Document:

Exhibit 10(e)

 

SEVENTH AMENDMENT TO SPLIT DOLLAR LIFE INSURANCE
AGREEMENT

COLLATERAL ASSIGNMENT PLAN

 

This Seventh Amendment to Split Dollar Life Insurance Agreement
Collateral Assignment Plan is made and entered into as of the 1st day of June,
1999 by and between The Goldsmith 1980 Insurance Trust (the “Trust”) and City
National Bank, a national banking association (“CNB”) with reference to the
following:

 

A. The Trust and CNB are parties to that certain Split Dollar Life
Insurance Agreement Collateral Assignment Plan dated as of June 15, 1980
as amended to date (the “Agreement”), by which the Trust granted CNB certain
rights with respect to a personal life insurance policy owned by the Trust
insuring the life of Bram Goldsmith.

 

B. Pursuant to the Third Amendment to the Agreement, dated as of December 19,
1990, the Trust and CNB agreed to replace the insurance policy then in effect,
issued by Connecticut General Life Insurance Company (the “Connecticut General
Policy”), with a policy insuring the joint lives of Bram Goldsmith and Elaine
Goldsmith issued by Transamerica Occidental Life Insurance Co. (the “Joint
Policy”), by surrendering the Connecticut General Policy to the insurer and
applying the cash surrender value therefrom to the premium paid for the Joint
Policy. The Third Amendment to the Agreement further provided that any premium
for the Joint Policy in excess of the cash surrender value of the Connecticut
General Policy would be paid by the Trust, provided that CNB could pay such
premiums if the Trust failed to do so.

 

C. As of the date of this Seventh Amendment, CNB has paid premiums with
respect to the Joint Policy, including premiums paid for the Connecticut
General Policy and subsequently applied to the Joint Policy, totaling $600,842.

 

D. The Trust and CNB wish to further amend the Agreement to insure that
effective as of the date of the Seventh Amendment, CNB shall be obligated to
pay additional annual premiums for the Joint Policy in an amount equal to the
greater of Sixty Thousand Dollars ($60,000) each year of the amount of premium
required each year to maintain a death benefit on the Joint Policy of Seven
Million Dollars ($7,000,000) for as long as either Bram Goldsmith or Elaine
Goldsmith is then living.

 

NOW, THEREFORE, CNB and the Trust hereby agree as follows:

 

The second sentence of Section 1.
of the Third Amendment to the Agreement which begins with the words “Any
premium” and ends with the words “sole discretion” is hereby deleted and the
following language is hereby inserted in its place:

 

“Effective June 1, 1999, CNB shall pay an annual premium for the
Joint Policy for each year while either Bram Goldsmith or Elaine Goldsmith is
then living, in an amount equal to the greater of Sixty Thousand Dollars
($60,000) or an amount necessary to maintain a then current death benefit for
the Joint Policy of Seven Million Dollars ($7,000,000), whichever amount is
greater. The Trust and CNB hereby acknowledge that as of the date of this
Seventh Amendment, CNB has paid premiums with respect to the Joint Policy,
including premiums paid for the Connecticut General Policy and subsequently
applied to the Joint Policy, totaling Six Hundred Thousand Eight Hundred
Forty-Two Dollars ($600,842).”

 

Except as otherwise set forth above, the
Agreement, as amended to date, remains in full force and effect according to
its terms.

 

1

 

IN WITNESS WHEREOF, the
parties hereto have executed this Seventh Amendment as of the date and year
first set forth above.

 

 

	
   

  	
  CITY
  NATIONAL BANK

  a national banking association

  	
   

  	
  THE
  GOLDSMITH 1980 INSURANCE TRUST

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard H. Sheehan, Jr.

  	
   

  	
   

  	
  By:

  	
  /s/
  Bruce Leigh Goldsmith, Trustee

  	
   

  
	
   

  	
   

  	
  RICHARD H. SHEEHAN, JR.

  	
   

  	
   

  	
  BRUCE
  LEIGH GOLDSMITH, TRUSTEE

  
	
   

  	
   

  	
  SENIOR VICE PRESIDENT AND GENERAL

  COUNSEL

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Russell Goldsmith, Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  RUSSELL
  GOLDSMITH, TRUSTEE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  CITY NATIONAL BANK,

  
	
   

  	
   

  	
   

  	
   

  	
  a national banking association, as

  Trustee

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Vergel V. Tan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
  Vice President

  
									

 

2Exhibit 10(g)

 

CITY NATIONAL CORPORATION

 

1985 STOCK OPTION PLAN

 

(As amended December 18,
1985; February 26, 1986; March 5, 1986; November 19, 1986; December 17,
1986; March 25, 1987; April 19, 1988; December 19, 1990; April 17,
1990; April 16, 1991; November 25, 1991; April 21, 1992)

 

TABLE OF CONTENTS 

 

	
  1.

