Prepared by MerrillDirect





 


NATIONAL
MERCANTILE BANCORP

AMENDED 1996 STOCK INCENTIVE PLAN

AMENDED AS OF APRIL 26, 2001



Section 1.         PURPOSE


             The
purpose of the 1996 Stock Incentive Plan (the "1996 Plan") of
National Mercantile Bancorp, a California corporation and a registered bank holding
company under the Bank Holding Company Act of 1956, as amended (the
"Company"), is to enable the Company to attract, retain and motivate
its employees and independent contractors by providing for or increasing the
proprietary interests of such employees and independent contractors in the
Company, and to enable the Company to attract, retain and motivate its
nonemployee directors and further align their interest with those of the
shareholders of the Company by providing for or increasing the proprietary
interest of such directors in the Company.


2.          PERSONS
ELIGIBLE


             Each
director, officer, employee or independent contractor of the Company or any of
its subsidiaries (each, a "Participant") shall be eligible to be
considered for the grant of an Award (as hereinafter defined) under the 1996
Plan. Directors who are not employees ("Nonemployee Directors") may
receive awards in addition to those described under Section 10 of the 1996
Plan.


3.          AWARDS


(a)              The Committee (as hereinafter
defined) responsible for administration of the 1996 Plan is authorized to enter
into any type of arrangement on behalf of the Company with a Participant that
is not inconsistent with the provisions of the 1996 Plan and that, by its
terms, involves or might involve the issuance of (i) shares of common stock of
the Company ("Common Shares") or (ii) Derivative Security (as such
term is defined in Rule 16a-1 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as such rule may be amended
from time to time) with an exercise or conversion privilege at a price related
to the Common Shares or with a value derived from the value of the Common
Shares. The entering into of any such arrangement is referred to herein as the
grant of an "Award."



(b)              Awards are not restricted to any
specified form or structure and may include, without limitation, sales or
bonuses of stock, restricted stock, stock options, reload stock options, stock
purchase warrants, other rights to acquire stock, securities convertible into
or redeemable for stock, stock appreciation rights, phantom stock, dividend
equivalents, performance units or performance shares, and an Award may consist
of one such security or benefit, or two or more of them in tandem or in the
alternative.



(c)              Awards may be issued, and Common
Shares may be issued pursuant to an Award, for any lawful consideration as
determined by the Committee, including, without limitation, services rendered
by the recipient of such Award.



(d)              Subject to the provisions of the
1996 Plan, the Committee, in its sole and absolute discretion, shall determine
all of the terms and conditions of each Award granted hereunder, which terms
and conditions may include, among other things:



(i)       a provision permitting the recipient of
such Award, including any recipient who is a director or officer of the
Company, to pay the purchase price of the Common Shares or other property
issuable pursuant to such Award, or such recipient's tax withholding obligation
with respect to such issuance, in whole or in part, by any one or more of the
following:






(A)     the delivery of cash;



(B)     the delivery of other property deemed
acceptable by the Committee;



(C)     the delivery of previously owned shares of
capital stock of the Company (including "pyramiding"); or



(D)     a reduction in the amount of Common Shares
or other property otherwise issuable pursuant to such Award.



(ii)      a provision conditioning or accelerating
the receipt of benefits pursuant to such Award, either automatically or in the
discretion of the Committee, upon the occurrence of specified events,
including, without limitation, a change of control of the Company (as defined
by the Committee), an acquisition of a specified percentage of the voting power
of the Company, the dissolution or liquidation of the Company, a sale of
substantially all of the property and assets of the Company or an event of the
type described in Section 7 hereof; or



(iii)     a provision required in order for such
Award to qualify as an incentive stock option (an "Incentive Stock
Option") under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"); PROVIDED, HOWEVER, that no Award issued to any
Nonemployee Director or any independent contractor of the Company shall qualify
as an Incentive Stock Option.



Section 4.         STOCK
SUBJECT TO THE 1996 PLAN


(a)              At any time, the aggregate number
of Common Shares issued or issuable pursuant to all Awards (including all
Incentive Stock Options) granted under the 1996 Plan shall not exceed 448,510
shares subject to adjustment as provided in Section 7 hereof.



