EXHIBIT 10.29

SIERRA BANCORP

2007 STOCK INCENTIVE PLAN

Adopted February 15, 2007

The purpose of the Sierra Bancorp 2007 Stock Incentive Plan (the “Plan”) is to
(i) encourage selected employees and directors of Sierra Bancorp (the “Company”)
and its subsidiaries to acquire a proprietary and vested interest in the growth
and performance of the Company; (ii) generate an increased incentive to
contribute to the Company’s future success and prosperity, thus enhancing the
value of the Company for the benefit of shareholders; and (iii) enhance the
ability of the Company and its subsidiaries to attract and retain individuals of
exceptional talent upon whom, in large measure, the sustained progress, growth
and profitability of the Company depend.

Section 2. Definitions

For purposes of the Plan, the following terms have the following meanings:

(a) “Award” means any award under the Plan, including any Option or Restricted
Stock Award.

(b) “Award Agreement” means, with respect to each Award, the signed written
agreement between the Company and the Participant setting forth the terms and
conditions of the Award.

(c) “Board” means Board of Directors of the Company.

(d) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.

(e) “Committee” means the Compensation Committee of Sierra Bancorp and Bank of
the Sierra.

(f) “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.

(g) “Holder” means the holder of a Restricted Stock Award granted under
Section 7.

(h) “Incentive Option” means any Option intended to be and designated as an
“incentive stock option” within the meaning of Section 422 of the Code.

(i) “Issue Date” shall mean the date established by the Board or the Committee
on which Certificates representing shares of Restricted Stock shall be issued by
the Company pursuant to the terms of Section 7(b).

(j) “Nonqualified Stock Option” means any Option that is not an Incentive
Option.

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(k) “Option” means an option granted under Section 6.

(l) “Optionee” means the holder of an Option granted under Section 6.

(m) “Participant” means an employee or director who is selected by the Board or
the Committee to receive an Award under the Plan.

(n) “Restricted Stock” or “Restricted Stock Award” means an Award of Stock
subject to restrictions, as more fully described in Section 7.

(o) “Restriction Period” means the period determined by the Board or the
Committee under Section 7(b).

(p) “Rule 16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act, as
amended from time to time, and any successor rule.

(q) “Stock” means the Common Stock, no par value, of the Company, and any
successor security.

(r) “Terminating Event” means: (i) the acquisition of more than fifty percent
(50%) of the value or voting power of the Company’s stock or that of its wholly
owned subsidiary, Bank of the Sierra (the “Bank”) by a person (including an
entity) or group; (ii) the acquisition in a period of twelve (12) months or less
of at least thirty-five percent (35%) of the Bank’s or the Company’s stock by a
person or group; (iii) the replacement of a majority of the Bank’s or the
Company’s Board in a period of twelve (12) months or less by directors who were
not endorsed by a majority of the current Board members; or (iv) the acquisition
in a period of twelve (12) months or less of forty percent (40%) or more of the
Company’s assets by an unrelated entity.

(s) “Termination” means, for purposes of the Plan, with respect to a
Participant, that (a) if the Participant is a director of the Company, he or she
has ceased to be, for any reason, a director and (b) if the Participant is an
employee, he or she has ceased to be, for any reason, employed by the Company or
a subsidiary.

(t) “Termination for Cause” in the case of an employee, shall mean termination
for malfeasance or gross misfeasance in the performance of duties, conviction of
illegal activity in connection therewith, any conduct seriously detrimental to
the interests of the Company or a subsidiary corporation, or removal pursuant to
the exercise of regulatory authority by the Board of Governors of the Federal
Reserve System (the “FRB”) or any applicable bank supervisory agency; and, in
any event, the determination of the Board with respect thereto shall be final
and conclusive. In the case of a director, Termination for Cause shall mean
removal pursuant to Sections 302 or 304 of the California Corporations Code or
removal pursuant to the exercise of regulatory authority by the FRB or any
applicable bank supervisory agency.

(u) “Vesting Date” means, for an Option or a portion of an Option, the first
date on which the Option or such portion may be exercised by the Optionee and,
for shares of Restricted Stock, the date on which the shares cease to be
forfeitable and become freely transferable shares in the hands of the
Participant.