  	
   

  	
  GENERAL
  PROVISION

  	
   

  
	
   

  	
   

  	
  1.1

  	
  Purpose

  	
   

  
	
   

  	
   

  	
  1.2

  	
  Definitions

  	
   

  
	
   

  	
   

  	
  1.3

  	
  Administration

  	
   

  
	
   

  	
   

  	
  1.4

  	
  Shares/Rights
  Subject to the Plan

  	
   

  
	
   

  	
   

  	
  1.5

  	
  Eligibility

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  STOCK
  OPTIONS

  	
   

  
	
   

  	
   

  	
  2.1

  	
  Grants

  	
   

  
	
   

  	
   

  	
  2.2

  	
  Stock Option Price

  	
   

  
	
   

  	
   

  	
  2.3

  	
  Term of Stock Option

  	
   

  
	
   

  	
   

  	
  2.4

  	
  Exercise of Stock Option

  	
   

  
	
   

  	
   

  	
  2.5

  	
  Surrender of Stock
  Options

  	
   

  
	
   

  	
   

  	
  2.6

  	
  Termination of Employment

  	
   

  
	
   

  	
   

  	
  2.7

  	
  Death
  of Optionee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2A.

  	
   

  	
  DIRECTOR
  STOCK OPTIONS. (Added April 19, 1988.)

  	
   

  
	
   

  	
   

  	
  2A.1

  	
  Eligibility

  	
   

  
	
   

  	
   

  	
  2A.2

  	
  Grant of Director
  Options

  	
   

  
	
   

  	
   

  	
  2A.3

  	
  Stock Option Price

  	
   

  
	
   

  	
   

  	
  2A.4

  	
  Other Terms
  of Director Stock Options

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  INCENTIVE STOCK OPTIONS

  	
   

  
	
   

  	
   

  	
  3.1

  	
  Grants

  	
   

  
	
   

  	
   

  	
  3.2

  	
  Option Price

  	
   

  
	
   

  	
   

  	
  3.3

  	
  Term
  of Option

  	
   

  
	
   

  	
   

  	
  3.4

  	
  Exercise of Option

  	
   

  
	
   

  	
   

  	
  3.5

  	
  Termination of Employment

  	
   

  
	
   

  	
   

  	
  3.6

  	
  Death
  of Employee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  STOCK APPRECIATION RIGHTS

  	
   

  
	
   

  	
   

  	
  4.1

  	
  Grants

  	
   

  
	
   

  	
   

  	
  4.2

  	
  Stock Appreciation
  Rights Period

  	
   

  
	
   

  	
   

  	
  4.3

  	
  Exercise of
  Stock Appreciation Rights

  	
   

  
	
   

  	
   

  	
  4.4

  	
  Payments

  	
   

  
	
   

  	
   

  	
  4.5

  	
  Termination of Employment

  	
   

  
	
   

  	
   

  	
  4.6

  	
  Death
  of Employee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  TAX OFFSET BONUS RIGHTS

  	
   

  
	
   

  	
   

  	
  5.1

  	
  Grants

  	
   

  
	
   

  	
   

  	
  5.2

  	
  Tax Offset Bonus
  Rights Period

  	
   

  
	
   

  	
   

  	
  5.3

  	
  Exercise of Rights

  	
   

  
	
   

  	
   

  	
  5.4

  	
  Payments

  	
   

  
	
   

  	
   

  	
  5.5

  	
  Termination of Employment

  	
   

  

 

i

 

	
  6.

  	
   

  	
  OTHER
  PROVISIONS

  	
   

  
	
   

  	
   

  	
  6.1

  	
  Adjustments
  Upon Changes in Capitalization

  	
   

  
	
   

  	
   

  	
  6.2

  	
  No Guarantee of
  Employment

  	
   

  
	
   

  	
   

  	
  6.3

  	
  Non-transferability

  	
   

  
	
   

  	
   

  	
  6.4

  	
  Rights of a Shareholder

  	
   

  
	
   

  	
   

  	
  6.5

  	
  Government Regulations

  	
   

  
	
   

  	
   

  	
  6.6

  	
  Amendment
  and Discontinuance of the Plan

  	
   

  
	
   

  	
   

  	
  6.7

  	
  Effective Date
  and Duration of Plan

  	
   

  

 

ii

 

CITY NATIONAL CORPORATION

 

1985 STOCK OPTION PLAN

 

1. GENERAL PROVISION

 

1.1 PURPOSE. The purpose of the Plan is to advance the interests
of the Corporation and its shareholders and to encourage successful long-term
Corporation growth and profitability by strengthening the ability of the
Corporation to attract, retain and encourage outstanding performance of key
employees to the Corporation or a subsidiary of the Corporation who are in
positions to make significant contributions toward such success, by increasing
their proprietary interest in the Corporation through stock ownership.

