to the Plan Administrator, who shall have the
discretionary authority to interpret the Plan and decide any issues arising
thereunder.  The decision of the Plan
Administrator shall be final.EXHIBIT
10.u

 

CITY
NATIONAL CORPORATION

2001 STOCK OPTION PLAN

 

1.       THE PLAN

 

1.1      PURPOSE

 

                The
purpose of this Plan is to promote the success of the Corporation by providing
an additional means through the grant of stock options to attract, motivate,
retain and reward employees of the Corporation with awards and incentives for
high levels of individual performance and improved financial performance of the
Corporation.

 

1.2      DEFINITIONS

 

(a)                                  “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 Option
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.

 

(b)                                 “Board” shall
mean the Board of Directors of the Corporation.

 

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

 

(1)                                  The acquisition
by any individual, 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 (i) the then outstanding shares of Common Stock of the Corporation (the “Outstanding
Common Stock”) or (ii) the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in the election of
directors (the “Outstanding Voting Securities”); provided, however, that for
purposes of this subsection (1), the following acquisitions shall not
constitute a Change in Control: (i) any acquisition directly from the
Corporation; (ii) any acquisition by the Corporation; (iii) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any corporation controlled by the Corporation, (iv) any
acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of paragraph (3) of this subsection (c), or (v) any
acquisition by the Goldsmith Family or any director or partnership for the
benefit of any member of the Goldsmith Family; or

 

(2)                                  Individuals
who, as of the date hereof, constitute the Board of Directors (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Corporation’s
stockholders, 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
with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or contest by or on behalf of a person other
than the Board; or

 

(3)                                  Consummation of
a reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Corporation (a “Business
Combination”), in each case, unless, following such Business Combination (i)
all or substantially all of the individuals and entities who were the
beneficial owners respectively, of the Outstanding Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns
the Corporation or all or substantially all of the Corporation’s assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination,
of the Outstanding Common Stock and Outstanding Voting Securities, as the case
may be, (ii) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan or related trust of the Corporation or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of the Board, providing for such
Business Combination; or

 

(4)                                  Approval by the
stockholders of the Corporation of a complete liquidation or dissolution of the
Corporation.

 

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

 

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

 

(f)                                    “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

 

 

2

 

                                                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.

 

(g)                                 “Common Stock”
shall mean the common stock of the Corporation, $1.00 par value per share, and
such other securities or property as may become the subject of Options, or
become subject to Options, pursuant to an adjustment made under SECTION 4.2 of
this Plan.

 

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

 

(i)                                     “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.

 

(j)                                     “Eligible
Employee” shall mean full-time employees of the Corporation who are “exempt
employees” as defined under the Fair Labor Standards Act of 1938 and who are
neither members of the Board nor Officers. 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 Corporation be an Eligible
Employee.

 

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

 

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

 

(m)                               “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.

 

(n)                                 “Nonqualified
Stock Option” shall mean an Option that is not an incentive stock option within
the meaning of Section 422 of the Code. All Options granted hereunder shall be
deemed to be Nonqualified Stock Options under this Plan and not an incentive
stock option under the Code.

 

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

 

(p)                                 “Officer” shall
mean those individuals determined by resolution of the Board to be officers of
the Corporation or its subsidiaries who perform significant policy-making
functions for the Corporation for purposes of Section 16 of the Exchange Act
and Rule 16a-1(f), or, if the Board shall not have adopted such a resolution,
those individuals determined by the Committee to be officers as defined in Rule
16a-1(f).

 

 

3

 

(q)                                 “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.

 

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

 

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

 

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

 

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

 

(v)                                 “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.

 

(w)                               “Plan” shall
mean this 2001 Stock Option Plan.

 

(x)                                   “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.

 

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

 

(z)                                   “Rule 16a-1(f)”
shall mean Rule 16a-1(f), as amended from time to time, as promulgated by the
Commission pursuant to the Exchange Act.

 

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

 

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

 

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

 

(dd)                          “Shares” shall
mean shares of Common Stock of the Corporation.

 

(ee)                            ““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 Corporation.

 

 

4

 

(ff)                                “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.

 

1.3      ADMINISTRATION AND AUTHORIZATION; POWER
AND PROCEDURE

 

(a)                                  Committee. This
Plan shall be administered by, and all Options 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)                                 Options;
Interpretation; Powers of Committee. Subject to the express provisions of this
Plan, the Committee shall have the authority:

 

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

 

(2)                                  To grant
Options 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
Options consistent with the express limits of this Plan, and establish the
installments (if any) in which such Options 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 Options;

 

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

 

(4)                                  To construe and
interpret this Plan and any agreements defining the rights and obligations of
the Corporation 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;

 

(5)                                  To cancel,
modify, or waive the Corporation’s rights with respect to, or modify,
discontinue, suspend, or terminate, any or all outstanding Options held by
Participants, subject to any required consent under SECTION 4.6;

 

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

 

(7)                                  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 Corporation, 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

 

 

5

 

                                                all persons. No
member of the Board or Committee, or officer of the Corporation, 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
Corporation. No director, officer or agent of the Corporation 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 Corporation.

