UMPQUA HOLDINGS CORPORATION
2013 INCENTIVE PLAN
1.PURPOSE. The purpose of this Plan is to enable the Company, and any Affiliate,
to motivate, attract and retain the types of Employees, Consultants and
Directors who will contribute to the Company’s success by providing incentives
that offer an opportunity to participate in the Company’s future performance and
align the interests of Employees, Consultants and Directors with those of the
shareholders of the Company. Capitalized terms not defined elsewhere in the text
are defined in Section 2.
2.    DEFINITIONS.
“Affiliate” means a corporation or other entity that, directly or through one or
more intermediaries, controls, is controlled by or is under common control with,
the Company.
“Applicable Laws” means the requirements related to or implicated by the
administration of the Plan under applicable state corporate law, United States
federal and state securities laws, the Code, any stock exchange or quotation
system on which the shares of Common Stock are listed or quoted, and the
applicable laws of any foreign country or jurisdiction where Awards are granted
under the Plan.
“Award” means any right granted under the Plan, including an Incentive Stock
Option, a Non-qualified Stock Option, a Stock Appreciation Right, a Restricted
Award, a Performance Share Award or a Performance Compensation Award.
“Award Agreement” means a written agreement, contract, certificate or other
instrument or document evidencing the terms and conditions of an individual
Award granted under the Plan which may, in the discretion of the Company, be
transmitted electronically to any Participant. Each Award Agreement shall be
subject to the terms and conditions of the Plan and may contain such other
provisions not inconsistent with this Plan including, without limitation,
restrictions upon the exercise of the Awards, as the Committee may deem
advisable.
“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular “person” (as that term is used in Section 13(d)(3)
of the Exchange Act), such “person” shall be deemed to have beneficial ownership
of all securities that such “person” has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only after the passage of time. The terms “Beneficially Owns” and
“Beneficially Owned” have a corresponding meaning.
“Board” means the Board of Directors of the Company, as constituted at any time.
“Cause” means:
With respect to any Employee or Consultant:
(a)    if the Employee or Consultant is a party to an employment or service
agreement with the Company or its Affiliates and such agreement provides for a
definition of Cause, the definition contained therein; or

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(b)    if no such employment or service agreement exists, or if such employment
or service agreement does not define Cause: (i) dishonest or fraudulent conduct
with respect to the performance of duties with the Company or an Affiliate; (ii)
conduct that materially discredits or is reasonably likely to result in harm to
the reputation or business of the Company or an Affiliate, including but not
limited to conviction or a plea of guilty or no contest to a felony or crime
involving moral turpitude; (iii) willful misconduct or gross negligence in
performance of duties with the Company or an Affiliate; (iv) an order or
directive from a state or federal banking regulatory agency requesting or
requiring removal of Employee or a finding by any such agency that Employee’s
performance threatens the safety or soundness of the Company or any Affiliate;
(v) material violation of state or federal securities or banking laws; or (vi) a
material breach of fiduciary duties to the Company or any Affiliate.
With respect to any Director, a determination by a majority of the disinterested
Board members that the Director has engaged in any of the following: (i)
malfeasance in office; (ii) gross misconduct or neglect; (iii) false or
fraudulent misrepresentation inducing the director’s appointment; (iv) willful
conversion of corporate funds; (v) repeated failure to participate in Board
meetings on a regular basis despite having received proper notice of the
meetings in advance; or (vi) an order or directive from a state or federal
banking regulatory agency requesting or requiring removal of Director or a
finding by any such agency that Director’s performance threatens the safety or
soundness of the Company or any Affiliate.
The Committee, in its absolute discretion, shall determine the effect of all
matters and questions relating to whether a Participant has been discharged for
Cause.
“Change in Control”
(a)    One Person (or more than one Person acting as a group) acquires (or has
acquired during the twelve-month period ending on the date of the most recent
acquisition) ownership of stock of the Company that, together with the stock
held by such person or group, constitutes more than 50% of the total fair market
value or total voting power of the stock of the Company; provided, that, a
Change in Control shall not occur if any Person (or more than one Person acting
as a group) owns more than 50% of the total fair market value or total voting
power of the Company’s stock and acquires additional stock;
(b)    The Company is a party to a plan of merger or plan of exchange and upon
consummation of such plan, the shareholders of the Company immediately prior to
the transaction do not own or continue to own (i) at least 40% of the total
voting power of the surviving company (if the then current CEO of the Company
continues as CEO of the surviving organization), or (ii) at least a majority of
the voting power of the surviving organization (if the then current CEO of the
Company does not continue as CEO of the surviving organization).
(c)    A majority of the members of the Board are replaced during any
twelve-month period by directors whose appointment or election is not endorsed
by a majority of the Board before the date of appointment or election; or
(d)    One person (or more than one person acting as a group), acquires (or has
acquired during the twelve-month period ending on the date of the most recent
acquisition) substantially all of the assets of the Company other than an
acquisition by (A) a corporation or other entity of which at least a majority of
its

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combined voting power is owned directly or indirectly by the Company, (B) a
corporation or other entity owned directly or indirectly by the holders of
capital stock of the Company in substantially the same proportions as their
ownership of Common Stock, or (C) a corporation, entity or person in which the
holders of at least a majority of the shares of voting capital stock of the
Company outstanding immediately prior to such transaction continue to hold
(either by such shares remaining outstanding in the continuing entity or by
their being converted into shares of voting capital stock of the surviving
entity) a majority of the total voting power represented by the shares of voting
capital stock of the Company (or the surviving entity) outstanding immediately
after such transaction.

Notwithstanding anything stated herein, a transaction shall not constitute a
“Change in Control” if its sole purpose is to change the state of the Company’s
incorporation.
“Code” means the Internal Revenue Code of 1986, as it may be amended from time
to time. Any reference to a section of the Code shall be deemed to include a
reference to any regulations promulgated thereunder.
“Committee” means the Compensation Committee of the Board appointed by the Board
to administer the Plan in accordance with Sections 4.3 and 4.4.
“Common Stock” means the common stock of the Company, or such other securities
of the Company as may be designated by the Committee from time to time in
substitution thereof.
“Company” means Umpqua Holdings Corporation, an Oregon corporation, and any
successor thereto.
“Consultant” means any individual who is engaged by the Company or any Affiliate
to render bona fide consulting or advisory services other than as an Employee or
Director.
“Continuous Service” means that the Participant’s service with the Company or an
Affiliate, whether as an Employee, Consultant or Director, is not interrupted or
terminated. The Participant’s Continuous Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Consultant or
Director or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the
Participant’s Continuous Service; provided further that if any Award is subject
to Section 409A of the Code, this sentence shall only be given effect to the
extent consistent with Section 409A of the Code. For example, a change in status
from an Employee of the Company to a Director of an Affiliate will not
constitute an interruption of Continuous Service. The Committee or its delegate,
in its sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal or family
leave of absence.
“Covered Employee” has the same meaning as set forth in Section 162(m)(3) of the
Code, as interpreted by Internal Revenue Service Notice 2007-49.
“Director” means a member of the Board.
“Disability” means

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(a)    if the Participant is a party to an employment or service agreement with
the Company or its Affiliates and such agreement provides for a definition of
Disability, the definition contained therein; or
(b)     if no such employment or service agreement exists, or if such employment
or service agreement does not define Disability, that the Participant is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment;
provided, however, for purposes of determining the term of an Incentive Stock
Option pursuant to Section 6.10 hereof, the term Disability shall have the
meaning ascribed to it under Section 22(e)(3) of the Code. The determination of
whether an individual has a Disability shall be determined under procedures
established by the Committee. Except in situations where the Committee is
determining Disability for purposes of the term of an Incentive Stock Option
pursuant to Section 6.10 hereof within the meaning of Section 22(e)(3) of the
Code, the Committee may rely on any determination that a Participant is disabled
for purposes of benefits under any long-term disability plan maintained by the
Company or any Affiliate in which a Participant participates.
“Disqualifying Disposition” has the meaning set forth in Section 6.13.
“Effective Date” shall mean the date as of which this Plan is adopted by the
Board.
“Employee” means any person, including an Officer or Director, employed by the
Company or an Affiliate; provided, that, for purposes of determining eligibility
to receive Incentive Stock Options, an Employee shall mean an employee of the
Company or a parent or subsidiary corporation within the meaning of IRC Section
424. Mere service as a Director or payment of a director’s fee by the Company or
an Affiliate shall not be sufficient to constitute “employment” by the Company
or an Affiliate.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Fair Market Value” means, as of any date, the value of the Common Stock as
determined below. If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation, the New York
Stock Exchange or the NASDAQ Stock Market, the Fair Market Value shall be the
closing price of a share of Common Stock (or if no sales were reported the
closing price on the date immediately preceding such date) as quoted on such
exchange or system on the day of determination, as reported in the Wall Street
Journal or such other source as the Committee deems reliable. In the absence of
an established market for the Common Stock, the Fair Market Value shall be
determined in good faith by the Committee and such determination shall be
conclusive and binding on all persons.
“Free Standing Rights” has the meaning set forth in Section 7.
“Good Reason” means:
(a)     If an Employee or Consultant is a party to an employment or service
agreement with the Company or its Affiliates and such agreement provides for a
definition of Good Reason, the definition contained therein; or
(b)     If no such agreement exists or if such agreement does not define Good
Reason, the occurrence of one or more of the following without the Participant’s
express written consent, which circumstances are not