 

1.2 DEFINITIONS.

 

(a) “CORPORATION” means City
National Corporation.

 

(b) “PLAN” means the 1985
Stock Option Plan.

 

(c) “BOARD” means the Board
of Directors of the Corporation.

 

(d) “COMMITTEE” means the
Compensation Committee of the Board of Directors unless the Board of Directors
appoints another committee to administer the Plan.

 

(e) “COMMON STOCK” or “STOCK”
means the common stock of the Corporation having a par value of $1.00 per
share.

 

(f) “DIRECTOR STOCK OPTIONS”
means Nonqualified Stock Options granted to directors of the Corporation
pursuant to

Section 2A of the Plan. (Added April 19,
1988.)

 

(g) “FAIR MARKET VALUE”
means the price at which the Stock shall have been sold in the last normal
transaction of the trading day on a specified date, or if no trading occurred
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. (Amended February 26, 1986.)

 

(h) “SUBSIDIARY” means any
corporation of which a majority of the outstanding voting stock or voting power
is beneficially owned directly or indirectly by the Corporation, such as, City
National Bank.

 

1

 

(i) “PARTICIPANT” or “OPTIONEE”
means a member of a select group of Officers and other key employees of the
Corporation or a Subsidiary who, in the opinion of the Committee, are in a
position to have a direct and significant impact on achieving the Corporation’s
long-term profit and growth objectives. No member of the Committee shall be a
Plan Participant.

 

(j) “INCENTIVE STOCK OPTION”
means an option as defined under

Section 422A of the
Internal Revenue Code and regulations thereunder, including an Incentive Stock
Option granted pursuant to Section 3 of the Plan.

 

(k) “STOCK OPTION” or “NONQUALIFIED
STOCK OPTION” means all options other than Incentive Stock Options granted
pursuant to Section 2 of the Plan.

 

(l) “OPTION” means either an
Incentive Stock Option or a Nonqualified Stock Option.

 

(m) “STOCK APPRECIATION
RIGHT” means a Right granted pursuant to Section 4 of the Plan to receive
the excess of the Fair Market Value of a share of the Corporation’s Common
Stock on the date when a Stock Appreciation Right is exercised over the
exercise price of the Right.

 

(n) “TAX OFFSET BONUS RIGHT”
means a right granted pursuant to

Section 5 of the Plan
to receive cash in an amount designated by the Compensation Committee at the
time such right is granted. (Amended March 5, 1986.)

 

(o) “RIGHT” means, in a
given context, either a Stock Appreciation Right or a Tax Offset Bonus Right.

 

1.3 ADMINISTRATION. The Plan shall be administered by the
Committee, which is authorized to interpret the Plan, to adopt such rules and
regulations as it may from time to time deem necessary for the effective
operation of the Plan, to act on all matters relating to the granting and
payment of awards under the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan. The Committee may
grant Nonqualified Stock Options or Incentive Stock Options that qualify under
the terms and conditions set for the in Section 422A of the Internal
Revenue Code. The interpretation and construction by the Committee of any Plan
provisions or of any award made shall be final unless otherwise determined by
the Board of Directors. No member of the Committee shall be personally liable
for any action, failure to act, determination or interpretation made in good
faith with respect to the Plan or any transaction hereunder.

 

2

 

1.4
SHARES/RIGHTS SUBJECT TO THE PLAN. Subject to adjustments provided in Paragraph 5.1 hereof, the number
of shares of stock to be delivered upon exercise of all Options granted or
Rights which may be exercised pursuant to awards under the Plan shall not
exceed 5,150,000. The shares to be delivered under the Plan may be either
authorized and unissued shares or shares issued and thereafter acquired by the
Corporation. (Amended December 18, 1985; April 19,
1988; April 17, 1990; April 21, 1992.)

 

If an Option or Right for
any reason expires or is terminated without having been exercised in full, the
remaining shares shall again become available for the granting of Options or
Rights under the Plan.

 

1.5 ELIGIBILITY. The Committee shall designate from time to
time the key employees who are to be granted Options (other than Director Stock
Options) and Stock Appreciation Rights. Subject to Section 2A of this
Plan, in no event may a member of the Committee or any non-employee Director be
granted an Option or Right under this Plan. (Amended April 19,
1988.)

 

No employee shall be
eligible for the grant of an Incentive Stock Option who owns or would own
immediately before the grant of such Incentive Stock Option, directly or
indirectly, stock possessing more than ten percent of the total combined voting
power of all classes of stock of the Corporation or of any parent or subsidiary
corporation unless at the time such Incentive Stock Option is granted the price
is at least 110% of the Fair Market Value of the Common Stock subject to the
Incentive Stock Option and such Incentive Stock Option by its terms is not
exercisable after the expiration of five years from the date such Incentive
Stock Option is granted.