 

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Section 3. Administration

(a) General. The Plan shall be administered by the Committee with respect to
(i) approving Option grants and Restricted Stock Awards to the Company’s “Named
Executive Officers” as that term is defined in applicable SEC regulations;
(ii) modifying or canceling existing grants or awards to Named Executive
Officers; or (iii) imposing limitations, restrictions and conditions upon any
such grant or award as the Committee deems necessary or advisable, unless the
Board, in its discretion shall elect to grant or modify any awards to Named
Executive Officers which are not intended to be exempt compensation pursuant to
Section 162(m) of the Code. In connection with the administration of the Plan,
the Committee, to the extent authorized, shall have the powers possessed by the
Board. The Board shall administer the Plan in all other respects, unless the
Board in its discretion shall elect to delegate such administration to the
Committee with respect to such other aspects of the Plan. The members of the
Committee shall at all times (i) meet the independence requirements of the
Nasdaq Stock Market, Inc.; (ii) qualify as “non-employee directors” as defined
in Section 16 of the Exchange Act; and (iii) qualify as “outside directors”
under Section 162(m) of the Code. Nothing contained herein shall prevent the
Board from delegating to the Committee full power and authority over the
administration of the Plan.

Any action of the Board or the Committee with respect to administration of the
Plan shall be taken pursuant to a majority vote of its members; provided,
however, that with respect to action by the Board in granting an option or other
award to an individual director, such action must be authorized by the required
number of directors without counting the interested director, who shall abstain
as to any vote on his or her option or award. An interested director may be
counted in determining the presence of a quorum at a meeting of the Board where
such action will be taken.

(b) Authority. The Board or the Committee as appropriate pursuant to
Section 3(a) shall grant Awards to directors and eligible employees. In
particular and without limitation, the Board or the Committee, subject to the
terms of the Plan, shall:

(i) select the directors, officers and other employees to whom Awards may be
granted;

(ii) determine whether and to what extent Awards are to be granted under the
Plan;

(iii) determine the number of shares to be covered by each Award granted under
the Plan; and

(iv) determine the terms and conditions of any Award granted under the Plan
based upon factors determined by the Board or the Committee.

(c) Board and Committee Determinations Binding. Subject to the express
provisions of the Plan, the Board or the Committee shall have the authority to
construe and interpret the Plan, any Award and any Award Agreement; to define
the terms used therein; to prescribe, amend, and rescind rules and regulations
relating to administration of the Plan, to determine the duration and purposes
of leaves of absence which may be granted to Participants without constituting a
termination of their employment for purposes of the Plan; and to make all other
determinations necessary or advisable for administration of the Plan, including,
without limitation, compliance with Rule 16b-3. Any determination made by the
Board or the Committee

 

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pursuant to the provisions of the Plan with respect to any Award shall be made
in its sole discretion at the time of the grant of the Award or, unless in
contravention of any express term of the Plan or Award, at any later time.
Determinations of the Board or the Committee on matters referred to in this
section shall be final and conclusive, and shall be binding on all persons,
including the Company and Participants.

Section 4. Stock Subject to Plan

(a) Shares Available for Awards. The total number of shares of the Company’s
authorized but unissued Stock reserved and available for issuance pursuant to
Awards under this Plan shall be 1,500,000 shares, including shares which were
previously subject to Options granted under the Company’s 1998 Stock Option Plan
and will be transferred to this Plan effective May 23, 2007. Eighty percent
(80%) of such shares shall be reserved exclusively for the grant of options to
officers and employees. The remaining twenty percent (20%) of such shares may be
granted to anyone eligible to participate in the Plan, including directors,
officers and employees. If any Option terminates or expires without being
exercised in full or if any shares of Stock subject to a Restricted Stock Award
are forfeited, the shares issuable under such Option or Award shall again be
available for issuance in connection with Awards. Any Award under this Plan
shall be governed by the terms of the Plan and any applicable Award Agreement.

(b) Adjustments. In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split or other change in corporate
structure affecting the Stock without receipt of consideration by the Company,
such substitution or adjustments shall be made in the aggregate number of shares
of Stock reserved for issuance under the Plan, in the number and exercise price
of shares subject to outstanding Options, and in the number of shares subject to
other outstanding Awards, as may be determined to be appropriate by the Board or
the Committee, in its sole discretion; provided, however, that no fractional
shares of Stock shall be issued under the Plan on account of any such
adjustment.

