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AMENDED AND RESTATED 1991 STOCK OPTION PLAN
OF
WESTCORP
1. Purpose. The purpose of this Stock Option Plan is to advance the
interests of the Company by encouraging and enabling the acquisition of a larger
personal proprietary interest in the Company by employees of the Company and its
Subsidiaries upon whose judgment and keen interest the Company is largely
dependent for the successful conduct of its operations. It is anticipated that
the acquisition of such proprietary interest in the Company will stimulate the
efforts of employees on behalf of the Company and its Subsidiaries and
strengthen their desire to remain with the Company and its Subsidiaries. It is
also expected that the opportunity to acquire such a proprietary interest will
enable the Company and its Subsidiaries to attract desirable personnel.
2. Definitions. When used in this Plan, unless the context
otherwise requires:
"Board of Directors" shall mean the Board of Directors of the
Company and, so long as Western Financial Bank ("Bank") or WFS Financial Inc
("WFS") is a Subsidiary of the Company, the Board of Directors of each of the
Bank and WFS.
"Committee" shall have the meaning set forth at Paragraph 3
hereof.
"Company" shall mean Westcorp, a California corporation.
"Director" shall mean a member of the Board of Directors.
"Employee" shall mean any full-time or part-time employee of the
Company or any Subsidiary.
"Fair Market Value" on a specified date shall mean the closing
price for a Share on the stock exchange, if any, on which Shares are primarily
traded, but if no Shares were traded on such date, then on the last previous
date on which a Share was so traded, or, if Shares are not primarily traded on a
stock exchange, the average of the bid and asked closing prices at which one
Share is traded on the over-the-counter market, as reported on the National
Association of Securities Dealers Automated Quotation System, or, if none of the
above is applicable, the value of a Share as established by the Board of
Directors for such date using any reasonable method of valuation.
"Incentive Stock Option" shall mean an incentive stock option
within the meaning of Internal Revenue Code Section 422.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as it may be amended.
"Option Certificate" shall have the meaning set forth at
Paragraph 5.5 hereof.
"Options" shall mean the stock options issued pursuant to this
Plan.
"Plan" shall mean this 1991 Stock Option Plan of the Company, as
adopted by the Board of Directors as of April 16, 1991, as such Plan from time
to time may be amended. "Share" shall mean a share of common stock of the
Company, par value $1.00.
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if, at the relevant date, each of the
corporations in the chain other than the last corporation in the unbroken chain
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owns stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
3. Administration of the Plan. The Plan shall be administered by
the Compensation Committee of the Board of Directors of the Company (the
"Committee"). Each member of the Committee shall hold office until his successor
is designated as a member of the Committee by the Board of Directors. Any
vacancy in the Committee may be filled by a resolution adopted by a majority of
the full Board of Directors. Any member of the Committee may be removed at any
time, with or without cause, by resolution adopted by a majority of the full
Board of Directors. A member of the Committee may resign from the Committee at
any time by giving written notice to the President or Corporate Secretary of the
Company, and unless otherwise specified therein, such resignation shall take
effect upon receipt thereof. The acceptance of such resignation shall not be
necessary to make it effective. The Committee shall establish such rules and
procedures as are necessary or advisable to administer the Plan. At any time
that no Committee is in existence, the Board of Directors shall constitute the
Committee and shall perform the functions and hold the powers of the Committee.
4. Participants. The class of employees who are potential
recipients of Incentive Stock Options to be granted under this Plan shall
consist of the Employees of the Company or a Subsidiary, including Employees who
are also Directors, as determined by the Committee. Options that are not
Incentive Stock Options may be granted to Employees of the Company or a
Subsidiary or to Directors. The Employees or Directors to whom options are
granted under this Plan and the number of Shares subject to each such Option
shall be determined by the Committee, in its sole discretion, subject, however,
to the terms and conditions of this Plan.