 

2. STOCK OPTIONS.

 

2.1 GRANTS. The Committee may, in its discretion, grant
to Participants Stock Options which shall be evidenced by Option agreements, on
the terms and conditions set forth in the Plan and on such other terms and
conditions as are not inconsistent with the purposes and provisions of the
Plan. The Committee shall determine the number of shares, if any, as to which
Stock Options are to be granted in any year and the number of shares as to
which Stock Options are to be granted to each Participant.

 

2.2 STOCK OPTION PRICE. Subject to Section 2A of this Plan, the
purchase price of stock covered by each Stock Option shall be determined by the
Committee but shall not be less than 100% of the Fair Market Value of such
stock on the date of the granting of the Stock Option. (Amended
April 19, 1988.)

 

2.3 TERM OF STOCK OPTION. Each Stock Option and all rights or
obligations thereunder shall be expressed to expire on such date as the
Committee may determine, but not later than the tenth anniversary of the date
on which the Stock Option is granted, and shall be subject to earlier
termination as hereinafter provided.

 

3

 

2.4 EXERCISE OF STOCK OPTION. A Stock Option may be exercised according
to its terms as determined by the Committee, by giving written notice to the
Corporation specifying the number of shares to be purchased, accompanied by the
payment in cash, equivalent or through exchange of previously acquired shares
or a combination of cash and previously acquired shares which will equal the
total purchase price therefor. Any shares so assigned and delivered to the
Corporation in payment or partial payment of the purchase price shall be valued
at their Fair Market Value on the exercise date.

 

No Stock Option or
installment thereof shall be exercisable except in respect of whole shares, and
fractional share interests shall be disregarded. The Committee may, by the
terms of the Stock Option, require any partial exercise to be with respect to a
specified minimum number of shares.

 

2.5 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 Stock Options to the Corporation for
cancellation and to receive upon such surrender a cash payment equal to the
Spread applicable to such surrendered Stock 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 Stock 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 evaluation 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 Stock 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 Stock Option is
then exercisable by (ii) the number of shares by such Stock Option with respect
to which it has not theretofore been exercised.

 

2.6 TERMINATION OF
EMPLOYMENT. Unless
otherwise determined by the Committee, if the employment of the Stock Option
holder terminates for any reason other

 

4

 

than for cause, death, retirement or disability,
the Stock Option shall expire at the earlier of the end of its fixed term or
three months after the date of such termination, and until then shall remain
exercisable only to the extent exercisable at such termination unless otherwise
determined by the Committee.

 

If the employment of the
Stock Option holder is terminated for cause, all of the Stock Options then held
by the holder shall immediately expire concurrent with such termination. Unless
otherwise determined by the Committee, cause shall include but not be limited
to, wilful violation, breach or neglect of duty by the employee.

 

If the employment of the
Stock Option holder terminates due to retirement or disability, the Stock
Option will expire at the earlier of the end of its fixed term or three years
after the date of such termination, and until then will be exercisable in full,
regardless of any vesting schedule otherwise applicable, unless otherwise
determined by the Committee. (Amended November 19,
1986.)

 

Notwithstanding the
foregoing, the Compensation Committee may, in its sole discretion, change the
expiration date and/or vesting provisions of any Stock Option after termination
of the holder’s employment from that set forth above, provided, however, that
in no event will the Stock Option remain in effect after the end of its
original fixed term. (Added December 19, 1990.)

 

2.7 DEATH OF OPTIONEE. Unless otherwise determined by the
Committee, if any Stock Option holder dies while employed by the Corporation or
any Subsidiary, or during the period referred to in Paragraph 2.6 hereof, the
Stock Option shall expire at the earlier of the end of its fixed term or one
year after the date of such death. During such period after the death, the
Stock Option may be exercised by the person or persons to whom the Stock Option
holder’s right under the Stock Option shall pass by will or by the applicable
laws of descent and distribution, in full, regardless of any vesting schedule otherwise
applicable, unless otherwise determined by the Committee. (Amended
November 19, 1986.)

 

Notwithstanding the
foregoing, the Compensation Committee may, in its sole discretion, change the
expiration date and/or vesting provisions of any Stock Option after the holder’s
death from that set forth above, provided, however, that in no event will the
Stock Option remain in effect after the end of its original fixed term. (Added December 19, 1990.)

 

2A. DIRECTOR STOCK OPTIONS. (Added April 19,
1988.)