(c) Individual Limitation. The Company may not grant Awards under the Plan for
more than 100,000 shares to any one Participant in any one fiscal year, subject
to adjustment from time to time as provided in Section 4(b) above.
Determinations under the preceding sentence shall be made in a manner that is
consistent with Section 162(m) of the Code and regulations promulgated
thereunder. The provisions of this Section 4(c) shall not apply in any
circumstance with respect to which the Board or the Committee determines that
compliance with Section 162(m) of the Code is not necessary.

Section 5. Eligibility

Awards may be granted to all employees, officers (whether or not they are also
directors), and to non-employee directors of the Company and its subsidiaries.
However, directors of the Company and its subsidiary corporations who are not
also officers or employees of the Company or a subsidiary corporation are not
eligible to receive Incentive Options under the Plan, but only other types of
Awards.

 

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Section 6. Stock Options

(a) Types. Any Option granted under the Plan shall be in such form as the Board
or the Committee may from time to time approve. The Board or the Committee shall
have the authority to grant to any eligible Participant Incentive Options,
Nonqualified Stock Options or both types of Options.

(b) Incentive Options. Incentive Options may be granted only to employees of the
Company or a Subsidiary. Any portion of an Option that is not designated as, or
does not qualify as, an Incentive Option shall constitute a Nonqualified Stock
Option.

(c) Terms and Conditions. Options granted under the Plan shall be subject to the
following terms and conditions:

(i) Option Term. Each Option and all rights or obligations thereunder shall
expire on such date as the Board or the Committee may determine, but not later
than ten (10) years from the date such Option is granted, and shall be subject
to earlier termination as provided elsewhere in the Plan. As to any Incentive
Option granted to an Optionee who, immediately before the option is granted,
owns beneficially more than ten percent (10%) of the outstanding stock of the
Company (whether acquired upon exercise of Options or otherwise), such option
must not be exercisable by its terms after five (5) years from the date of its
grant.

(ii) Grant Date. The time an Option is granted, sometimes referred to as the
grant date, shall be the day of the action of the Board or the Committee
described in Section 3(a) hereof; provided, however, that if appropriate
resolutions of the Board or the Committee indicate that an Option is to be
granted as of and on some future date, the time such Option is granted shall be
such future date. If action by the Board or the Committee is taken by the
unanimous written consent of its members, such action shall be deemed to be at
the time the last Board or Committee member signs the consent.

(iii) Exercise Price. The exercise price per share of stock subject to each
Option shall be determined by the Board or the Committee but shall not be less
than one hundred percent (100%) of the fair market value of such stock at the
time such Option is granted. As to any Incentive Option granted to an Optionee
who, immediately before the Option is granted, owns beneficially more than ten
percent (10%) of the outstanding stock of the Company, the purchase price must
be at least one hundred ten percent (110%) of the fair market value of the stock
at the time when such Option is granted. The fair market value of such stock
shall be determined in accordance with any reasonable valuation method,
consistent with all applicable requirements under the Code, the Exchange Act,
and regulations promulgated thereunder. The purchase price of any shares
purchased shall be paid in full in cash at the time of each such purchase.

(iv) Exercisability. Each Option shall be exercisable in such installments,
which need not be equal, and upon such conditions as the Board or the Committee
shall determine; provided, however, that if an Optionee shall not in any given
installment period purchase all of the shares which such Optionee is entitled to
purchase in such installment period, such Optionee’s right to purchase any
shares not purchased in such installment period shall continue until the
expiration of such Option. No Option or installment thereof shall be exercisable
except with respect to whole shares, and fractional share interests shall be
disregarded except that they may be accumulated in accordance with the next
preceding sentence.

 

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(v) Limit on Exercisability. The aggregate fair market value (determined as of
the time the Option is granted) of the stock for which any officer or employee
may be granted Incentive Options which are first exercisable during any one
calendar year (under all Incentive Stock Option Plans of the Company and its
subsidiaries) shall not exceed One Hundred Thousand Dollars ($100,000).

(vi) Method of Exercise; Payment. Options may be exercised by ten (10) days
written notice delivered to the Company stating the number of shares with
respect to which the Option is being exercised, together with cash in the amount
of the purchase price for such shares. No fewer than ten (10) shares may be
purchased at one time unless the number purchased is the total number which may
be purchased under the Option.