(b)              For purposes of Section 4(a)
hereof, the aggregate number of Common Shares issued or issuable pursuant to
Awards granted under the 1996 Plan shall at any time be deemed to be equal to
the sum of the following:



(i)       the number of Common Shares that were
issued prior to such time pursuant to Awards granted under the 1996 Plan, other
than Common Shares that were subsequently reacquired by the Company pursuant to
the terms and conditions of such Awards and with respect to which the holder
thereof received no benefits of ownership such as dividends; plus



(ii)      the number of Common Shares that were
otherwise issuable prior to such time pursuant to Awards granted under the 1996
Plan, but that were withheld by the Company as payment of the purchase price of
the Common Shares issued pursuant to such Awards or as payment of the
recipient's tax withholding obligation with respect to such issuance; plus



(iii)     the maximum number of Common Shares that
are or may be issuable at or after such time pursuant to Awards granted under
the 1996 Plan prior to such time.



Section 5.         DURATION


             Unless
sooner terminated pursuant to Section 8 below, the 1996 Plan shall terminate on
March 28, 2006. No Awards shall be granted under the 1996 Plan while the 1996
Plan is suspended or after it is terminated.





Section 6.         ADMINISTRATION


(a)              The 1996 Plan shall be
administered by a committee (the "Committee") of the Board of
Directors of the Company (the "Board") consisting of two or more
directors, each of whom: (i) is a "disinterested person" (as such
term is defined in Rule 16b-3 promulgated under the Exchange Act, as such Rule
may be amended from time to time); and (ii) is an "outside director"
within the meaning of Section 162(m) of the Code. Members of the Committee
shall serve at the pleasure of the Board, and the Board may from time to time
remove members from or add members to, the Committee.



(b)              Subject to the provisions of the
1996 Plan, the Committee shall be authorized and empowered to do all things
necessary or desirable in connection with the administration of the 1996 Plan,
including, without limitation, the following:



(i)       adopt, amend and rescind rules and
regulations relating to the 1996 Plan;



(ii)      determine which persons are Participants
and to which of such Participants, if any, Awards shall be granted hereunder;



(iii)     grant Awards to Participants and determine
the terms and conditions thereof, including the number of Common Shares
issuable pursuant thereto;



(iv)     determine the terms and conditions of the
Nonemployee Director Options that are automatically granted hereunder, other
than the terms and conditions specified in Section 10 hereof;



(v)      determine whether, and the extent to which
adjustments are required pursuant to Section 7 hereof; and



(vi)     interpret and construe the 1996 Plan and
the terms and conditions of any Award granted hereunder.



Section 7.         ADJUSTMENTS


             If
the outstanding shares of the class of Company stock then subject to the 1996
Plan are increased, decreased or exchanged for or converted into cash, property
or a different number or kind of securities, or if cash, property or securities
are distributed in respect of such outstanding securities, in either case as a
result of a reorganization, merger, consolidation, recapitalization,
restructuring, reclassification, dividend (other than a regular cash dividend)
or other distribution, stock split, reverse stock split or the like, or if
substantially all of the property and assets of the Company are sold, then,
unless the terms of such transaction shall provide otherwise, the Committee
shall make appropriate and proportionate adjustments in: (i) the number and
type of shares or other securities or cash or other property that may be
acquired pursuant to Awards theretofore granted under the 1996 Plan; and (ii) the
maximum number and type of shares or other securities that may be issued
pursuant to Awards thereafter granted under the 1996 Plan. The determination of
the Committee as to what adjustments shall be made pursuant to this section,
and the extent thereof, shall be final and conclusive. No fractional shares of
stock shall be issued under the 1996 Plan on account of any such adjustment.


Section 8.         AMENDMENT
AND TERMINATION


             The
Board may suspend or terminate the 1996 Plan at any time; PROVIDED, HOWEVER,
that no such suspension or termination shall deprive the recipient of any Award
theretofore granted under the 1996 Plan, without the consent of such recipient,
of any of his or her rights thereunder or with respect thereto.