 

2A.1 ELIGIBILITY. All directors of the Corporation who are not employees of the
Corporation or any Subsidiary shall be eligible to receive Director Stock
Options, as set forth in this Section 2A. Notwithstanding the foregoing,
any director who is, or who during the preceding calendar year was, a member of
the Committee or any committee administering any other stock option, stock
appreciation, stock bonus or other stock plan of the Corporation or any
Subsidiary will not be eligible to receive Director Stock

 

5

 

Options hereunder if, in the
opinion of counsel for the Corporation, the receipt of Director Stock Options
will cause such director to cease to be a “disinterested person” with respect
to the Plan or any other stock option, stock appreciation, stock bonus or other
stock option, stock appreciation, stock bonus or other stock plan of the
Corporation or any Subsidiary pursuant to Rule 16b-3 of the Securities and
Exchange Commission, or will otherwise disqualify the Plan or any other such
plan from compliance with said rule.

(Added April 19, 1988.)

 

2A.2
GRANT OF DIRECTOR OPTIONS. Every eligible
director will receive Director Stock Options having a value equal to the
Retainer Amount for the year beginning on the date of each annual meeting of
shareholders. Director Stock Options shall be granted automatically to each
such eligible director on the business day following such annual meeting of
shareholders, without further action of the Committee or the Board. The number
of Director Stock Options granted hereunder shall be determined according to
the following formula, rounded to the nearest share: The Retainer Amount shall
be divided by the Fair Market Value of a share of stock on the date of the
annual meeting of shareholders immediately preceding the grant less $1.00. The “Retainer
Amount” shall be $3,000. (Added April 19, 1988.)

 

2A.3 STOCK OPTION PRICE. The purchase
price of stock pursuant to a Director Stock Option shall be $1.00 per share.

 

2A.4
OTHER TERMS OF DIRECTOR STOCK OPTIONS. Each Director Stock Option shall become exercisable six (6) months
after the date of grant. Unless otherwise determined by the Committee, if the
holder of Director Stock Options ceases to serve as a director of the
Corporation for any reason other than for cause, the Director Stock Options
shall expire at the end of their fixed term or three months after the date of
such termination, and until then shall be exercisable in full, regardless of
any vesting schedule otherwise applicable. Except as set forth in this Section 2A,
all terms and provisions of the Director Stock Options shall be as set forth in
the Plan with respect to Stock Options which are not Director Stock Options. (Added April 19, 1988; amended April 16, 1991; November 25,
1991.)

 

3. INCENTIVE STOCK OPTIONS.

 

3.1 GRANTS.
The Committee may, in its discretion, grant to Participants Incentive Stock
Options which shall be evidenced by Option agreements on the terms and
conditions set forth in Section 422A of the Internal Revenue Code and on
such other terms and conditions as are not inconsistent with the purposes and
provisions of the Plan. The Committee shall determine the number of shares, if
any, as to which Incentive Stock Options are to be granted in any year and the
number of shares as to which Incentive Stock Options are to be granted to each
Participant.

 

6

 

For Incentive Stock Options
granted on or before December 31, 1986, the total purchase price of all
Incentive Stock Options granted to any individual Participant in any calendar
year under this Plan shall not exceed $100,000, provided, however, that:

 

(a) One-half of any unused
portion of such $100,000 limitation may be carried over and added to the
$100,000 limitation during any of the succeeding three calendar years, and

 

(b) The amount of any unused
limit carry-over from any calendar year which may be taken into account in any
succeeding calendar year shall be reduced by the amount of such carry-over
which was used in prior calendar years, and

 

(c) The total purchase price
of Incentive Stock Options granted during any calendar year shall be treated as
first using up the $100,000 limit and then shall be treated as using up the
unused limit carry-over to such year in the order of the calendar years in
which the carry-overs arose.

 

For Incentive Stock Options
granted on or after January 1, 1987, the aggregate fair market value
(determined at the time the Incentive Stock Option is granted) of the stock
with respect to which Incentive Stock Options are exercisable for the first
time by a Participant during any calendar year (under all Incentive Stock
Option plans of the Participant’s employer corporation and its parent and
subsidiary corporations) shall not exceed $100,000. (Amended December 17,
1986.)

 

3.2 OPTION PRICE. The purchase price of stock covered by each
Incentive Stock Option shall be determined by the Committee but shall not be
less than 100% of the Fair Market Value of such stock on the date of the
granting of the Incentive Stock Option.

 

3.3 TERM OF OPTION. Each Incentive Stock Option and all rights
or obligations thereunder shall be expressed to expire on such date as the
Committee may determine, but not later than the tenth anniversary of the date
on which the Incentive Stock Option is granted, and shall be subject to earlier
termination as hereinafter provided.

 

3.4 EXERCISE OF OPTION. With respect to Incentive Stock Options
granted before January 1, 1987, in accordance with Section 422A(b)(7)
of the Code of 1954, as amended, no Incentive Stock Option shall be exercisable
while there is outstanding any Incentive Stock Option issued under this Plan or
any other Plan which was granted before the granting of such Incentive Stock
Option to a Participant to purchase Common Stock of the Corporation or the
parent or a Subsidiary of the Corporation or of a predecessor company of the
Corporation or a parent or subsidiary of the Corporation. (Amended
March 5, 1986 and March 25, 1987.)