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remedied by the Company within thirty days of its receipt of a written notice
from the Participant describing the applicable circumstances (which notice must
be provided by the Participant within sixty days of the Participant’s knowledge
of the applicable circumstances): (i) a material reduction in the Participant’s
base salary unless the reduction is in connection with, and commensurate with,
reductions in the salaries of all or substantially all similarly situated
employees of the Company or any Affiliate; or (ii) a geographical relocation of
the Participant’s principal office location by more than fifty miles.
“Grant Date” means the date on which the Committee adopts a resolution, or takes
other appropriate action, expressly granting an Award to a Participant that
specifies the key terms and conditions of the Award or, if a later date is set
forth in such resolution, then such date as is set forth in such resolution.
“Incentive Stock Option” means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.
“Incumbent Directors” means individuals who, on the Effective Date, constitute
the Board, provided that any individual becoming a Director subsequent to the
Effective Date whose election or nomination for election to the Board was
approved by a vote of at least two-thirds of the Incumbent Directors then on the
Board (either by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for Director without
objection to such nomination) shall be an Incumbent Director. No individual
initially elected or nominated as a director of the Company as a result of an
actual or threatened election contest with respect to Directors or as a result
of any other actual or threatened solicitation of proxies by or on behalf of any
person other than the Board shall be an Incumbent Director.
“Negative Discretion” means the discretion authorized by the Plan to be applied
by the Committee to eliminate or reduce the size of a Performance Compensation
Award in accordance with Section 10.3(d) of the Plan; provided, that, the
exercise of such discretion would not cause the Performance Compensation Award
to fail to qualify as “performance-based compensation” under Section 162(m) of
the Code.
“Non-Employee Director” means a Director who is a “non-employee director” within
the meaning of Rule 16b-3.
“Non-qualified Stock Option” means an Option that by its terms does not qualify
or is not intended to qualify as an Incentive Stock Option.
“Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.
“Option” means an Incentive Stock Option or a Non-qualified Stock Option granted
pursuant to the Plan.
“Optionholder” means a person to whom an Option is granted pursuant to the Plan
or, if applicable, such other person who holds an outstanding Option.
“Option Exercise Price” means the price at which a share of Common Stock may be
purchased upon the exercise of an Option.

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“Outside Director” means a Director who is an “outside director” within the
meaning of Section 162(m) of the Code and Treasury Regulations Section
1.162-27(e)(3) or any successor to such statute and regulation.
“Participant” means an eligible person to whom an Award is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Award.
“Performance Compensation Award” means any Award designated by the Committee as
a Performance Compensation Award pursuant to Section 10 of the Plan.
“Performance Criteria” means the criterion or criteria that the Committee shall
select for purposes of establishing the Performance Goals for a Performance
Period with respect to any Performance Compensation Award under the Plan. The
Performance Criteria that will be used to establish the Performance Goals shall
be based on the attainment of specific levels of performance of the Company (or
Affiliate, division, business unit or operational unit of the Company) and shall
be limited to the following: (a) net earnings or net income (before or after
taxes); (b) basic or diluted earnings per share (before or after taxes); (c) net
operating earnings; (d) return on assets, average assets, equity or average
equity; (e) share price (including, but not limited to, growth measures and
total shareholder return); (f) efficiency ratio; (g) regulatory capital ratios;
(h) CAMELS or other regulatory ratings; (i) completion of acquisitions,
dispositions or business expansion; (j) credit quality, non-performing asset or
non-performing loan levels or ratios or loan delinquency levels; (k) provision
for loan losses or net charge-offs; (l) deposits; (m) market share; (n) loans;
(o) net interest margin; (p) interest income; (q) non-interest income; (r)
interest expense; or (s) non-interest expense.
Any one or more of the Performance Criteria may be used on an absolute or
relative basis to measure the performance of the Company or an Affiliate as a
whole or any division, business unit or operational unit of the Company or an
Affiliate or any combination thereof, as the Committee may deem appropriate, or
as compared to the performance of a group of comparable companies, or published
or special index that the Committee, in its sole discretion, deems appropriate,
or the Committee may select Performance Criterion (e) above as compared to
various stock market indices. The Committee also has the authority to provide
for accelerated vesting of any Award based on the achievement of Performance
Goals pursuant to the Performance Criteria specified in this paragraph. To the
extent required under Section 162(m) of the Code, the Committee shall, within
the first 90 days of a Performance Period (or, if longer or shorter, within the
maximum period allowed under Section 162(m) of the Code), define in an objective
fashion the manner of calculating the Performance Criteria it selects to use for
such Performance Period. In the event that applicable tax and/or securities laws
change to permit the Committee discretion to alter the governing Performance
Criteria without obtaining shareholder approval of such changes, the Committee
shall have sole discretion to make such changes without obtaining shareholder
approval.
“Performance Formula” means, for a Performance Period, the one or more objective
formulas applied against the relevant Performance Goal to determine, with regard
to the Performance Compensation Award of a particular Participant, whether all,
some portion but less than all, or none of the Performance Compensation Award
has been earned for the Performance Period.
“Performance Goals” means, for a Performance Period, the one or more goals
established by the Committee for the Performance Period based upon the
Performance Criteria. The Committee is authorized at any time during the first
90 days of a Performance Period (or, if longer or shorter, within the maximum
period allowed under Section 162(m) of the Code), or at any time thereafter (but
only to the extent the exercise of such authority after such period

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would not cause the Performance Compensation Awards granted to any Participant
for the Performance Period to fail to qualify as “performance-based
compensation” under Section 162(m) of the Code), in its sole and absolute
discretion, to adjust or modify the calculation of a Performance Goal for such
Performance Period to the extent permitted under Section 162(m) of the Code in
order to prevent the dilution or enlargement of the rights of Participants based
on the following events: (a) discontinued operations; (b) litigation or claim
judgments or settlements; (c) the effect of changes in tax laws, accounting
principles, or other laws or regulatory rules affecting reported results; (d)
merger or acquisition related expenses; (e) extraordinary nonrecurring items as
described in Accounting Principles Board Opinion No. 30 (or any successor or
pronouncement thereto) or in management’s discussion and analysis of financial
condition and results of operations appearing in the Company's annual report to
shareholders for the applicable year; (f) acquisitions or divestitures; or (g)
any other specific unusual or nonrecurring events, or objectively determinable
category thereof. A Performance Goal may be expressed in any form as the
Committee may determine including, but not limited to: (a) percentage growth;
(b) absolute growth; (c) cumulative growth; (d) performance in relation to an
index; (e) performance in relation to a designated group of peers; (f) a
designated absolute amount; or (g) per share of Common Stock outstanding.
“Performance Period” means the one or more periods of time not less than one
fiscal quarter in duration, as the Committee may select, over which the
attainment of one or more Performance Goals will be measured for the purpose of
determining a Participant's right to and the payment of a Performance
Compensation Award.
“Performance Share Award” means any Award granted pursuant to Section 9 hereof.
“Performance Share” means the grant of a right to receive a number of actual
shares of Common Stock or share units based upon the performance of the Company
during a Performance Period, as determined by the Committee.
“Permitted Transferee” means: (a) a member of the Optionholder’s immediate
family (child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships), any person sharing the Optionholder’s household (other than a
tenant or employee), a trust in which these persons have more than 50% of the
beneficial interest, a foundation in which these persons (or the Optionholder)
control the management of assets, and any other entity in which these persons
(or the Optionholder) own more than 50% of the voting interests; (b) third
parties designated by the Committee in connection with a program established and
approved by the Committee pursuant to which Participants may receive a cash
payment or other consideration in consideration for the transfer of a
Non-qualified Stock Option; and (c) such other transferees as may be permitted
by the Committee in its sole discretion.
“Plan” means this Umpqua Holdings Corporation 2013 Incentive Plan, as amended or
restated from time to time.
“Related Rights” has the meaning set forth in Section 7.
“Restricted Award” means any Award granted pursuant to Section 8.
“Restricted Period” has the meaning set forth in Section 8.