5. Shares; Grant of Options.
5.1 The Committee may, but shall not be required to, grant,
in accordance with this Plan, Options to purchase an aggregate of up to
3,000,000 Shares (as such number may be adjusted pursuant to Paragraph 13.1),
which may be either treasury Shares or authorized but unissued Shares.
5.2 An Option granted under this Plan shall be deemed to be
an Incentive Stock Option unless the Committee, in its sole discretion,
designates otherwise. Options which are designated not to be Incentive Stock
options shall not be treated as such for purposes of this Plan and the Internal
Revenue Code.
5.3 If any Option shall expire or terminate for any reason
without having been exercised in full, the unpurchased Shares subject thereto
may again be made subject to Options under the Plan.
5.4 Nothing herein contained shall be construed to prohibit
the grant of Options at different times to the same employee.
5.5 The form of Option shall be determined from time to time
by the Committee. The terms and provisions of the Option shall be set forth in
writing in a certificate or agreement (the "Option Certificate") signed by the
Option holder and on behalf of the Company by the Chairman of the Board or the
President or a Vice President or the Corporate Secretary of the Company. The
Option Certificate shall state whether or not the Option is an Incentive Stock
Option. The Committee may, in its sole discretion, at the time an Option is
granted, establish one or more conditions to the exercise of an Option, provided
that such condition or conditions shall not be inconsistent with Section 422 of
the Internal Revenue Code.
6. Price. The exercise price per Share of the Shares to be
purchased pursuant to any Option shall be fixed by the Committee at the time an
Option is granted; provided, however, that, in no event shall the exercise price
be less than the Fair Market Value of a Share on the day on which the Option is
granted.
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7. Duration of Options. The duration of any Option granted under
this Plan shall be for a period fixed by the Committee but not more than ten
(10) years from the date upon which the Option is granted.
8. Limitations Regarding Ten Percent Stockholders. No Option which
is intended to qualify as an Incentive Stock Option may be granted under this
Plan to any Employee who, at the time the Option is granted, owns, or is
considered as owning, within the meaning of Section 422 of the Internal Revenue
Code, shares possessing more than ten percent (10%) of the total combined voting
power or value of all classes of stock of the Company or any Subsidiary, unless
(i) the exercise price under such Option is at least one hundred and ten percent
(110%) of the Fair Market Value of a Share on the date such Option is granted,
and (ii) the duration of the Option is not more than five (5) years from the
date on which the Option is granted.
9. Option Holder Not a Stockholder. An Option holder shall not be
deemed to be the holder of, or to have any of the rights of, a stockholder with
respect to, any Shares subject to such Option unless and until the Option shall
have been exercised pursuant to the terms thereof, the Company shall have issued
and delivered Shares to the Option holder, and said holder's name shall have
been entered as a stockholder of record on the books of the Company. Thereupon,
said holder shall have full voting, dividend and other ownership rights with
respect to such Shares.
10. Non-transferability of Options. Options and all rights
thereunder shall be non-transferable and non-assignable by the holder thereof
and shall be exercisable only by the holder, except to the extent that the
representative of the estate or the heirs of a deceased Option holder may be
permitted to exercise them.
11. Exercise of Options.
11.1 Except as otherwise provided herein, an Option, after
the grant thereof, shall be exercisable by the holder at such rate and times as
may be fixed by the Committee at the time the Option is granted; provided,
however, that no Option may be exercised in part or in full prior to the
approval of the Plan by a majority vote of the stockholders of the Company as
provided in Paragraph 17 of this Plan. Unless otherwise determined by the
Committee, (i) no Option may be exercised until the first anniversary of the
date on which the Option was granted, (ii) 25% of the Shares subject to an
Option may be purchased on or after the first anniversary of the date of grant,
and (iii) an additional 25% of the Shares subject to the Option may be purchased
on or after each of the next succeeding three (3) anniversaries of the date of
grant.