 

If shares acquired pursuant
to exercise of an Incentive Stock Option are disposed of within two years of
grant or within one year of exercise, the Incentive Stock

 

7

 

Option shall be treated as a
nonqualified option (Stock Option) with respect to tax consequences for the
Corporation and the Optionee.

 

An Incentive Stock Option
may be exercised according to its terms as determined by the Committee, by
giving written notice to the Corporation specifying the number of shares to be
purchased, accompanied by the payment in cash, equivalent or through exchange
of previously acquired shares or a combination of cash and previously acquired
shares which will equal the total purchase price therefor. Any shares so
assigned and delivered to the Corporation in payment or partial payment of the
purchase price shall be valued at their Fair Market Value on the exercise date

 

No Incentive Stock Option or
installment thereof shall be exercisable except in respect of whole shares, and
fractional share interests shall be disregarded. The Committee may, by the
terms of the Incentive Stock Option, require any partial exercise to be with
respect to a specified minimum number of shares.

 

3.5 TERMINATION OF
EMPLOYMENT. If the
employment of the Incentive Stock Option holder terminates for any reason other
than for cause, death, retirement, or disability, the Incentive Stock Option
shall expire at the earlier of the end of its fixed term or three months after
the date of such termination, and until then shall remain exercisable only to
the extent exercisable at such termination unless otherwise determined by the
Committee. If such termination occurs by reason of disability or retirement,
such three-month period will be extended to three years and such Incentive
Stock Option may be exercised in full, regardless of any vesting schedule otherwise
applicable, unless otherwise determined by the Committee. However, failure to
exercise an Incentive Stock Option within three months of the date the Optionee
ceases to be employed by the Corporation or a Subsidiary by reason of
retirement or within one year of the date the Optionee ceases to be employed by
reason of disability shall cause an Incentive Stock Option to cease to be
treated as an Incentive Stock Option for purposes of Section 421 of the
Internal Revenue Code. (Amended November 19, 1986.)

 

If the employment of the
Incentive Stock Option holder is terminated for cause, all of the Incentive
Stock Options then held by the holder shall immediately expire concurrent with
such termination. Cause shall include, but not be limited to, wilful violation,
breach or neglect of duty by the employee.

 

3.6 DEATH OF EMPLOYEE. In the event of termination due to death,
the Incentive Stock Option shall expire at the earlier of the term of the
Incentive Stock Option or one year after termination due to such causes. During
such period after death an Incentive Stock Option may be exercised in full,
regardless of any vesting schedule otherwise applicable, unless otherwise
determined by the Committee, by the person or persons to whom the Incentive
Stock Option holder’s right shall pass by will or by the applicable laws of
descent and distribution. (Amended November 19, 1986.)

 

8

 

4. STOCK APPRECIATION RIGHTS.

 

4.1 GRANTS.
The Committee may, in its discretion, grant Stock Appreciation Rights to
selected Participants. Such rights shall be evidenced by Stock Appreciation
Rights agreements on the terms and conditions set forth in the Plan and on such
other terms and conditions as are not inconsistent with the purposes and
provisions of the Plan. Each Stock Appreciation Right may relate to a specific
Option granted under the Plan or be unrelated to an Option. Stock Appreciation
Rights granted in relation to a specific Option shall be granted either
concurrently or at such later time as determined by the Committee.

 

4.2
STOCK APPRECIATION RIGHTS PERIOD. Each Stock Appreciation Right related to an Option and all rights or
obligations thereunder shall expire upon the expiration of the related Option.
Stock Appreciation Rights unrelated to an Option and all rights or obligations
thereunder shall expire on such date as the Committee may determine. In no
event may a Stock Appreciation Right, related or unrelated to an Option, be
exercised later than the tenth anniversary of the date on which the Stock
Appreciation Right is granted, and shall be subject to earlier termination as
hereinafter provided.

 

4.3
EXERCISE OF STOCK APPRECIATION RIGHTS. Stock Appreciation Rights shall be exercisable at such time as may be
determined by the Committee provided that Stock Appreciation Rights granted in
connection with an Option shall not be exercised prior to the time that the
related Option may be exercised nor after the related Option expires.

 

Upon exercise of a Stock
Appreciation Right granted in relation to an Option, the number of shares
subject to exercise under the related Option shall automatically be reduced by
the number of shares represented by the Option or portion thereof which is
surrendered. Shares subject to Options, or portions thereof, which have been
surrendered in connection with the exercise of Stock Appreciation Rights, shall
not be available for subsequent Option grants under the Plan.

 

A Stock Appreciation Right
granted in relation to an Incentive Stock Option shall be exercisable only when
the Fair Market Value of the underlying Incentive Stock Option exceeds the
exercise price of that Option.