Options may also be exercised by delivering to the Company (i) an exercise
notice instructing the Company to deliver the certificates for the shares
purchased to a designated brokerage firm which shall sell the stock in the
market as soon as the Option is exercised; and (ii) a copy of irrevocable
instructions delivered to the brokerage firm to sell the shares acquired upon
exercise of the Option and to deliver to the Company from the sale proceeds
sufficient cash to pay the exercise price and applicable withholding taxes
arising as a result of the exercise, with the balance of the sales proceeds, if
any, after payment of any broker’s commission, to be credited to the Optionee’s
brokerage account.

The Company may require any Optionee, or any person to whom an Option is
transferred under Section 6(c)(ix) hereof, as a condition of exercising any such
Option, to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the Option for such person’s own
account and not with any present intention of selling or otherwise distributing
the stock. The requirement of providing written assurances, and any assurances
given pursuant to the requirement, shall be inoperative if (i) the shares to be
issued upon the exercise of the Option have been registered under a then
currently effective registration statement under the Securities Act of 1933, as
amended, or (ii) a determination is made by counsel for the Company that such
written assurances are not required in the circumstances under the then
applicable state or federal securities laws.

(vii) Cessation of Employment; Disability. Except as provided in Subsection
6(c)(i) above, if an Optionee ceases to be employed by or to serve as a director
of the Company or a subsidiary corporation for any reason other than death,
disability or cause, such Optionee’s Option shall expire thirty (30) days
thereafter, and during such period after such Optionee ceases to be an employee
or director, such Option shall be exercisable only as to those shares with
respect to which installments, if any, had accrued as of the date on which the
Optionee ceased to be employed by or ceased to serve as a director of the
Company or such subsidiary corporation. Except as provided in Subsections
6(c)(i) above, if an Optionee ceases to be employed by or ceases to serve as a
director of the Company or a subsidiary corporation by reason of disability
(within the meaning of Section 22(e)(3) of the Code), such Optionee’s Option
shall expire not later than one (1) year thereafter, and during such period
after such Optionee ceases to be an employee or a director such Option shall be
exercisable only as to those shares with respect to which installments, if any,
had accrued as of the date on which the Optionee ceased to be employed by or
ceased to serve as a director of the Company or such subsidiary corporation.

 

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(viii) Termination of Employment for Cause. If an Optionee’s employment by or
service as a director of the Company or a subsidiary corporation is terminated
for Cause, such Optionee’s Option shall expire immediately; provided, however,
that the Board may, in its sole discretion, within thirty (30) days of such
termination, waive the expiration of the Option by giving written notice of such
waiver to the Optionee at such Optionee’s last known address. In the event of
such waiver, the Optionee may exercise the Option only to such extent, for such
time, and upon such terms and conditions as if such Optionee had ceased to be
employed by or ceased to serve as a director of the Company or such subsidiary
corporation upon the date of such termination for a reason other than Cause,
disability, or death.

(ix) Death of Optionee. Except as provided in Subsection 6(c)(i) above, if any
Optionee dies while employed by or serving as a director of the Company or a
subsidiary corporation or during the 30-day or one-year period referred to in
Subsection 6(c)(vii) above, such Optionee’s Option shall expire one (1) year
after the date of such death. After such death but before such expiration, the
persons to whom the Optionee’s rights under the Option shall have passed by Will
or by the applicable laws of descent and distribution shall have the right to
exercise such Option to the extent that installments, if any, had accrued as of
the date of the Optionee’s death.

Section 7. Restricted Stock Awards

(a) General. Restricted Stock Awards may be issued hereunder to Participants,
for no cash consideration or for such amount as the Board or the Committee in
its discretion shall determine, either alone or in addition to other Awards
granted under the Plan. The provisions of Restricted Stock Awards need not be
the same with respect to each recipient. The Committee may provide upon grant of
a Restricted Stock Award that any shares of Restricted Stock that may be
purchased by the Holder in cash and are subsequently forfeited by the Holder
prior to the Vesting Date therefor shall be reacquired by the Company at the
purchase price originally paid therefor by the Holder, if applicable.