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“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.
“Securities Act” means the Securities Act of 1933, as amended.
“Stock Appreciation Right” means the right pursuant to an Award granted under
Section 7 to receive, upon exercise, an amount payable in cash or shares equal
to the number of shares subject to the Stock Appreciation Right that is being
exercised multiplied by the excess of (a) the Fair Market Value of a share of
Common Stock on the date the Award is exercised, over (b) the exercise price
specified in the Stock Appreciation Right Award Agreement.
“Stock for Stock Exchange” has the meaning set forth in Section 6.4.
“Ten Percent Shareholder” means a person who owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of any of its
Affiliates.
3.    ELIGIBILITY.
3.1    Available Awards. Awards that may be granted under the Plan include: (a)
Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock Appreciation
Rights, (d) Restricted Awards (including Restricted Stock and Restricted Stock
Units), (e) Performance Share Awards, and (f) Performance Compensation Awards.
3.2    Eligibility for Specific Awards. Incentive Stock Options may be granted
only to Employees. All other Awards may be granted to Employees, Consultants and
Directors and those individuals whom the Committee determines are reasonably
expected to become Employees, Consultants and Directors following the Grant
Date.
3.3    Ten Percent Shareholders. A Ten Percent Shareholder shall not be granted
an Incentive Stock Option unless the Option Exercise Price is at least 110% of
the Fair Market Value of the Common Stock at the Grant Date and the Option is
not exercisable after the expiration of five years from the Grant Date.
4.    ADMINISTRATION.
4.1    Authority of Committee. The Plan shall be administered by the Committee
or, in the Board’s sole discretion, by the Board. Subject to the terms of the
Plan, the Committee’s charter and Applicable Laws, and in addition to other
express powers and authorization conferred by the Plan, the Committee shall have
the authority:
(a)    to construe and interpret the Plan and any Award Agreement;
(b)    to promulgate, amend, and rescind rules and regulations relating to the
Plan or any Award;
(c)    to authorize any person to execute, on behalf of the Company, any
instrument required to carry out the purposes of the Plan;

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(d)    to delegate its authority to one or more Officers of the Company with
respect to Awards that do not involve Covered Employees or “insiders” within the
meaning of Section 16 of the Exchange Act;
(e)    to determine when Awards are to be granted under the Plan and the
applicable Grant Date;
(f)    select persons to receive Awards;
(g)    to determine the number of shares of Common Stock to be made subject to
each Award;
(h)    to determine whether each Option is to be an Incentive Stock Option or a
Non-qualified Stock Option;
(i)    to prescribe the terms and conditions of each Award not inconsistent with
the Plan, including, without limitation, the exercise price, the time or times
when Awards may vest and be exercised (which may be based on Performance
Criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Award or the shares of Common Stock
relating thereto, based in each case on such factors as the Committee will
determine, and to specify the provisions of the Award Agreement relating to such
grant, provided, however, that the minimum vesting period for any Award shall be
one year;
(j)    to determine the target number of Performance Shares to be granted
pursuant to a Performance Share Award, the performance measures that will be
used to establish the performance goals, the performance period(s) and the
number of Performance Shares earned by a Participant;
(k)    to designate an Award (including a cash bonus) as a Performance
Compensation Award and to select the Performance Criteria that will be used to
establish the Performance Goals;
(l)    to amend any outstanding Awards, including for the purpose of modifying
the time or manner of vesting, or the term of any outstanding Award; provided,
however, that if any such amendment impairs a Participant's rights or increases
a Participant’s obligations under his or her Award or creates or increases a
Participant’s federal income tax liability with respect to an Award, such
amendment shall also be subject to the Participant's consent;
(m)    to determine the duration and purpose of leaves of absences which may be
granted to a Participant without constituting termination of their employment
for purposes of the Plan, which periods shall be no shorter than the periods
generally applicable to Employees under the Company’s employment policies;
(n)    to make decisions with respect to outstanding Awards that may become
necessary upon a change in corporate control or an event that triggers
anti-dilution adjustments;
(o)    to interpret, administer, reconcile any inconsistency in, correct any
defect in and/or supply any omission in the Plan and any instrument or agreement
relating to, or Award granted under, the Plan; and

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(p)    to exercise discretion to make any and all other determinations which it
determines to be necessary or advisable for the administration of the Plan.
The Committee also may modify the purchase price or the exercise price of any
outstanding Award, provided that if the modification effects a repricing,
shareholder approval shall be required before the repricing is effective.
4.2    Committee Decisions Final. All decisions made by the Committee pursuant
to the provisions of the Plan shall be final and binding on the Company and the
Participants. Any dispute regarding the interpretation of the Plan or any Award
Agreement shall be submitted by the Participant or Company to the Committee for
review.
4.3    Delegation. The Committee, or if no Committee has been appointed, the
Board, may delegate administration of the Plan to a committee or committees of
one or more Directors, and the term “Committee” shall apply to any person or
persons to whom such authority has been delegated. The Committee shall have the
power to delegate to a subcommittee any of the administrative powers the
Committee is authorized to exercise (and references in this Plan to the Board or
the Committee shall thereafter be to the committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan.
The members of the Committee shall be appointed by and serve at the pleasure of
the Board. From time to time, the Board may increase or decrease the size of the
Committee, add additional members to, remove members (with or without cause)
from, appoint new members in substitution therefor, and fill vacancies, however
caused, in the Committee. The Committee shall act pursuant to a vote of the
majority of its members or, in the case of a Committee comprised of only two
members, the unanimous consent of its members, whether present or not, or by the
written consent of its members and minutes shall be kept of all of its meetings
and copies thereof shall be provided to the Board. Subject to the limitations
prescribed by the Company’s Bylaws, the Plan and the Board, the Committee may
establish and follow such rules and regulations for the conduct of its business
as it may determine to be advisable.
4.4    Committee Composition. Except as otherwise determined by the Board, the
Committee shall consist solely of two or more Non-Employee Directors who are
also Outside Directors. The Board shall have discretion to determine whether or
not it intends to comply with the exemption requirements of Rule 16b-3 and/or
Section 162(m) of the Code. However, if the Board intends to satisfy such
exemption requirements, with respect to Awards to any Covered Employee and with
respect to any insider subject to Section 16 of the Exchange Act, the Committee
shall be a compensation committee of the Board that at all times consists solely
of two or more Non-Employee Directors who are also Outside Directors. Within the
scope of such authority, the Board or the Committee may (a) delegate to a
committee of one or more members of the Board who are not Outside Directors the
authority to grant Awards to eligible persons who are either (i) not then
Covered Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Award or (ii) not persons with respect
to whom the Company wishes to comply with Section 162(m) of the Code or (b)
delegate to a committee of one or more members of the Board who are not
Non-Employee Directors the authority to grant Awards to eligible persons who are
not then subject to Section 16 of the Exchange Act. Nothing herein shall create
an inference that an Award is not validly granted under the Plan in the event
Awards are granted under the Plan by a compensation committee of the Board that
does not at all times consist solely of two or more Non-Employee Directors who
are also Outside Directors.

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5.    SHARES SUBJECT TO THE PLAN.
5.1    Number of Shares Available. Subject to adjustment in accordance with
Section 13, the total number of shares of Common Stock available for the grant
and issuance under the Plan is twelve (12) million; provided that, no more than
four (4) million shares of Common Stock may be granted as Incentive Stock
Options. Any shares of Common Stock granted in connection with Options and Stock
Appreciation Rights shall be counted against this limit as one (1) share for
every one (1) Option or Stock Appreciation Right awarded. Any shares of Common
Stock granted in connection with Awards other than Options and Stock
Appreciation Rights shall be counted against this limit as two (2) shares of
Common Stock for every one (1) share of Common Stock granted in connection with
such Award. During the terms of the Awards, the Company shall keep available at
all times the number of shares of Common Stock required to satisfy such Awards.
Shares of Common Stock available for distribution under the Plan may consist, in
whole or in part, of authorized and unissued shares, treasury shares or shares
reacquired by the Company in any manner.
5.2    Individual Limits. Subject to adjustment in accordance with Section 13,
no Participant shall be granted, during any one-year period, Options to purchase
Common Stock and Stock Appreciation Rights with respect to more than 400,000
shares of Common Stock in the aggregate and/or any other Awards with respect to
more than 200,000 shares of Common Stock in the aggregate. If an Award is to be
settled in cash, the number of shares of Common Stock on which the Award is
based shall not count toward the individual share limit set forth in this
Section 5.
5.3    Cancellation, Forfeiture or Expiration. Any shares of Common Stock
subject to an Award that is canceled, forfeited or expires prior to exercise or
realization, either in full or in part, shall again become available for
issuance under the Plan. Any shares of Common Stock that again become available
for future grants pursuant to this Section 5.3 shall be added back as one (1)
share if such shares were subject to Options or Stock Appreciation Rights and as
two (2) shares if such shares were subject to other Awards.
6.    OPTIONS. Each Option granted under the Plan shall be evidenced by an Award
Agreement. Each Option so granted shall be subject to the conditions set forth
in this Section 6, and to such other conditions not inconsistent with the Plan
as may be reflected in the applicable Award Agreement. All Options shall be
separately designated Incentive Stock Options or Non-qualified Stock Options at
the time of grant, and, if certificates are issued, a separate certificate or
certificates will be issued for shares of Common Stock purchased on exercise of
each type of Option. Notwithstanding the foregoing, the Company shall have no
liability to any Participant or any other person if an Option designated as an
Incentive Stock Option fails to qualify as such at any time or if an Option is
determined to constitute “nonqualified deferred compensation” within the meaning
of Section 409A of the Code and the terms of such Option do not satisfy the
requirements of Section 409A of the Code. The provisions of separate Options
need not be identical, but each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the substance of each
of the following provisions:
6.1    Term. Subject to the provisions of Section 3.3 regarding Ten Percent
Shareholders, no Incentive Stock Option shall be exercisable after the
expiration of 10 years from the Grant Date. The term of a Non-qualified Stock
Option granted under the Plan shall be determined by the Committee; provided,
however, no Non-qualified Stock Option shall be exercisable after the expiration
of 10 years from the Grant Date.