 

All Stock Appreciation
Rights unrelated to an Option not exercised by the anniversary of the tenth
year after the date such Rights were granted shall expire and automatically be
paid to the Stock Appreciation Right holder in the amount of the aggregate value
equal to the product of the excess of the Fair Market Value on the exercise
date of one share over the stock price per share times the number of Stock
Appreciation Rights awarded.

 

Each holder of a Stock
Appreciation Right agrees to give the Committee prompt written notice of an
election made by such holder to exercise said Stock Appreciation Rights subject
to the approval of the Committee.

 

9

 

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

 

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

 

4.4 PAYMENTS. Upon the exercise of a Stock Appreciation
Right and surrender of any related Option, the Corporation shall deliver to the
person an amount equivalent to the excess of Fair Market Value of a share of
stock at the exercise date over the Fair Market Value of such share on the date
the Stock Appreciation Right was awarded, in either cash, Common Stock or a
combination thereof. The Committee shall determine whether cash shall be given
in lieu of fractional shares of Common Stock. No fractional shares will be
issued.

 

The Committee shall place a
maximum limitation which will be payable upon exercise of a Stock Appreciation
Right of up to 200% of the Fair Market Value (or lesser percentage as the
Committee may determine) of a share of Common Stock on the date the Stock
Appreciation Right is granted. Such limitation, however, must be determined as of
the date of the grant, and noted on the instrument evidencing the Participant’s
Stock Appreciation Right granted hereunder.

 

4.5 TERMINATION OF
EMPLOYMENT. In the
event a Participant ceases to be an employee of the Corporation for any reason,
any Stock Appreciation Right shall be exercisable only to the extent that any
related Option is exercisable under the applicable provisions of Paragraphs
2.6, 2.7, 3.5, and 3.6 of the Plan. (Amended November 19,
1986.)

 

Stock Appreciation Rights
unrelated to Options shall expire at the earlier of the end of its fixed term
or three months after the date of termination due to any reason other than for
cause, death, retirement, or disability, and only to the extent exercisable at
such termination unless otherwise determined by the Committee. If the
employment of the Stock Appreciation Right holder terminates due to retirement
or disability, the Stock Appreciation Right will expire at the earlier of the
end of its fixed term or three years after the date of such termination and
until then will be exercisable in full, regardless of any vesting schedule otherwise
applicable, unless otherwise determined by the Committee.

 

If the employment of the
holder of Stock Appreciation Rights is terminated for cause, all of the Stock
Appreciation Rights then held by the holder shall immediately expire concurrent
with such termination. Cause shall include, but not be limited to, wilful
violation, breach or neglect of duty by the employee.

 

10

 

4.6 DEATH OF EMPLOYEE. If the holder of Stock Appreciation Rights
unrelated to Options dies, the Stock Appreciation Rights shall expire at the
earlier of the end of its fixed term or one year after the date of such death
and until then shall remain exercisable in full, regardless of any vesting schedule otherwise
applicable, unless otherwise determined by the Committee. All Stock
Appreciation Rights related to Options shall expire based on the termination
conditions of the underlying Options. (Amended November 19,
1986.)

 

5. TAX OFFSET BONUS RIGHTS.

 

5.1 GRANTS.
The Committee may, in its discretion, grant Tax Offset Bonus Rights to selected
Participants. Such rights shall be evidenced by Tax Offset Bonus Rights
agreements on the terms and conditions set forth in the Plan, which agreements
shall specify the amount or method of calculating the amount of the rights
being granted and may contain such other terms and conditions as are not
inconsistent with the purposes and provisions of the Plan. Each Tax Offset Bonus
Right must relate to a specific Nonqualified Stock Option granted under Section 2
of the Plan. Tax Offset Bonus Rights granted in relation to a specific
Nonqualified Stock Option shall be granted either concurrently or at such later
time as determined by the Committee. The amount of any Tax Offset Bonus Right
may be, but is not required to be, calculated as a specified percentage of the
excess of the Fair Market Value of a share of the 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. (Amended
March 5, 1986.)

 

5.2 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.

 

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

 

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

 

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

 

11

 

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.

 

5.4 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 Committee shall determine. No
fractional shares will be issued. (Amended March 5,
1986.)

 

5.5 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 Paragraphs 2.6 and 2.7 of the
Plan.

(Amended November 19,
1986.)

 

If the employment of the
holder of Tax Offset Bonus Rights is terminated for cause, all of the Tax
Offset Bonus Rights then held by the holder shall immediately expire concurrent
with such termination. Unless otherwise determined by the Committee, cause
shall include, but not be limited to, wilful violation, breach or neglect of
duty by the employee.