(b) Issue Date and Vesting Date. At the time of the grant of a Restricted Stock
Award, the Board or the Committee shall establish an Issue Date or Issue Dates
and a Vesting Date or Vesting Dates with respect to such shares. The Board or
the Committee may provide upon grant of a Restricted Stock Award that different
numbers or portions of the shares subject to the Award shall have different
Vesting Dates. The Board or the Committee may also provide that the Vesting
Dates will be accelerated upon the subsequent occurrence of such event (e.g.,
early retirement of the Holder) as the Board or the Committee may specify. The
Board or the Committee also may establish upon grant of a Restricted Stock Award
that some or all of the shares subject thereto shall be subject after the
Vesting Date to additional restrictions upon transfer or sale, although not to
forfeiture.

(c) Issuance of Certificates. Reasonably promptly after the Issue Date with
respect to shares of Restricted Stock, the Company shall cause to be issued a
stock certificate, registered in the name of the Participant to whom such shares
were granted, evidencing such shares; provided, that the Company shall not cause
such a stock certificate to be issued unless it has received a stock power duly
endorsed in blank with respect to such shares. Each such stock certificate shall
bear the following legend:

“The transferability of this certificate and the shares of stock represented
hereby are subject to the restrictions, terms and conditions (including
forfeiture provisions and restrictions

 

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against transfer) contained in the Sierra Bancorp 2007 Stock Incentive Plan and
related Award Agreement, and such rules, regulations and interpretations as
Sierra Bancorp’s Board of Directors or Compensation Committee may adopt. Copies
of the Plan, Award Agreement and rules, regulations and interpretations, if any,
are on file at the principal executive office of Sierra Bancorp, 86 North Main
Street, Porterville, California 93257.”

Such legend shall not be removed until such shares vest pursuant to the terms
hereof.

Each certificate issued pursuant to this Section 7 (c), together with the stock
powers relating to the shares of Restricted Stock evidenced by such certificate,
shall be held by the Company unless the Board or the Committee determines
otherwise.

(d) Consequences of Vesting. Upon the vesting of a share of Restricted Stock
pursuant to the terms of the Plan and the applicable Award Agreement, the
restrictions on transfer described in Section 7(c) shall cease to apply to such
share. Reasonably promptly after a Restricted Stock Award becomes fully vested,
the Company shall cause to be delivered to the Participant to whom such shares
were granted, a certificate evidencing such share, free of the legend set forth
in Section 7(c). If a Restricted Stock Award is partially vested, the Company
may continue to hold the originally issued certificate until fully vested unless
the Participant specifically requests the issuance of a certificate for just the
vested shares. Reasonably promptly after any such request, the Company shall
cause the certificates to be issued separately for the restricted and
unrestricted shares, and shall deliver the unrestricted certificate to the
Participant. Notwithstanding the foregoing, such shares still may be subject to
restrictions on transfer as a result of applicable securities laws.

(e) Dividends. If and to the extent the Board or the Committee so specifies upon
grant, the Holder of shares of Restricted Stock shall be entitled to receive
from the Company, after the grant date and until the Vesting Date, dividends or
other distributions with respect to the shares identical or comparable in
financial value to the dividends and other distributions that would have been
received by the Holder had the shares not been subject to the restrictions on
Restricted Stock imposed under the Plan, and the Holder shall not be required to
return any such distributions to the Company in the event of forfeiture of the
Restricted Stock; provided that any such dividends or distribution payable to
the Holder that constitute Stock or other equity securities of the Company shall
be issued in the same manner and subject to the same restrictions and conditions
as apply to the shares of Restricted Stock as to which such dividends and
distributions are paid. The Board or the Committee in its discretion may require
that any dividends paid on shares of Restricted Stock shall be held in escrow
until all restrictions on such shares have lapsed.

(f) Voting Rights. If and to the extent the Board or the Committee so specifies
upon grant, the Holder of shares of Restricted Stock shall be entitled to vote
or direct the voting of such shares after the grant date and until the Vesting
Date.

 

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(g) Termination. Except to the extent otherwise provided in the Award Agreement
and pursuant to this section, in the event of a Termination of employment or
directorship during the Restriction Period, all shares still subject to
restriction shall be forfeited by the Participant. If the recipient has paid
cash for the Award, the stock will be repurchased at the same price originally
paid by the Participant. In the event that the Company requires such a return of
shares, it also shall have the right to require the return of all dividends paid
on such shares, whether by termination of any escrow arrangement under which
such dividends are held or otherwise, unless otherwise specified in the
applicable Award Agreement.