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6.2    Exercise Price of An Incentive Stock Option. Subject to the provisions of
Section 3.3 regarding Ten Percent Shareholders, the Option Exercise Price of
each Incentive Stock Option shall be not less than 100% of the Fair Market Value
of the Common Stock subject to the Option on the Grant Date. Notwithstanding the
foregoing, an Incentive Stock Option may be granted with an Option Exercise
Price lower than that set forth in the preceding sentence if such Option is
granted pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code.
6.3    Exercise Price of a Non-qualified Stock Option. The Option Exercise Price
of each Non-qualified Stock Option shall be not less than 100% of the Fair
Market Value of the Common Stock subject to the Option on the Grant Date.
Notwithstanding the foregoing, a Non-qualified Stock Option may be granted with
an Option Exercise Price lower than that set forth in the preceding sentence if
such Option is granted pursuant to an assumption or substitution for another
option in a manner satisfying the provisions of Section 409A of the Code.
6.4    Consideration. The Option Exercise Price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (a) in cash or by certified or bank check at
the time the Option is exercised or (b) in the discretion of the Committee, upon
such terms as the Committee shall approve, the Option Exercise Price may be
paid: (i) by delivery to the Company of other Common Stock, duly endorsed for
transfer to the Company, with a Fair Market Value on the date of delivery equal
to the Option Exercise Price (or portion thereof) due for the number of shares
being acquired, or by means of attestation whereby the Participant identifies
for delivery specific shares of Common Stock that have an aggregate Fair Market
Value on the date of attestation equal to the Option Exercise Price (or portion
thereof) and receives a number of shares of Common Stock equal to the difference
between the number of shares thereby purchased and the number of identified
attestation shares of Common Stock (a “Stock for Stock Exchange”); (ii) a
“cashless” exercise program established with a broker; (iii) by reduction in the
number of shares of Common Stock otherwise deliverable upon exercise of such
Option with a Fair Market Value equal to the aggregate Option Exercise Price at
the time of exercise; (iv) any combination of the foregoing methods; or (v) in
any other form of legal consideration that may be acceptable to the Committee.
Unless otherwise specifically provided in the Option, the exercise price of
Common Stock acquired pursuant to an Option that is paid by delivery (or
attestation) to the Company of other Common Stock acquired, directly or
indirectly from the Company, shall be paid only by shares of the Common Stock of
the Company that have been held for more than six months (or such longer or
shorter period of time required to avoid a charge to earnings for financial
accounting purposes). Notwithstanding the foregoing, during any period for which
the Common Stock is publicly traded (i.e., the Common Stock is listed on any
established stock exchange or a national market system) an exercise by a
Director or Officer that involves or may involve a direct or indirect extension
of credit or arrangement of an extension of credit by the Company, directly or
indirectly, in violation of Section 402(a) of the Sarbanes-Oxley Act of 2002 or
Regulation O promulgated by the Board of Governors of the Federal Reserve
System, as determined by the Committee in its sole discretion, shall be
prohibited with respect to any Award under this Plan.
6.5    Transferability of An Incentive Stock Option. An Incentive Stock Option
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

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6.6    Transferability of a Non-qualified Stock Option. A Non-qualified Stock
Option may, in the sole discretion of the Committee, be transferable to a
Permitted Transferee, upon written approval by the Committee to the extent
provided in the Award Agreement. If the Non-qualified Stock Option does not
provide for transferability, then the Non-qualified Stock Option shall not be
transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.
6.7    Vesting of Options. Each Option may, but need not, vest and therefore
become exercisable in periodic installments that may, but need not, be equal.
The Option may be subject to such other terms and conditions on the time or
times when it may be exercised (which may be based on performance or other
criteria) as the Committee may deem appropriate. The vesting provisions of
individual Options may vary. No Option may be exercised for a fraction of a
share of Common Stock. The Committee may, but shall not be required to, provide
for an acceleration of vesting and exercisability in the terms of any Award
Agreement upon the occurrence of a specified event.
6.8    Termination of Continuous Service. Unless otherwise provided in an Award
Agreement or in an employment agreement the terms of which have been approved by
the Committee, in the event an Optionholder’s Continuous Service terminates
(other than upon the Optionholder’s death or Disability), the Optionholder may
exercise his or her Option (to the extent that the Optionholder was entitled to
exercise such Option as of the date of termination) but only within such period
of time ending on the earlier of (a) the date three months following the
termination of the Optionholder’s Continuous Service or (b) the expiration of
the term of the Option as set forth in the Award Agreement; provided that, if
the termination of Continuous Service is by the Company for Cause, all
outstanding Options (whether or not vested) shall immediately terminate and
cease to be exercisable. If, after termination, the Optionholder does not
exercise his or her Option within the time specified in the Award Agreement, the
Option shall terminate.
6.9    Extension of Termination Date. An Optionholder’s Award Agreement may also
provide that if the exercise of the Option following the termination of the
Optionholder’s Continuous Service for any reason would be prohibited at any time
because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act or any other state or federal securities
law or the rules of any securities exchange or interdealer quotation system,
then the Option shall terminate on the earlier of (a) the expiration of the term
of the Option in accordance with Section 6.1 or (b) the expiration of a period
after termination of the Participant’s Continuous Service that is three months
after the end of the period during which the exercise of the Option would be in
violation of such registration or other securities law requirements.
6.10    Disability of Optionholder. Unless otherwise provided in an Award
Agreement, in the event that an Optionholder’s Continuous Service terminates as
a result of the Optionholder’s Disability, the Optionholder may exercise his or
her Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination), but only within such period of time
ending on the earlier of (a) the date 12 months following such termination or
(b) the expiration of the term of the Option as set forth in the Award
Agreement. If, after termination, the Optionholder does not exercise his or her
Option within the time specified herein or in the Award Agreement, the Option
shall terminate.

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6.11    Death of Optionholder. Unless otherwise provided in an Award Agreement,
in the event an Optionholder’s Continuous Service terminates as a result of the
Optionholder’s death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder’s death, but only within the period ending on the
earlier of (a) the date 12 months following the date of death or (b) the
expiration of the term of such Option as set forth in the Award Agreement. If,
after the Optionholder’s death, the Option is not exercised within the time
specified herein or in the Award Agreement, the Option shall terminate.
6.12    Incentive Stock Option $100,000 Limitation. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds $100,000, the Options or portions thereof which exceed
such limit (according to the order in which they were granted) shall be treated
as Non-qualified Stock Options.
6.13    Disqualifying Dispositions. Any Participant who shall make a
“disposition” (as defined in Section 424 of the Code) of all or any portion of
shares of Common Stock acquired upon exercise of an Incentive Stock Option
within two years from the Grant Date of such Incentive Stock Option or within
one year after the issuance of the shares of Common Stock acquired upon exercise
of such Incentive Stock Option (a “Disqualifying Disposition”) shall be required
to immediately advise the Company in writing as to the occurrence of the sale
and the price realized upon the sale of such shares of Common Stock.
7.    STOCK APPRECIATION RIGHTS. Each Stock Appreciation Right granted under the
Plan shall be evidenced by an Award Agreement. Each Stock Appreciation Right so
granted shall be subject to the conditions set forth in this Section 7, and to
such other conditions not inconsistent with the Plan as may be reflected in the
applicable Award Agreement. Stock Appreciation Rights may be granted alone
(“Free Standing Rights”) or in tandem with an Option granted under the Plan
(“Related Rights”).
7.1    Grant Requirements. Any Related Right that relates to a Non-qualified
Stock Option may be granted at the same time the Option is granted or at any
time thereafter, but before the exercise or expiration of the Option. Any
Related Right that relates to an Incentive Stock Option must be granted at the
same time the Incentive Stock Option is granted.
7.2    Term of Stock Appreciation Rights. The term of a Stock Appreciation Right
granted under the Plan shall be determined by the Committee; provided, however,
no Stock Appreciation Right shall be exercisable later than the tenth
anniversary of the Grant Date.
7.3    Vesting of Stock Appreciation Rights. Each Stock Appreciation Right may,
but need not, vest and therefore become exercisable in periodic installments
that may, but need not, be equal. The Stock Appreciation Right may be subject to
such other terms and conditions on the time or times when it may be exercised
(which may be based on performance or other criteria) as the Committee may deem
appropriate. The vesting provisions of individual Stock Appreciation Rights may
vary. No Stock Appreciation Right may be exercised for a fraction of a