11.2 An Option shall be exercised by the delivery of a
written notice duly signed by the Option holder thereof (or the representative
of the estate or the heirs of a deceased Option holder) to such effect, together
with the Option Certificate and either cash, a certified check payable to the
order of the Company or Shares duly endorsed over to the Company (which Shares
shall be valued at their Fair Market Value as of the date preceding the day of
such exercise) or any combination of such methods of payment, which together
amount to the full exercise price of the Shares purchased pursuant to the
exercise of the Option, to the Corporate Secretary or an officer of the Company
who has been designated for the purpose of receiving the same. No Option may be
granted pursuant to the Plan or exercised at any time when such Option, or the
granting or exercise thereof, may result in the violation of any law or
governmental order or regulation.
11.3 Within a reasonable time after exercise of an option,
the Company shall cause to be delivered to the person entitled thereto a
certificate for the Shares purchased pursuant to the exercise of the Option. If
the Option shall have been exercised with respect to less than all of the Shares
subject to the Option, the Company shall also cause to be delivered to the
person entitled thereto a new Option Certificate in replacement of the Option
Certificate surrendered at the time of the exercise of the Option, indicating
the number of Shares with respect to which the Option remains available for
exercise, or the original Option Certificate shall be endorsed to give effect to
the partial exercise thereof.
11.4 Notwithstanding any provision in the Plan to the
contrary, with respect to an Option which is intended to be an Incentive Stock
Option, to the extent that the Fair Market Value of the Shares (determined as of
the date of grant) with respect to which such Option (and any other Incentive
Stock Option granted under the Plan or any other
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stock option plan adopted by the Company or any Subsidiary) first becomes
exercisable in any calendar year exceeds $100,000.00 the Option shall not be an
Incentive Stock Option.
11.5 All or any part of any remaining unexercised Options
granted to any person may, after approval of the Plan by the stockholders of the
Company as provided in Paragraph 17 of this Plan, be exercised in full, whether
or not then exercisable, upon (a) the attainment by the holder of age 65,
provided the holder is still an Employee of the Company or a Subsidiary or is
still a Director; (b) the holder's death while in the employ of the Company or a
subsidiary or while a director; or (c) upon the occurrence of such special
circumstance or event as, in the sole discretion of the Committee, merits
special consideration.
12. Termination of employment or Service.
12.1 All or any part of any Option which is intended to be an
Incentive Stock Option, to the extent unexercised, shall terminate immediately
upon the cessation or termination for any reason of the Option holder's
employment by the Company and all Subsidiaries (including circumstances under
which a Subsidiary employing the Option holder ceases to be a Subsidiary or is
liquidated and the Option holder does not continue to be employed by the Company
or another Subsidiary), regardless of whether the Option holder is or remains a
Director, except that the Option holder shall have until the end of the three
(3) months following the cessation or termination of his employment with the
Company and all Subsidiaries, and no longer, to exercise any unexercised Option
that he could have exercised on the day on which such employment ceased or
terminated; provided, that such exercise must be accomplished prior to the
expiration of the term of such Option.
12.2 All or any part of any Option which is not intended to
be an Incentive Stock Option, to the extent unexercised, shall terminate
immediately upon (i) the cessation or termination for any reason of the Option
holder's employment by the Company and all Subsidiaries (including circumstances
under which a Subsidiary employing the Option holder ceases to be a Subsidiary
or is liquidated and the Option holder does not continue to be employed by the
Company or another Subsidiary), unless the Option holder as of the date of such
cessation or termination and immediately thereafter is a Director, or (ii) upon
the Option holder ceasing to be a Director, unless on the date of such cessation
and immediately thereafter he is an Employee of the Company or a Subsidiary;
except that the Option holder shall have until the end of three (3) months
following the cessation or termination of employment or following his ceasing to
be a Director, respectively, and no longer, to exercise any unexercised Option
that he could have exercised on the day on which such employment ceased or
terminated, or he ceased to be a Director, respectively; provided, that such
exercise must be accomplished prior to the expiration of the term of such
Option.