Section 8. Terminating Events

(a) Impact of Event. In the event of a “Terminating Event” as defined in
Section 2(r), any surviving corporation or entity or acquiring corporation or
entity, or affiliate of such corporation or entity, may assume any Options or
Restricted Stock Awards outstanding under the Plan or may substitute similar
awards for those outstanding under the Plan. In the event any surviving
corporation or entity or acquiring corporation or entity in a Terminating Event
does not assume such Options or Awards or does not substitute similar Options or
other Awards for those outstanding under the Plan, then (i) the vesting of such
Options or other Awards outstanding under the Plan shall be accelerated and made
fully exercisable and all restrictions thereon shall lapse ten (10) days prior
to the closing of the Terminating Event; and (ii) upon the closing of the
Terminating Event, any Options outstanding under the Plan shall be terminated if
not exercised prior to the closing, unless the Board in its sole discretion
determines prior to the effective date of the Terminating Event that all
outstanding Options and the Plan itself should continue in full force and
effect. In the case of such a determination by the Board, or in the event that
any pending Terminating Event does not occur, the Plan and all outstanding
Options and other Awards thereunder shall continue in force with all original
vesting schedules in effect.

(b) Notice to Participants of Terminating Event. Not less than thirty (30) days
prior to a Terminating Event, the Board or the Committee shall notify each
Participant of the pendancy of the Terminating Event. With respect to Holders of
Restricted Stock, the notice shall simply inform such Participants of the
pendancy of the Terminating Event and of the fact that the restrictions on their
Restricted Stock will lapse. In the case of Optionees, the notice shall inform
such Optionees that their Options shall, notwithstanding the provisions of
Sections 5(c)(iv) hereof, become exercisable in full and not only as to those
shares with respect to which installments, if any, have then accrued, subject,
however, to earlier expiration or termination as provided elsewhere in the Plan,
and further subject to the condition that the Terminating Event in fact occurs.
Optionees shall then be entitled to exercise any Options or portions thereof
commencing on the tenth (10th) day, and ending on the third (3rd) day, prior to
the Terminating Event, or at such other times as may be specified by the Board
in connection with the Terminating Event.

Section 9. Acceleration of Options or other Awards.

Notwithstanding the provisions of Sections 6(c)(iv) or 7(b) hereof or any
provision to the contrary contained in any Award Agreement, the Board or the
Committee, in its sole discretion, may accelerate the vesting of all or any
Award then outstanding. The decision by the Board or the Committee to accelerate
an Award or to decline to accelerate an Award shall be final. In the event of
the acceleration of Options as the result of a decision by the Board or the
Committee pursuant to this Section 9, each outstanding Option so accelerated
shall be

 

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exercisable for a period from and after the date of such acceleration and upon
such other terms and conditions as the Board or the Committee may determine in
its sole discretion, provided that such terms and conditions (other than terms
and conditions relating solely to the acceleration of exercisability and the
related termination of an Option) may not adversely affect the rights of any
Participant without the consent of the Participant so adversely affected. Any
outstanding Option which has not been exercised by the holder at the end of such
period shall terminate automatically at that time.

Section 10. General Provisions

(a) Award Grants. Any Award may be granted either alone or in addition to other
Awards granted under the Plan. Subject to the terms and restrictions set forth
elsewhere in the Plan, the Board or the Committee shall determine the
consideration, if any, payable by the Participant for any Award and, in addition
to those set forth in the Plan, any other terms and conditions of the Awards.
The Board or the Committee may condition the grant or payment of any Award upon
the attainment of specified performance goals or such other factors or criteria,
including vesting based on continued service on the Board or employment, as the
Board or the Committee shall determine. Performance objectives may vary from
Participant to Participant and among groups of Participants and shall be based
upon such Company, subsidiary, group or division factors or criteria as the
Committee may deem appropriate, including, but not limited to, earnings per
share or return on equity. The other provisions of Awards also need not be the
same with respect to each recipient. Unless specified otherwise in the Plan or
by the Board or the Committee, the date of grant of an Award shall be the date
of action by the Board or the Committee to grant the Award, provided that
Participants do not have the ability to further negotiate the terms of their
awards, and provided further that the awards will be communicated to
Participants within a relatively short period of time following the Board’s or
the Committee’s action.