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share of Common Stock. The Committee may, but shall not be required to, provide
for an acceleration of vesting and exercisability in the terms of any Stock
Appreciation Right upon the occurrence of a specified event.
7.4    Exercise and Payment. Upon exercise of a Stock Appreciation Right, the
holder shall be entitled to receive from the Company an amount equal to the
number of shares of Common Stock subject to the Stock Appreciation Right that is
being exercised multiplied by the excess of (i) the Fair Market Value of a share
of Common Stock on the date the Award is exercised, over (ii) the exercise price
specified in the Stock Appreciation Right or related Option. Payment with
respect to the exercise of a Stock Appreciation Right shall be made on the date
of exercise. Payment shall be made in the form of shares of Common Stock (with
or without restrictions as to substantial risk of forfeiture and
transferability, as determined by the Committee in its sole discretion), cash or
a combination thereof, as determined by the Committee.
7.5    Exercise Price. The exercise price of a Free Standing Stock Appreciation
Right shall be determined by the Committee, but shall not be less than 100% of
the Fair Market Value of one share of Common Stock on the Grant Date of such
Stock Appreciation Right. A Related Right granted simultaneously with or
subsequent to the grant of an Option and in conjunction therewith or in the
alternative thereto shall have the same exercise price as the related Option,
shall be transferable only upon the same terms and conditions as the related
Option, and shall be exercisable only to the same extent as the related Option;
provided, however, that a Stock Appreciation Right, by its terms, shall be
exercisable only when the Fair Market Value per share of Common Stock subject to
the Stock Appreciation Right and related Option exceeds the exercise price per
share thereof and no Stock Appreciation Rights may be granted in tandem with an
Option unless the Committee determines that the requirements of Section 7.1 are
satisfied.
7.6    Reduction in the Underlying Option Shares. Upon any exercise of a Related
Right, the number of shares of Common Stock for which any related Option shall
be exercisable shall be reduced by the number of shares for which the Stock
Appreciation Right has been exercised. The number of shares of Common Stock for
which a Related Right shall be exercisable shall be reduced upon any exercise of
any related Option by the number of shares of Common Stock for which such Option
has been exercised.
8.    RESTRICTED AWARDS. A Restricted Award is an Award of actual shares of
Common Stock (“Restricted Stock”) or hypothetical Common Stock units
(“Restricted Stock Units”) having a value equal to the Fair Market Value of an
identical number of shares of Common Stock, which may, but need not, provide
that such Restricted Award may not be sold, assigned, transferred or otherwise
disposed of, pledged or hypothecated as collateral for a loan or as security for
the performance of any obligation or for any other purpose for such period (the
“Restricted Period”) as the Committee shall determine. Each Restricted Award
granted under the Plan shall be evidenced by an Award Agreement. Each Restricted
Award so granted shall be subject to the conditions set forth in this Section 8,
and to such other conditions not inconsistent with the Plan as may be reflected
in the applicable Award Agreement.
8.1    Restricted Stock and Restricted Stock Units.
(a)    Each Participant granted Restricted Stock shall execute and deliver to
the Company an Award Agreement with respect to the Restricted Stock setting
forth the restrictions and other terms and conditions applicable to such
Restricted Stock. If the Committee determines that the Restricted Stock shall be
held by the

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Company or in escrow rather than delivered to the Participant pending the
release of the applicable restrictions, the Committee may require the
Participant to additionally execute and deliver to the Company (A) an escrow
agreement satisfactory to the Committee, if applicable and (B) the appropriate
blank stock power with respect to the Restricted Stock covered by such
agreement. If a Participant fails to execute an agreement evidencing an Award of
Restricted Stock and, if applicable, an escrow agreement and stock power, the
Award shall be null and void. Subject to the restrictions set forth in the
Award, the Participant generally shall have the rights and privileges of a
shareholder as to such Restricted Stock, including the right to vote such
Restricted Stock and the right to receive dividends; provided that, any cash
dividends and stock dividends with respect to the Restricted Stock shall be
withheld by the Company for the Participant’s account, and interest may be
credited on the amount of the cash dividends withheld at a rate and subject to
such terms as determined by the Committee. The cash dividends or stock dividends
so withheld by the Committee and attributable to any particular share of
Restricted Stock (and earnings thereon, if applicable) shall be distributed to
the Participant in cash or, at the discretion of the Committee, in shares of
Common Stock having a Fair Market Value equal to the amount of such dividends,
if applicable, upon the release of restrictions on such share and, if such share
is forfeited, the Participant shall have no right to such dividends.
(b)    The terms and conditions of a grant of Restricted Stock Units shall be
reflected in an Award Agreement. No shares of Common Stock shall be issued at
the time a Restricted Stock Unit is granted, and the Company will not be
required to set aside a fund for the payment of any such Award. A Participant
shall have no voting rights with respect to any Restricted Stock Units granted
hereunder. At the discretion of the Committee, each Restricted Stock Unit
(representing one share of Common Stock) may be credited with cash and stock
dividends paid by the Company in respect of one share of Common Stock (“Dividend
Equivalents”). Dividend Equivalents shall be withheld by the Company for the
Participant’s account, and interest may be credited on the amount of cash
Dividend Equivalents withheld at a rate and subject to such terms as determined
by the Committee. Dividend Equivalents credited to a Participant’s account and
attributable to any particular Restricted Stock Unit (and earnings thereon, if
applicable) shall be distributed in cash or, at the discretion of the Committee,
in shares of Common Stock having a Fair Market Value equal to the amount of such
Dividend Equivalents and earnings, if applicable, to the Participant upon
settlement of such Restricted Stock Unit and, if such Restricted Stock Unit is
forfeited, the Participant shall have no right to such Dividend Equivalents.
8.2    Restrictions.
(a)    Restricted Stock awarded to a Participant shall be subject to the
following restrictions until the expiration of the Restricted Period, and to
such other terms and conditions (which may be related to performance or other
criteria) as may be set forth in the applicable Award Agreement: (A) if an
escrow arrangement is used, the Participant shall not be entitled to delivery of
the stock certificate; (B) the shares shall be subject to the restrictions on
transferability set forth in the Award Agreement; (C) the shares shall be
subject to forfeiture to the extent provided in the applicable Award Agreement;
and (D) to the extent such shares are forfeited, the stock certificates shall be
returned to the Company, and all rights of the Participant to such shares and as
a shareholder with respect to such shares shall terminate without further
obligation on the part of the Company.
(b)    Restricted Stock Units awarded to any Participant shall be subject to (A)
forfeiture until the expiration of the Restricted Period, and satisfaction of
any applicable Performance Goals during such period, to the extent provided in
the applicable Award Agreement, and to the extent such Restricted Stock Units
are forfeited, all