12.3 Notwithstanding Paragraphs 12.1 and 12.2, if the
cessation or termination of an Option holder's employment or an Option holder's
ceasing to be a Director is due to the permanent and total disability of the
Option holder within the meaning of Internal Revenue Code Section 22(e)(3), the
existence of which permanent and total disability shall be determined by the
Committee in its sole discretion (which determination by the Committee shall be
conclusive), the Option holder shall have the privilege of exercising any Option
which is unexercised at the time of such cessation or termination, but only to
the extent that such Option is then exercisable, within twelve (12) months of
such cessation or termination: provided, however, that such exercise must be
accomplished prior to the expiration of the term of such Option.
12.4 Notwithstanding Paragraphs 12.1 and 12.2, if the
cessation of an Option holder's employment or an Option holder's ceasing to be a
Director is due to death, the representative of the estate or the heirs of a
deceased Option holder, shall have the privilege of exercising any Option which
is unexercised at the time of such death, but only to the extent that such
Option is then exercisable, within twelve (12) months of the Option holder's
death; provided, however, that such exercise must be accomplished prior to the
expiration of the term of such Option.
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12.5 Notwithstanding Paragraphs 12.1 and 12.2, if the
employment of any Option holder with the Company or a Subsidiary shall be
terminated because of the Option holder's violation of the duties of such
employment with the Company or a Subsidiary as he may from time to time have,
the existence of which violation shall be determined by the Committee in its
sole discretion (which determination by the Committee shall be conclusive), all
unexercised Options of such Option holder shall terminate immediately upon such
termination, and an Option holder whose employment with the Company or a
Subsidiary is so terminated shall have no right after such termination to
exercise any unexercised Option he might have exercised prior to the termination
of his employment.
12.6 Nothing contained herein or in the Option Certificate
shall be construed to confer on any Employee any right to continue in the employ
of the Company or any Subsidiary or derogate from any right of the Company and
any Subsidiary to retire, request the resignation of or discharge such Employee,
at any time, with or without cause.
13. Changes in Securities or Corporate Organization.
13.1 Adjustment of Shares. If prior to the complete exercise
of any Option there shall be declared and paid a stock dividend upon the common
stock of the Company or if the common stock of the Company shall be split up,
converted, exchanged, reclassified, or in any way substituted for, the Option,
to the extent that it has not been exercised, shall entitle the holder thereof
upon the future exercise of the Option to such number and kind of securities or
other property subject to the terms of the Option to which he would have been
entitled had he actually owned the Shares subject to the unexercised portion of
the Option at the time of the occurrence of such stock dividend, split-up,
conversion, exchange, reclassification or substitution; and the aggregate
purchase price upon the future exercise of the Option shall be the same as if
the originally optioned Shares were being purchased thereunder. Any fractional
shares or securities payable upon the exercise of the Option as a result of such
adjustment shall be payable in cash based upon the Fair Market Value of such
shares or securities at the time of such exercise. If any such event should
occur, the number of Shares with respect to which Options remain to be issued,
or with respect to which Options may be reissued under the Plan shall be
adjusted in a similar manner.
13.2 Acquisition or Reorganization. In the event of an
acquisition by a person or entity, or a group of persons or entities acting in
conjunction, of more than fifty percent (50%) of the issued and outstanding
shares of stock of the Company having ordinary voting power (excluding
acquisitions by any person or entity or a group of persons or entities holding
more than 50% of such stock on April 16, 1991), or a sale, lease, transfer or
other disposition of all or substantially all of the assets of the Company, or a
merger or consolidation of the Company into or with any other person or entity
which results in the acquisition of the Company by a non-affiliated person or
entity, or any other event which would similarly constitute an acquisition of
the Company by a non-affiliated person or entity, in the event provision is not
made in the transaction for the continuance of the Plan and for the assumption
of Options theretofore granted or the substitution for those Options of new
options covering the securities of a successor corporation or a parent or
subsidiary thereof, or in the event such provision is made but the Company has
not agreed to it, an Option holder shall be entitled, during the period thirty
(30) days prior to the effective date of the consummation of any such
transaction, to purchase, in whole or in part, the full number of Shares under
the Option which the Option holder would otherwise have been entitled to
purchase during the remaining term of the Option and without regard to exercise
dates or any otherwise applicable exercise restrictions set forth in the Option
Certificate or the Plan (other than the expiration date of the Option). To the
extent that any such exercise relates to stock that is not otherwise available
for purchase through the exercise of the Option by the Option holder at that
time, the exercise shall be contingent upon the consummation of the transaction.