(b) Award Agreement. As soon as practicable after the date of an Award grant,
the Company and the Participant shall enter into a written Award Agreement
identifying the date of grant, and specifying the terms and conditions of the
Award. Options are not exercisable until after execution of the Award Agreement
by the Company and the Participant, but a delay in execution of the Award
Agreement shall not affect the validity of the Option grant.

(c) Certificates; Transfer Restrictions. All certificates for shares of Stock or
other securities delivered under the Plan shall be subject to such stock
transfer orders, legends and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the SEC, any
market in which the Stock is then traded and any applicable federal, state or
foreign securities laws.

(d) Tax Withholding. Whenever shares of Stock are issued or to be issued
pursuant to Awards, the Company shall have the right to require the Participant
to remit to the Company an amount sufficient to satisfy federal, state, local or
other withholding tax requirements if, when, and to the extent required by law
(whether so required to secure for the Company an otherwise available tax
deduction or otherwise) prior to the delivery of any certificate or certificates
for such shares. The obligations of the Company under the Plan shall be
conditional on satisfaction of all such withholding obligations and the Company
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the Participant. With the approval
of the Board or the Committee, which it shall have sole discretion to grant, the
Participant may elect to satisfy an applicable withholding requirement,

 

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in whole or in part, by having the Company withhold from delivery shares of
Stock having a value equal to the amount of tax to be withheld. Such shares
shall be valued at their fair market value on the date as of which the amount of
tax to be withheld is determined. Fractional share amounts shall be settled in
cash.

(e) Notification of Election Under Section 83(b) of the Code. If any Participant
shall, in connection with the acquisition of shares of Restricted Stock under
the Plan, make the election permitted under Section 83(b) of the Code (i.e., an
election to include in gross income in the year of transfer the amounts
specified in Section 83(b)), such Participant shall notify the Company of such
election within ten days of filing notice of the election with the Internal
Revenue Service, in addition to any filing and notification required pursuant to
regulations issued under the authority of Section 83(b).

(f) Transferability. No Award shall be assignable or otherwise transferable by
the Participant other than by will or by the laws of descent and distribution.
During the life of a Participant, an Award shall be exercisable, and any
elections with respect to an Award may be made, only by the Participant or the
Participant’s guardian or legal representative.

(g) Adjustment of Awards; Waivers. The Board or the Committee may adjust the
performance goals and measurements applicable to Awards (i) to take into account
changes in law and accounting and tax rules, (ii) to make such adjustments as
the Board or the Committee deems necessary or appropriate to reflect the
inclusion or exclusion of the impact of extraordinary or unusual items, events
or circumstances in order to avoid windfalls or hardships, and (iii) to make
such adjustments as the Board or the Committee deems necessary or appropriate to
reflect any material changes in business conditions. In the event of hardship or
other special circumstances of a Participant and otherwise in its discretion,
the Board or the Committee may waive in whole or in part any or all
restrictions, conditions, vesting, or forfeiture with respect to any Award
granted to such Participant.

(h) Non-Competition. The Board or the Committee may condition its discretionary
waiver of a forfeiture, the acceleration of vesting at the time of Termination
of a Participant holding any unexercised or unearned Award, the waiver of
restrictions on any Award, or the extension of the expiration period to a period
not longer than that provided by the Plan upon such Participant’s agreement (and
compliance with such agreement) (i) not to engage in any business or activity
competitive with any business or activity conducted by the Company and (ii) to
be available for consultations at the request of the Company’s management, all
on such terms and conditions (including conditions in addition to (i) and (ii))
as the Board or the Committee may determine.

(i) Regulatory Compliance. Each Award under the Plan shall be subject to the
condition that, if at any time the Board or the Committee shall determine that
(i) the listing, registration or qualification of the shares of Stock upon any
securities exchange or for trading in any securities market or under any state
or federal law, (ii) the consent or approval of any government or regulatory
body or (iii) an agreement by the Participant with respect thereto, is necessary
or desirable, then such Award shall not be consummated in whole or in part
unless such listing, registration, qualification, consent, approval or agreement
shall have been effected or obtained free of any conditions not acceptable to
the Board or the Committee.