 

1.4      PARTICIPATION

 

                Options
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 Option may, if otherwise eligible, be granted additional Options if the
Committee shall so determine.

 

1.5      SHARES AVAILABLE FOR OPTIONS

 

                Subject
to the provisions of SECTION 4.2, the capital stock that may be delivered under
this Plan shall be shares of the Corporation’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 Options granted to Eligible Employees under this Plan shall not
exceed 2,000,000 Shares subject to subsection (c) below and the adjustments
contemplated by SECTION 4.2.

 

(b)                                 Reservation of
Shares. Common Stock subject to outstanding Options shall be reserved for
issuance. If the Corporation withholds Shares pursuant to SECTION 2.2(B) or
4.5, the number of shares that would have been deliverable with respect to an
Option shall be reduced by the number of shares withheld and such shares shall
not be available for additional Options under this Plan.

 

(c)                                  Reissue of
Options. 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 Option, or any alternative form
of consideration under an Option that is not paid in connection with the
settlement of an Option or any portion of an Option shall again be available
for Option under subsection (a) above, 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 Options and subsequently reacquired by the Corporation
pursuant to the terms and conditions of the Options also shall be available for
reissuance under the Plan.

 

 

6

 

                                                Nothing in this
paragraph shall be interpreted to allow shares which are in the possession of
the Corporation pursuant to either SECTION 2.2(B) or 4.5 to be available for
reissuance under the Plan.

 

(d)                                 Interpretive
Issues. Additional rules for determining the number of shares 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.

 

1.6      GRANT OF OPTIONS

 

                Subject
to the express provisions of this Plan, the Committee shall determine the
number of Shares subject to each OPTION, and the price (if any) to be paid for
the Shares. Each Option shall be evidenced by an Option Agreement signed by the
Corporation and, if required by the Committee, by the Participant.

 

1.7      OPTION PERIOD

 

                Each
OPTION and all executory rights or obligations under the related OPTION
Agreement shall expire on such date (if any) as shall be determined by the
Committee, but not later than ten (10) years after the OPTION Date.

 

1.8      LIMITATIONS ON EXERCISE AND VESTING OF
OPTIONS

 

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

 

(b)                                 Procedure. Any
exercisable Option shall be deemed to be exercised when the Secretary of the
Corporation 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 Option at one time unless the number purchased is the total
number at the time available for purchase under the Option.

 

1.9      NO TRANSFERABILITY

 

(a)                                  Options 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

 

 

7

 

                                                exception to
transfer restrictions under Rule 16b-3, no right or benefit under this Plan or
any Option that has not 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 Corporation) and
any such attempted action shall be void. The Corporation 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 Options 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 Options 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 Option Agreement or other writing expressly permit.

 

2.       EMPLOYEE OPTIONS

 

2.1      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 shall be a
Nonqualified Stock Option, which shall be indicated in the applicable Option
Agreement.

 

2.2      OPTION PRICE

 

(a)                                  Pricing Limits.
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) (iii)
by notice and third party payment in such manner as may be authorized by the
Committee; (iv) 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 Option by delivering such Shares; or (v)
if authorized by the Committee or specified in the applicable Option 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 under clause (iv) shall be valued at their Fair Market Value on the
date of exercise.

 

 

8

 

2.3      NO OPTION REPRICING

 

                Subject
to SECTION 4.2 and SECTION 4.6 and the specific limitations on Options granted
in this Plan, the Committee may not reduce the exercise price of any Option
granted pursuant to the Plan following the date of the Option or accept the
surrender of outstanding Options as consideration for the grant of a new Option
with a lower per-share exercise price.

 

2.4      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 Corporation 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 Corporation, 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 Corporation’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.

 

3.       TAX OFFSET BONUS RIGHTS

 

3.1      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
ARTICLE 2 of the Plan. Tax Offset Bonus Rights granted in relation to a
specific

 

 

9

 

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 Corporation’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.

 

3.2      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.

 

3.3      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.

 

                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.

 

3.4      PAYMENTS

 

                Upon
the exercise of a Tax Offset Bonus Right, the Corporation 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.

 

3.5      TERMINATION OF EMPLOYMENT

 

                Unless
otherwise determined by the Committee, in the event a Participant ceases to be
an employee of the Corporation 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 Option
Agreement.

 

 

10

 

4.       OTHER PROVISIONS

 

4.1      RIGHTS OF ELIGIBLE EMPLOYEES,
PARTICIPANTS AND BENEFICIARIES

 

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

 

(b)                                 No Employment Contract.
Nothing contained in this Plan (or in any other documents related to this Plan
or to any Option) shall confer upon any Eligible Employee or Participant any
right to continue in the employ or other service of the Corporation or
constitute any contract or agreement of employment or other service, nor shall
interfere in any way with the right of the Corporation 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. Options payable under this Plan shall be payable in Shares or from the
general assets of the Corporation, and no special or separate reserve, fund or
deposit shall be made to assure payment of such Options. 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 Corporation by reason of any Option 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 Corporation 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 Option
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Corporation.