 

6. OTHER PROVISIONS.

 

6.1
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of a reorganization, merger,
recapitalization, reclassification, stock split-up, stock dividend, stock
consolidation or otherwise, an appropriate and proportionate adjustment shall
be made in the number and kind of shares as to which Options and Rights may be
granted. A corresponding adjustment changing the number or kind of shares, the
exercise price per share allocated to unexercised Options and Rights or
portions thereof which shall have been granted or awarded prior to any such
change, shall likewise be made. Any such adjustment, however, shall be made
without change in the total price applicable to the unexercised portion of the
Option or Right.

 

In adjusting Common Stock to
reflect such changes, or in determining that no such adjustment is necessary,
the Board may rely on the advice of counsel and accountants of the Corporation, and the determination of the Board shall be
conclusive. No fractional shares of stock shall be issued under the Plan on
account of any such adjustment.

 

In the event (a) any person,
corporation or entity other than the Corporation shall acquire more than 70% of
the Corporation’s Common Stock through a tender offer, exchange offer or
otherwise; or (b) the Corporation shall be liquidated or

 

12

 

dissolved following a sale
of all or substantially all of its assets; or (c) the Corporation shall not be
the surviving corporation resulting from any merger or consolidation to which
it is a party, any then outstanding Stock Option, Incentive Stock Option, or
Stock Appreciation Right, or Tax Offset Bonus Right held by an employee of the
Corporation or any subsidiary of the Corporation shall immediately become
exercisable to the full extent theretofore not exercised, but in no event after
ten years from the date of such grant, provided, however, that the Board of
Directors may, by unanimous resolution, provide that such maturity shall not result
from an event in clause (c) above.

 

In the event of a merger or
consolidation to which the Corporation is a party, if the Board of Directors
provides that any then outstanding Options shall not become exercisable to the
full extent theretofore not exercised, the Board will make provision in
connection with such transaction for the continuance of the Plan and the
assumption of Options and Rights theretofore granted, or the substitution for
such with new Options and Rights 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.

 

6.2 NO GUARANTEE OF
EMPLOYMENT. Nothing
in the Plan or any Option or Right shall interfere with or limit in any way the
right of the Corporation or any of its Subsidiaries to terminate any
Participant’s employment at any time, nor confer upon any Participant any right
to continue in the employ of the Corporation or any of its Subsidiaries, except
to the extent as is otherwise provided in any employment contract with any such
Participant.

 

6.3 NON-TRANSFERABILITY. An Option or Right granted under this Plan
shall, by its terms, be nontransferable by the Option or Right holder other
than by will or the laws of descent and distribution, and shall be exercisable
during the lifetime only by the Option or Right holder.

 

6.4 RIGHTS OF A SHAREHOLDER. The holder of such Option shall have no
rights as a shareholder with respect to any shares subject to such Option until
the date of issuance of a stock certificate to the Participant for such shares
and then only measured by the shares actually issued.

 

6.5 GOVERNMENT REGULATIONS. The Plan, the grant and exercise of Options
and Rights shall be subject to all applicable rules and regulations of
government or other authorities.

 

6.6
AMENDMENT AND DISCONTINUANCE OF THE PLAN. The Committee may amend or discontinue the
Plan as it shall from time to time consider desirable, provided that no
amendment shall, without further approval by the holders of a majority of the
shares which are represented in person or by proxy and entitled to vote on the
subject at a meeting of stockholders of the Corporation, change the terms of
the Plan so as to (a) increase the maximum number of shares for which Options and
Rights may be granted in the aggregate (other than upon adjustments upon
changes in capitalization as

 

13

 

provided in Paragraph 5.1
hereof), (b) reduce the minimum Option price, (c) extend the maximum Option
period, (d) increase the Retainer Amount for the purpose of Section 2A, or
(e) permit the grant of Director Stock Options to employees of the Corporation
or any Subsidiary, or to any person other than a director of the Corporation.
Notwithstanding any other provisions hereof, the Plan shall not be amended more
frequently than once every six (6) months with respect to the persons eligible
to receive Director Stock Options, the purchase price of stock pursuant to
Director Stock Options or the formula set forth in Section 2A.2 that
determine the number of Director Stock Options granted to any optionee. (Amended April 19, 1988; and April 16, 1991.)

 

6.7
EFFECTIVE DATE AND DURATION OF PLAN. The Plan shall be effective upon approval by the Committee and adopted
by the Board of Directors and subject to approval hereof by the holders of a
majority of the shares which are represented in person or by proxy and entitled
to vote on the subject at a meeting of the shareholders of the Corporation,
provided, however, that the Committee or the Board of Directors may grant
Options or Rights under this Plan prior to said shareholder approval provided
that any such grant or grants are made conditioned on and subject to said
shareholder approval. Unless previously terminated by the Board of Directors,
the Plan shall terminate on the tenth anniversary of its adoption by the Board
of Directors.

 

14

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