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rights of the Participant to such Restricted Stock Units shall terminate without
further obligation on the part of the Company and (B) such other terms and
conditions as may be set forth in the applicable Award Agreement.
(c)    The Committee shall have the authority to remove any or all of the
restrictions on the Restricted Stock and Restricted Stock Units whenever it may
determine that, by reason of changes in Applicable Laws or other changes in
circumstances arising after the date the Restricted Stock or Restricted Stock
Units are granted, such action is appropriate.
8.3    Restricted Period. With respect to Restricted Awards, the Restricted
Period shall commence on the Grant Date and end at the time or times set forth
on a schedule established by the Committee in the applicable Award Agreement. No
Restricted Award may be granted or settled for a fraction of a share of Common
Stock. The Committee may, but shall not be required to, provide for an
acceleration of vesting in the terms of any Award Agreement upon the occurrence
of a specified event.
8.4    Delivery of Restricted Stock and Settlement of Restricted Stock Units.
Upon the expiration of the Restricted Period with respect to any shares of
Restricted Stock, the restrictions set forth in Section 8.2 and the applicable
Award Agreement shall be of no further force or effect with respect to such
shares, except as set forth in the applicable Award Agreement. If an escrow
arrangement is used, upon such expiration, the Company shall deliver to the
Participant, or his or her beneficiary, without charge, the stock certificate
evidencing the shares of Restricted Stock which have not then been forfeited and
with respect to which the Restricted Period has expired (to the nearest full
share) and any cash dividends or stock dividends credited to the Participant’s
account with respect to such Restricted Stock and the interest thereon, if any.
Upon the expiration of the Restricted Period with respect to any outstanding
Restricted Stock Units, the Company shall deliver to the Participant, or his or
her beneficiary, without charge, one share of Common Stock for each such
outstanding Restricted Stock Unit (“Vested Unit”) and cash equal to any Dividend
Equivalents credited with respect to each such Vested Unit in accordance with
Section 8.1(b) hereof and the interest thereon or, at the discretion of the
Committee, in shares of Common Stock having a Fair Market Value equal to such
Dividend Equivalents and the interest thereon, if any; provided, however, that,
if explicitly provided in the applicable Award Agreement, the Committee may, in
its sole discretion, elect to pay cash or part cash and part Common Stock in
lieu of delivering only shares of Common Stock for Vested Units. If a cash
payment is made in lieu of delivering shares of Common Stock, the amount of such
payment shall be equal to the Fair Market Value of the Common Stock as of the
date on which the Restricted Period lapsed with respect to each Vested Unit.
8.5    Stock Restrictions. Each certificate representing Restricted Stock
awarded under the Plan shall bear a legend in such form as the Company deems
appropriate.
9.    PERFORMANCE SHARE AWARDS.
9.1    Grant. Each Performance Share Award granted under the Plan shall be
evidenced by an Award Agreement. Each Performance Share Award so granted shall
be subject to the conditions set forth in this Section 9, and to such other
conditions not inconsistent with the Plan as may be reflected in the applicable
Award Agreement. The Committee shall have the discretion to determine: (i) the
number of shares of Common Stock or stock-denominated units subject to a
Performance Share Award granted to any Participant; (ii) the performance period

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applicable to any Award; (iii) the conditions that must be satisfied for a
Participant to earn an Award; and (iv) the other terms, conditions and
restrictions of the Award.
9.2    Earning Performance Share Awards. The number of Performance Shares earned
by a Participant will depend on the extent to which the performance goals
established by the Committee are attained within the applicable Performance
Period, as determined by the Committee. No payout shall be made with respect to
any Performance Share Award except upon written certification by the Committee
that the minimum threshold performance goal(s) have been achieved.
10.    PERFORMANCE COMPENSATION AWARDS. The Committee shall have the authority,
at the time of grant of any Award described in this Plan (other than Options and
Stock Appreciation Rights granted with an exercise price equal to or greater
than the Fair Market Value per share of Common Stock on the Grant Date), to
designate such Award as a Performance Compensation Award in order to qualify
such Award as “performance-based compensation” under Section 162(m) of the Code.
In addition, the Committee shall have the authority to make an Award of a cash
bonus to any Participant and designate such Award as a Performance Compensation
Award in order to qualify such Award as “performance-based compensation” under
Section 162(m) of the Code.
10.1    Eligibility. The Committee will, in its sole discretion, designate
within the first 90 days of a Performance Period (or, if longer or shorter,
within the maximum period allowed under Section 162(m) of the Code) which
Participants will be eligible to receive Performance Compensation Awards in
respect of such Performance Period. However, designation of a Participant
eligible to receive an Award hereunder for a Performance Period shall not in any
manner entitle the Participant to receive payment in respect of any Performance
Compensation Award for such Performance Period. The determination as to whether
or not such Participant becomes entitled to payment in respect of any
Performance Compensation Award shall be decided solely in accordance with the
provisions of this Section 10. Moreover, designation of a Participant eligible
to receive an Award hereunder for a particular Performance Period shall not
require designation of such Participant eligible to receive an Award hereunder
in any subsequent Performance Period and designation of one person as a
Participant eligible to receive an Award hereunder shall not require designation
of any other person as a Participant eligible to receive an Award hereunder in
such period or in any other period.
10.2    Discretion of Committee with Respect to Performance Compensation Awards.
With regard to a particular Performance Period, the Committee shall have full
discretion to select the length of such Performance Period (provided any such
Performance Period shall be not less than one fiscal quarter in duration), the
types of Performance Compensation Awards to be issued, the Performance Criteria
that will be used to establish the Performance Goals, the kinds or levels of the
Performance Goals that are to apply to the Company and the Performance Formula.
Within the first 90 days of a Performance Period (or, if longer or shorter,
within the maximum period allowed under Section 162(m) of the Code), the
Committee shall, with regard to the Performance Compensation Awards to be issued
for such Performance Period, exercise its discretion with respect to each of the
matters enumerated in the immediately preceding sentence of this Section 10.2
and record the same in writing.

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10.3    Payment of Performance Compensation Awards.
(a)    Condition to Receipt of Payment. Unless otherwise provided in the
applicable Award Agreement, a Participant must be employed by the Company on the
last day of a Performance Period to be eligible for payment in respect of a
Performance Compensation Award for such Performance Period.
(b)    Limitation. A Participant shall be eligible to receive payment in respect
of a Performance Compensation Award only to the extent that: (A) the Performance
Goals for such period are achieved; and (B) the Performance Formula as applied
against such Performance Goals determines that all or some portion of such
Participant’s Performance Compensation Award has been earned for the Performance
Period.
(c)    Certification. Following the completion of a Performance Period, the
Committee shall review and certify in writing whether, and to what extent, the
Performance Goals for the Performance Period have been achieved and, if so,
calculate and certify in writing the amount of the Performance Compensation
Awards earned for the period based upon the Performance Formula. The Committee
shall then determine the actual size of each Participant’s Performance
Compensation Award for the Performance Period and, in so doing, may apply
Negative Discretion in accordance with Section 10.3(f) hereof, if and when it
deems appropriate.
(d)    Use of Discretion. In determining the actual size of an individual
Performance Compensation Award for a Performance Period, the Committee may
reduce or eliminate the amount of the Performance Compensation Award earned
under the Performance Formula in the Performance Period through the use of
Negative Discretion if, in its sole judgment, such reduction or elimination is
appropriate. The Committee shall not have the discretion to (A) grant or provide
payment in respect of Performance Compensation Awards for a Performance Period
if the Performance Goals for such Performance Period have not been attained or
(B) increase a Performance Compensation Award above the maximum amount payable
under Section 10.3(f) of the Plan.
(e)    Timing of Award Payments. Performance Compensation Awards granted for a
Performance Period shall be paid to Participants as soon as administratively
practicable following completion of the certifications required by this Section
10.3 but in no event later than 2 1/2 months following the end of the fiscal
year during which the Performance Period is completed.
(f)    Maximum Award Payable. Notwithstanding any provision contained in this
Plan to the contrary, the maximum Performance Compensation Award payable to any
one Participant under the Plan for a Performance Period (excluding any Options
and Stock Appreciation Rights) is 200,000 shares of Common Stock or, in the
event such Performance Compensation Award is paid in cash, the equivalent cash
value thereof on the first or last day of the Performance Period to which such
Award relates, as determined by the Committee. The maximum amount that can be
paid in any calendar year to any Participant pursuant to a Performance
Compensation Award described above is $1,500,000. Furthermore, any Performance
Compensation Award that has been deferred shall not (between the date as of
which the Award is deferred and the payment date) increase (A) with respect to a
Performance Compensation Award that is payable in cash, by a measuring factor
for each fiscal year greater than a reasonable rate of interest set by the
Committee or (B) with respect to a Performance Compensation Award that is
payable in shares of Common Stock, by an amount greater than the appreciation of
a share of Common Stock from the date such Award is deferred to the payment
date.