 

4.2      ADJUSTMENTS; ACCELERATIONS

 

(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
Corporation, 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 Corporation is the surviving entity, or
through a combination, consolidation, recapitalization, reclassification, stock
split, stock dividend, reverse stock split, stock consolidation, dividend or
distribution of cash or property to the stockholders of the Corporation 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
Corporation 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 Options including, but not limited to
(A) the number and kind of shares of Common

 

 

11

 

                                                Stock or other
consideration that is subject to or may be delivered under this Plan and
pursuant to outstanding Options or (B) the consideration payable with respect
to Options granted prior to any such change; 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 Options or the cash, securities or property deliverable to the
holder of any or all outstanding Options based upon the distribution or
consideration payable to holders of Common Stock upon or in respect of such
event. 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 stockholders generally.

 

(b)                                 Acceleration of
Options Upon Change in Control. As to any or all Participants, upon the
occurrence of a Change in Control Event, each Option shall become immediately
exercisable; provided, however, that in no event shall any Option be
accelerated as to any Section 16 Person to a date less than six months after
the Option Date of such Option. 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 Options or determine that only
certain or limited benefits under Options 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 theretofore granted, or the substitution for such
with new Options 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 subsection (b) by express provision in the
Option Agreement and may accord any Participant a right to refuse any
acceleration, whether pursuant to the Option Agreement or otherwise, in such
circumstances as the Committee may approve. Any acceleration of Options shall
comply with applicable regulatory requirements, including without limitation
Section 422 of the Code.

 

(c)                                  Possible Early
Termination of Accelerated Options. If any Option or other right to acquire
Shares under this Plan has not been exercised prior to (i) a dissolution of the
Corporation, (ii) a reorganization event described in subsection (a) above that
the Corporation does not survive, or (iii) the consummation of a reorganization
event described in subsection (a) above 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.

 

4.3      EFFECT OF TERMINATION OF EMPLOYMENT

 

                The
Committee shall establish in respect of each Option 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

 

 

12

 

retirement, termination for cause, disability
or death. Notwithstanding any terms to the contrary in an Option Agreement or
this Plan, the Committee may decide in its complete discretion to extend the
exercise period of an Option (although not beyond the period described in
SECTION 1.7) and the number of shares covered by the Option with respect to
which the Option is exercisable or vested.

 

4.4      COMPLIANCE WITH LAWS

 

                This
Plan, the granting and vesting of Options under this Plan and the offer,
issuance and delivery of Shares and/or the payment of money under this Plan or
under Options 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 Corporation, 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 Corporation, provide such assurances and representations to the Corporation
as the Corporation may deem necessary or desirable to assure compliance with
all applicable legal requirements.

 

4.5      TAX WITHHOLDING

 

(a)                                  Cash or Shares.
Upon any exercise, vesting, or payment of any Option, the Corporation 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 Corporation 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 Corporation 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 Option or thereafter)
to the Participant the right to elect, or the Committee may require (either at
the time of the Option or thereafter), pursuant to such rules and subject to
such conditions as the Committee may establish, to have the Corporation 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 Corporation 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.

 

4.6      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 Options may be
granted during any suspension of this Plan or after termination of this Plan,
but the

 

 

13

 

                                                Committee shall
retain jurisdiction as to Options then outstanding in accordance with the terms
of this Plan. Any suspension will not affect the expiration of the Plan set
forth in SECTION 4.9.

 

(b)                                 Amendments to
Options. 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 Options 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 Options
that do not affect in any manner materially adverse to the Participant his or
her rights and benefits under an Option.

 

(c)                                  Limitations on
Amendments to Plan and Options. No amendment, suspension or termination of the
Plan or change of or affecting any outstanding Option 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
Corporation under any Option granted under this Plan prior to the effective
date of such change. Changes contemplated by SECTION 4.2 shall not be deemed to
constitute changes or amendments for purposes of this SECTION 4.6.

 

4.7      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 stockholder for which a record date is
prior to such date of delivery.

 

4.8      EFFECTIVE DATE OF THE PLAN

 

                This
Plan shall be effective as of [March 5, 2001], the date of Board approval.

 

4.9      TERM OF THE PLAN

 

                No
Option 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 Option Agreement, any Option thereto granted may extend
beyond such date, and all authority of the Committee with respect to Options
hereunder shall continue during any suspension of this Plan and in respect of
outstanding Options on such termination date.

 

4.10     GOVERNING LAW; CONSTRUCTION; SEVERABILITY

 

(a)                                  Choice of Law.
This Plan, the Options, all documents evidencing Options 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 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.

 

 

14

 

(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.

 

(1)                                  It is the
intent of the Corporation that this Plan and Options 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 Option 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.

 

(2)                                  It is the
further intent of the Corporation that options 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.

 

4.11     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.

 

4.12     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.

 

 

15

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