14. Issuance of Shares and Compliance with Securities Laws. Before
issuing and delivering any Shares to an Option holder, the Company may: (i)
require the holder to give satisfactory assurances that the Shares are being
purchased for investment and not with a view to resale or distribution, and will
not be transferred in violation of applicable securities laws; (ii) restrict the
transferability of such Shares and require a legend to be endorsed on the
certificates representing the Shares; and (iii) condition the exercise of an
Option or the issuance and delivery of Shares upon the
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listing, registration or qualification of the Shares covered by such Option upon
a securities exchange or under applicable securities laws.
15. Income Tax Withholding. If the Company or a Subsidiary shall be
required to withhold any amounts by reason of any federal, state or local tax
rules or regulations in respect of the payment of cash or the issuance of Shares
pursuant to the exercise of an Option, the Company or the Subsidiary shall be
entitled to deduct and withhold such amounts from any cash payments to be made
to the Option holder. In any event, the holder shall make available to the
Company or Subsidiary, promptly when requested by the Company or such
Subsidiary, sufficient funds to meet the requirements of such withholding and
the Company or Subsidiary shall be entitled to take and authorize such steps as
it may deem advisable in order to have such funds made available to the Company
or Subsidiary out of any funds or property due or to become due to the holder.
16. Administration and Amendment of the Plan. Except as hereinafter
provided, the Board of Directors or the Committee may at any time withdraw or
from time to time amend the Plan as it relates to, and the terms and conditions
of, any Options not theretofore granted, and the Board of Directors or the
Committee, with the consent of each adversely affected Option holder (if any),
may at any time withdraw or from time to time amend the Plan as it relates to,
and the terms and conditions of, any outstanding Option. Notwithstanding the
foregoing, any amendment by the Board of Directors or the Committee which would
increase the number of Shares issuable under Options or change the class of
employees to whom Options which are intended to be Incentive Stock Options may
be granted or the class of persons to whom Options which are not intended to be
Incentive Stock Options may be granted, shall be subject to the approval of the
stockholders of the Company within one (1) year of the adoption of such
amendment.
Determinations of the Committee as to any question which may
arise with respect to the interpretation of the provisions of the Plan and
Options shall be final. The Committee may authorize and establish such rules,
regulations and revisions thereof, not inconsistent with the provisions of the
Plan, as it may deem advisable to make the Plan and Options effective or provide
for their administration, and may take such other action with regard to the Plan
and Options as it shall deem desirable to effectuate their purpose.
17. Effective Date of the Plan. This Plan is conditioned upon its
approval by the stockholders of the Company at any special or annual meeting of
the stockholders on or before April 15, 1992, by the vote of the holders of a
majority of the outstanding Shares of the Company, voting either in person or by
proxy, at a duly held stockholders' meeting; except that this Plan is adopted
and approved by the Board of Directors effective April 16, 1991 to permit the
grant of Options prior to the approval of the Plan by the stockholders of the
Company as aforesaid. In the event that this Plan is not approved by the
stockholders of the Company as aforesaid, this Plan and any Options granted
hereunder shall be void and of no force or effect.
18. Final Issuance Date. No Option shall be granted under the Plan
after April 15, 2001.
19. Gender. Throughout this Plan, unless the context otherwise
requires, the masculine gender includes the feminine and neuter, and the neuter
gender includes the masculine and feminine.
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