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11.    REGULATORY COMPLIANCE. The implementation of the Plan, the granting of
any Awards and the issuance of any shares of Common Stock upon the exercise of
any granted Awards shall be subject to the Company’s procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the Awards granted under it, and the shares of Common Stock
issued pursuant to it. No Shares or other assets shall be issued or delivered
under the Plan unless and until there shall have been compliance with all
applicable requirements of federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement (if required)
for the Shares issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq Stock Market, if applicable) on which the
Common Stock is then listed for trading (if any).
12.    MISCELLANEOUS AWARD PROVISIONS.
12.1    Acceleration of Exercisability and Vesting. The Board shall have the
power to accelerate the time at which an Award may first be exercised or the
time during which an Award or any part thereof will vest in accordance with the
Plan, notwithstanding the provisions in the Award stating the time at which it
may first be exercised or the time during which it will vest.
12.2    Shareholder Rights. Except as provided in the Plan or an Award
Agreement, no Participant shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares of Common Stock subject to
such Award unless and until such Participant has satisfied all requirements for
exercise of the Award pursuant to its terms and no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions of other rights for which the record date is prior to
the date such Common Stock certificate is issued, except as provided in Section
13 hereof.
12.3    No Employment or Other Service Rights. Nothing in the Plan or any
instrument executed or Award granted pursuant thereto shall confer upon any
Participant any right to continue to serve the Company or an Affiliate in the
capacity in effect at the time the Award was granted or shall affect the right
of the Company or an Affiliate to terminate (a) the employment of an Employee
with or without notice and with or without Cause or (b) the service of a
Director pursuant to the Articles of Incorporation or Bylaws of the Company or
an Affiliate, and any applicable provisions of the corporate law of the state in
which the Company or the Affiliate is incorporated, as the case may be.
12.4    Transfer; Approved Leave of Absence. For purposes of the Plan, no
termination of employment by an Employee shall be deemed to result from either
(a) a transfer to the employment of the Company from an Affiliate or from the
Company to an Affiliate, or from one Affiliate to another, or (b) an approved
leave of absence for military service or sickness, or for any other purpose
approved by the Company, if the Employee’s right to reemployment is guaranteed
either by a statute or by contract or under the policy pursuant to which the
leave of absence was granted or if the Committee otherwise so provides in
writing, in either case, except to the extent inconsistent with Section 409A of
the Code if the applicable Award is subject thereto.
12.5    Withholding Obligations. The Company’s obligation to deliver Shares upon
the exercise of Options, deliver Shares or cash upon the exercise of Stock
Appreciation Rights, or deliver Shares or remove any restrictive legends upon
vesting of such Shares under the Plan shall be subject to the satisfaction of
all applicable federal, state and local income and employment tax withholding
requirements. To the extent permitted under Section 402 of the

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Sarbanes-Oxley Act of 2002 and the regulations adopted pursuant thereto and
provided by the terms of an Award Agreement, and subject to the discretion of
the Committee, the Participant may satisfy any federal, state or local tax
withholding obligation relating to the exercise or acquisition of Common Stock
under an Award by any of the following means (in addition to the Company’s right
to withhold from any compensation paid to the Participant by the Company) or by
a combination of such means: (a) tendering a cash payment; (b) authorizing the
Company to withhold shares of Common Stock from the shares of Common Stock
otherwise issuable to the Participant as a result of the exercise or acquisition
of Common Stock under the Award; or (c) delivering to the Company previously
owned and unencumbered shares of Common Stock of the Company, provided, however,
that no shares of Common Stock are withheld or delivered with a fair market
value exceeding the minimum amount of tax required to be withheld by law.
13.    ADJUSTMENTS UPON CHANGES IN STOCK. In the event of changes in the
outstanding Common Stock or in the capital structure of the Company by reason of
any stock or extraordinary cash dividend, stock split, reverse stock split, an
extraordinary corporate transaction such as any recapitalization,
reorganization, merger, consolidation, combination, exchange, or other relevant
change in capitalization occurring after the Grant Date of any Award, Awards
granted under the Plan and any Award Agreements, the exercise price of Options
and Stock Appreciation Rights, the maximum number of shares of Common Stock
subject to all Awards stated in Section 5 and the maximum number of shares of
Common Stock with respect to which any one person may be granted Awards during
any period stated in Section 5 and Section 10.3(f) shall be adjusted or
substituted, as to the number, price or kind of a share of Common Stock or other
consideration subject to such Awards to the extent necessary to preserve the
economic intent of such Award. Such adjustment shall be made by the Committee,
to the extent possible, so that the adjustment shall not result in an accounting
consequence under Opinion 25 of the Accounting Principles Board, as amended, and
any successor thereof, and Financial Accounting Standards Board Interpretation
No. 44, as amended, and so that the adjustment shall not result in any taxes to
the Company or the Participant. In the case of adjustments made pursuant to this
Section 13, unless the Committee specifically determines that such adjustment is
in the best interests of the Company or its Affiliates, the Committee shall, in
the case of Incentive Stock Options, ensure that any adjustments under this
Section 13 will not constitute a modification, extension or renewal of the
Incentive Stock Options within the meaning of Section 424(h)(3) of the Code and
in the case of Non-qualified Stock Options, ensure that any adjustments under
this Section 13 will not constitute a modification of such Non-qualified Stock
Options within the meaning of Section 409A of the Code. Any adjustments made
under this Section 13 shall be made in a manner which does not adversely affect
the exemption provided pursuant to Rule 16b-3 under the Exchange Act. Further,
with respect to Awards intended to qualify as “performance-based compensation”
under Section 162(m) of the Code, any adjustments or substitutions will not
cause the Company to be denied a tax deduction on account of Section 162(m) of
the Code. The Company shall give each Participant notice of an adjustment
hereunder and, upon notice, such adjustment shall be conclusive and binding for
all purposes.
14.    EFFECT OF CHANGE IN CONTROL.
14.1    Vesting. Unless otherwise provided in Section 14.2 or in the Award
Agreement or an employment agreement, vesting of Awards will not automatically
accelerate upon a Change in Control.
14.2    Assumption by Successor. In the event of a Change in Control any or all
outstanding Awards may be assumed or replaced by the successor entity, which
assumption or replacement shall be binding on all Participants.

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In the alternative, the successor entity may substitute equivalent Awards or
provide substantially similar consideration to Participants as was provided to
shareholders (after taking into account the existing provisions of the Awards).
The successor entity may also issue, in place of outstanding Shares of the
Company held by the Participant, substantially similar shares. In the event such
successor or acquiring entity (if any) refuses to assume, convert, replace or
substitute Awards, as provided above, pursuant to a Change in Control, then
notwithstanding any other provision in this Plan to the contrary, such Awards
shall have their vesting accelerate as to all shares subject to such Award
immediately prior to the Change in Control unless otherwise determined by the
Committee and then such Awards will terminate. In addition, in the event such
successor or acquiring entity (if any) refuses to assume, convert, replace or
substitute Awards, as provided above, pursuant to a Change in Control, the
Committee will notify the Participant in writing or electronically that such
Award will be exercisable for a period of time determined by the Committee in
its sole discretion, and such Award will terminate upon the expiration of such
period. Awards need not be treated similarly in a Change in Control.
14.3    Assumption of Awards by the Company. The Company, from time to time,
also may substitute or assume outstanding awards granted by another entity,
whether in connection with an acquisition of such other entity or otherwise, by
either; (a) granting an Award under this Plan in substitution of such other
entity’s award; or (b) assuming such award as if it had been granted under this
Plan if the terms of such assumed award could be applied to an Award granted
under this Plan. Such substitution or assumption will be permissible if the
holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other entity had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another entity, the terms and conditions of such award will remain unchanged
(except that the Exercise Price and the number and nature of Shares issuable
upon exercise or settlement of any such Award will be adjusted appropriately
pursuant to Section 424(a) of the Code). In the event the Company elects to
grant a new Option in substitution rather than assuming an existing option, such
new Option may be granted with a similarly adjusted Exercise Price.
14.4    Cancellation. In addition, in the event of a Change in Control, the
Committee may in its discretion and upon at least 10 days’ advance notice to the
affected persons, cancel any outstanding Awards and pay to the holders thereof,
in cash or stock, or any combination thereof, the value of such Awards based
upon the price per share of Common Stock received or to be received by other
shareholders of the Company in the event. In the case of any Option or Stock
Appreciation Right with an exercise price (or SAR Exercise Price in the case of
a Stock Appreciation Right) that equals or exceeds the price paid for a share of
Common Stock in connection with the Change in Control, the Committee may cancel
the Option or Stock Appreciation Right without the payment of consideration
therefor.
14.5    Successors. The obligations of the Company under the Plan shall be
binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to all or substantially all of
the assets and business of the Company and its Affiliates, taken as a whole.
15.    AMENDMENT OF THE PLAN AND AWARDS.
15.1    Amendment of Plan. The Board at any time, and from time to time, may
amend or terminate the Plan. However, except as provided in Section 13 relating
to adjustments upon changes in Common Stock and Section