 

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(j) Rights as Shareholder. Unless the Plan, the Board or the Committee expressly
specifies otherwise, an Optionee shall have no rights as a shareholder with
respect to any shares covered by an Option until the stock certificates
representing the shares are actually delivered to the Optionee. Except as
specified in Section 4(b), no adjustment shall be made for dividends or other
rights for which the record date is prior to the date the certificates are
delivered. The rights of Holders shall be as specified in their Award
Agreements, as determined by the Board or the Committee in accordance with
Section 7 hereof.

(k) Beneficiary Designation. The Board or the Committee, in its discretion, may
establish procedures for a Participant to designate a beneficiary to whom any
amounts payable in the event of the Participant’s death are to be paid.

(l) Additional Plans. Nothing contained in the Plan shall prevent the Company or
a subsidiary from adopting other or additional compensation arrangements for its
directors and employees.

(m) No Employment Rights; No Right to Directorship. Neither the adoption of this
Plan nor the grant of any Award hereunder shall (i) confer upon any employee any
right to continued employment nor shall it interfere in any way with the right
of the Company or a subsidiary to terminate the employment of any employee at
any time; or (ii) confer upon any Participant any right with respect to
continuation of the Participant’s membership on the Board or interfere in any
way with provisions in the Company’s Articles of Incorporation and Bylaws
relating to the election, appointment, terms of office, and removal of members
of the Board.

(n) Rule 16b-3. With respect to persons subject to Section 16 of the Exchange
Act, transactions under this Plan are intended to comply with the applicable
conditions of Rule 16b-3. To the extent any provision of this Plan or action by
the Board or the Committee fails to so comply, it shall be adjusted to comply
with Rule 16b-3, to the extent permitted by law and deemed advisable by the
Board or the Committee. It shall be the responsibility of persons subject to
Section 16 of the Exchange Act, not of the Company, the Board or the Committee,
to comply with the requirements of Section 16 of the Exchange Act; and neither
the Company nor the Committee shall be liable if this Plan or any transaction
under this Plan fails to comply with the applicable conditions of Rule 16b-3, or
if any such person incurs any liability under Section 16 of the Exchange Act.

(o) Governing Law. The Plan and all Awards shall be governed by and construed in
accordance with the laws of the State of California.

(p) Use of Proceeds. All cash proceeds to the Company under the Plan shall
constitute general funds of the Company.

(q) Assumption by Successor. The obligations of the Company under the Plan and
under any outstanding Award may be assumed by any successor corporation, which
for purposes of the Plan shall be included within the meaning of “Company.”

 

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Section 11. Amendments and Termination

The Board may amend, alter or discontinue the Plan or any Award, but no
amendment, alteration or discontinuance shall be made which would impair the
rights of a Participant under an outstanding Award without the Participant’s
consent. No amendment, alteration or discontinuance shall require shareholder
approval unless it would:

(a) increase in the total number of shares reserved for issuance pursuant to
Awards under the Plan;

(b) change the minimum option price for Options;

(c) increase the maximum term of Awards provided for herein;

(d) expand the types of awards which may be issued under the Plan; or

(e) permit Awards to be granted to anyone other than a director or an officer or
employee of the Company or a subsidiary corporation.

Any amendment or modification requiring shareholder approval shall be deemed
adopted as of the date of the action of the Board effecting such amendment or
modification and shall be effective immediately, unless otherwise provided
therein, subject to approval thereof within twelve (12) months before or after
the effective date by (i) a majority of the shares of the Company’s stock
represented and voting in person or by proxy at a duly held shareholders’
meeting; or (ii) the written consent of the holders of a majority of the
Company’s outstanding shares.

Section 12. Effective Date of Plan

The Plan shall be deemed adopted as of the date first shown herein and shall be
effective immediately, subject to approval hereof within twelve (12) months
before or after said date by (i) a majority of the shares of the Company’s stock
represented and voting in person or by proxy at a duly held shareholders’
meeting; or (ii) the written consent of the holders of a majority of the
Company’s outstanding shares.

Section 13. Term of Plan

No Award shall be granted on or after February 15, 2017, but Awards granted
prior to February 15, 2017 may extend beyond that date.

 

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