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15.3, no amendment shall be effective unless approved by the shareholders of the
Company to the extent shareholder approval is necessary to satisfy any
Applicable Laws or to the extent such amendment would (i) increase the number of
shares of Common Stock issuable pursuant to this Plan (except as provided in
Section 13), (ii) expand the group of persons eligible to receive Awards, (iii)
authorize the amendment of any Option to reduce its exercise price (except as
required by Section 13) or (iv) permit the cancellation and replacement of any
Option with the grant of an Award having a lesser per share exercise price
(except as required by Section 13). At the time of such amendment, the Board
shall determine, upon advice from counsel, whether such amendment will be
contingent on shareholder approval. The Board may not, without prior shareholder
approval, provide for the cash buyout of underwater Stock Options (Stock Options
with an exercise price below Fair Market Value as of the date of the proposed
purchase).
15.2    Shareholder Approval. The Board may, in its sole discretion, submit any
other amendment to the Plan for shareholder approval, including, but not limited
to, amendments to the Plan intended to satisfy the requirements of Section
162(m) of the Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
15.3    Contemplated Amendments. It is expressly contemplated that the Board may
amend the Plan in any respect the Board deems necessary or advisable to provide
eligible Employees, Consultants and Directors with the maximum benefits provided
or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options or to the
nonqualified deferred compensation provisions of Section 409A of the Code or to
bring the Plan or Awards granted under it into compliance therewith.
15.4    No Impairment of Rights. Rights under any Award granted before amendment
of the Plan shall not be impaired by any amendment of the Plan unless (a) the
Company requests the consent of the Participant and (b) the Participant consents
in writing.
15.5    Amendment of Awards. The Committee at any time, and from time to time,
may amend the terms of any one or more Awards; provided, however, that the
Committee may not affect any amendment which would otherwise constitute an
impairment of the rights under any Award unless (a) the Company requests the
consent of the Participant and (b) the Participant consents in writing.
16.    GENERAL PROVISIONS.
16.1    Forfeiture Events. The Committee may specify in an Award Agreement that
the Participant’s rights, payments and benefits with respect to an Award shall
be subject to reduction, cancellation, forfeiture or recoupment upon the
occurrence of certain events, in addition to applicable vesting conditions of an
Award. Such events may include, without limitation, breach of non-competition,
non-solicitation, confidentiality, or other restrictive covenants that are
contained in the Award Agreement or otherwise applicable to the Participant, a
termination of the Participant’s Continuous Service for Cause, or other conduct
by the Participant that is detrimental to the business or reputation of the
Company or its Affiliates.
16.2    Clawback. Notwithstanding any other provisions in this Plan, any Award
which is subject to recovery under any law, government regulation or stock
exchange listing requirement, will be subject to such deductions and clawback as
may be required to be made pursuant to such law, government regulation or stock
exchange listing

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requirement (or any policy adopted by the Company pursuant to any such law,
government regulation or stock exchange listing requirement). The Board or the
Administrator has the discretion to recover from any Participant Awards (or the
value thereof) received by any Participant that are based upon materially
inaccurate financial statements (which includes, but is not limited to,
statements of earnings, revenues or gains) or any other materially inaccurate
performance metric.
16.3    Other Compensation Arrangements. Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to shareholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in specific
cases.
16.4    Sub-plans. The Committee may from time to time establish sub-plans under
the Plan for purposes of satisfying blue sky, securities, tax or other laws of
various jurisdictions in which the Company intends to grant Awards, or to permit
selected Participants the opportunity to elect to defer receipt of consideration
upon exercise of an Award, satisfaction of performance criteria, or other event
that absent the election would entitle the Participant to payment or receipt of
shares of Common Stock or other consideration under an Award. Any sub-plans
shall contain such limitations and other terms and conditions as the Committee
determines are necessary or desirable. All sub-plans shall be deemed a part of
the Plan, but each sub-plan shall apply only to the Participants in the
jurisdiction for which the sub-plan was designed. With respect to deferral
sub-plans, the Committee may establish the election procedures, the timing of
such elections, the mechanisms for payments of, and accrual of interest or other
earnings, if any, on amounts, shares or other consideration so deferred, and
such other terms, conditions, rules and procedures that the Committee deems
advisable for the administration of any such deferral sub-plan or program.
16.5    Unfunded Plan. The Plan shall be unfunded. Neither the Company nor the
Board or the Committee shall be required to establish any special or separate
fund or to segregate any assets to assure the performance of its obligations
under the Plan.
16.6    No Fractional Shares. No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan. The Committee shall determine whether
cash, additional Awards or other securities or property shall be issued or paid
in lieu of fractional shares of Common Stock or whether any fractional shares
should be rounded, forfeited or otherwise eliminated.
16.7    Section 409A. The Plan is intended to comply with Section 409A of the
Code to the extent subject thereto, and, accordingly, to the maximum extent
permitted, the Plan shall be interpreted and administered to be in compliance
therewith. Any payments described in the Plan that are due within the
“short-term deferral period” as defined in Section 409A of the Code shall not be
treated as deferred compensation unless Applicable Laws require otherwise.
Notwithstanding anything to the contrary in the Plan, to the extent required to
avoid accelerated taxation and tax penalties under Section 409A of the Code,
amounts that would otherwise be payable and benefits that would otherwise be
provided pursuant to the Plan during the six-month period immediately following
the Participant’s termination of Continuous Service shall instead be paid on the
first payroll date after the six-month anniversary of the Participant’s
separation from service (or the Participant’s death, if earlier).
Notwithstanding the foregoing, neither the Company nor the Committee shall have
any obligation to take any action to prevent the assessment of any excise tax or
penalty on any Participant under Section 409A of the Code and neither the
Company nor the Committee will have any liability to any Participant for such
tax or penalty.

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16.8    Section 16 Compliance. It is the intent of the Company that the Plan
satisfy, and be interpreted in a manner that satisfies, the applicable
requirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act
so that Participants will be entitled to the benefit of Rule 16b-3, or any other
rule promulgated under Section 16 of the Exchange Act, and will not be subject
to short-swing liability under Section 16 of the Exchange Act. Accordingly, if
the operation of any provision of the Plan would conflict with the intent
expressed in this Section 16.13, such provision to the extent possible shall be
interpreted or deemed amended so as to avoid such conflict.
16.9    Section 162(m). To the extent the Committee issues any Award that is
intended to be exempt from the deduction limitation of Section 162(m) of the
Code, the Committee may, without shareholder or grantee approval, amend the Plan
or the relevant Award Agreement retroactively or prospectively to the extent it
determines necessary in order to comply with any subsequent clarification of
Section 162(m) of the Code required to preserve the Company’s federal income tax
deduction for compensation paid pursuant to any such Award.
16.10    Beneficiary Designation. Each Participant under the Plan may from time
to time name any beneficiary or beneficiaries by whom any right under the Plan
is to be exercised in case of such Participant’s death. Each designation under
the Plan will revoke all prior designations by the same Participant with respect
to the Plan, shall be in a form reasonably prescribed by the Committee and shall
be effective only when filed by the Participant in writing with the Company
during the Participant’s lifetime.
16.11    Severability. If any of the provisions of the Plan or any Award
Agreement is held to be invalid, illegal or unenforceable, whether in whole or
in part, such provision shall be deemed modified to the extent, but only to the
extent, of such invalidity, illegality or unenforceability and the remaining
provisions shall not be affected thereby.
16.12    Plan Headings. The headings in the Plan are for purposes of convenience
only and are not intended to define or limit the construction of the provisions
hereof.
16.13    Non-Uniform Treatment. The Committee’s determinations under the Plan
need not be uniform and may be made by it selectively among persons who are
eligible to receive, or actually receive, Awards. Without limiting the
generality of the foregoing, the Committee shall be entitled to make non-uniform
and selective determinations, amendments and adjustments, and to enter into
non-uniform and selective Award Agreements.
16.14    Governing Law. This Plan and all Awards granted hereunder shall be
governed by and construed in accordance with the laws of the State of Oregon.
17.    EFFECTIVE DATE OF PLAN. The Plan shall become effective as of the
Effective Date, but no Award shall be exercised (or, in the case of a stock
Award, shall be granted) unless and until the Plan has been approved by the
shareholders of the Company, which approval shall be within twelve months after
the date the Plan is adopted by the Board.
18.    TERMINATION OR SUSPENSION OF THE PLAN. The Plan shall terminate
automatically on April 15, 2023. No Award shall be granted pursuant to the Plan
after such date, but Awards theretofore granted may extend beyond that date. The
Board may suspend or terminate the Plan at any earlier date pursuant to Section
15.1 hereof.

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No Awards may be granted under the Plan while the Plan is suspended or after it
is terminated. Unless the Company determines to submit Section 10 of the Plan
and the definition of “Performance Goal” and “Performance Criteria” to the
Company’s shareholders at the first shareholder meeting that occurs in the fifth
year following the year in which the Plan was last approved by shareholders (or
any earlier meeting designated by the Board), in accordance with the
requirements of Section 162(m) of the Code, and such shareholder approval is
obtained, then no further Performance Compensation Awards shall be made to
Covered Employees under Section 10 after the date of such annual meeting, but
the Plan may continue in effect for Awards to Participants not in accordance
with Section 162(m) of the Code.
As adopted by the Board of Directors of Umpqua Holdings Corporation on December
14, 2012, and amended January 20, 2016.
As approved by the shareholders of Umpqua Holdings Corporation on April 16,
2013.