             The Board may amend the 1996 Plan at any time and in any
manner subject to the following limitations:


(a)              No such amendment shall deprive
the recipient of any Award theretofore granted under the 1996 Plan, without the
consent of such recipient, of any of his or her rights thereunder or with
respect thereto;



(b)              Except as otherwise provided in
Section 7 relating to adjustments upon changes in stock, no such amendment
shall be effective unless approved by the affirmative vote of the holders of a
majority of the outstanding shares of the Company present, represented and
entitled to vote at a shareholders meeting or by the written consent of a
majority of the outstanding shares of the Company where such shareholder
approval is required by law or pursuant to the Articles of Incorporation or Bylaws
of the Company; and



(c)              Section 10 hereof shall not be
amended more than once every six (6) months, other than to comport with changes
in the Code, the Employee Retirement Income Security Act, or the rules and
regulations thereunder.



Section 9.         EFFECTIVE
DATE


             The
1996 Plan shall be effective as of June 18, 1997, the date upon which it was
approved by the shareholders of the Company; PROVIDED, HOWEVER, that no Common
Shares may be issued under this Plan until it has been approved, director or
indirectly, by the affirmative vote of the holders (the
"Shareholders") of a majority of the outstanding shares of the
Company present, or represented, and entitled to vote at a meeting duly held in
accordance with the laws of the State of California.


Section 10.      NONEMPLOYEE
DIRECTOR OPTIONS


(a)              Any person elected or appointed to
serve as a Nonemployee Director who has not previously served as a Nonemployee
Director of the Company on or prior to October 1, 1996, shall be granted, on
the first business day following the later of the date of such election or
appointment or the date the 1996 Plan is approved by the Shareholders, an
option to purchase 1,100 Common Shares without the requirement of any further
action by the Committee. On the first business day following the date of the
annual meeting of shareholders of the Company held in 1998, or any adjournment
thereof (the "1998 Meeting"), any person who was a Nonemployee
Director on or after the effective date of the 1996 Plan and who is re-elected
to the Board at the 1998 Meeting shall be granted an option to purchase 550
Common Shares without the requirement of any further action by the Committee.
Options that may be granted to newly-elected Nonemployee Directors or to
re-elected Nonemployee Directors under this Section 10 shall be referred to
collectively as the "Nonemployee Director Options." The date on which
a Nonemployee Director Option is granted shall be the Date of Grant for such
option.



(b)              If, on any date upon which
Nonemployee Director Options are to be automatically granted pursuant to this
Section 10, the number of Common Shares remaining available for options under
the 1996 Plan is insufficient for the grant to each Nonemployee Director
entitled thereto of a Nonemployee Director Option to purchase the entire number
of Common Shares specified in this Section 10, then a Nonemployee Director
Option to purchase a proportionate amount of such available number of Common
Shares (rounded to the nearest whole share) shall be granted to each
Nonemployee Director entitled thereto on such date.






(c)              Each Nonemployee Director Option
granted under the 1996 Plan shall become fully exercisable one year from the
Date of Grant, provided that in the event that a Change of Control (as defined
below) shall occur, such granted Nonemployee Director Option shall be
immediately exercisable.



(d)              Each Nonemployee Director Option
granted under the 1996 Plan shall expire upon the sixth anniversary of the Date
of Grant.



(e)              Each Nonemployee Director Option
shall have an exercise price equal to the aggregate Fair Market Value on the
Date of Grant of the Common Shares subject thereto.



(f)               Payment of the exercise price of
any Nonemployee Director Option granted under the 1996 Plan shall be made in
full in cash concurrently with the exercise of such option; PROVIDED HOWEVER,
that, in the discretion of the Board, the payment of such exercise price may
instead be made:



(i)       in whole or in part, with Common Shares
delivered concurrently with such exercise (such shares to be valued on the
basis of the Fair Market Value of such shares on the date of such exercise),
provided that the Company is not then prohibited from purchasing or acquiring
Common Shares; or



(ii)      in whole or in part, by the delivery,
concurrently with such exercise and in accordance with Section 220.3(e)(4) of
Regulation T promulgated under the Exchange Act, of a properly executed
exercise notice for such option and irrevocable instructions to a broker
promptly to deliver to the Company a specified dollar amount of the proceeds of
a sale of or a loan secured by the Common Shares issuable upon exercise of such
option.



(g)              For purposes of this Section 10,
the "Fair Market Value" of a Common Share or other security on any
date (the "Determination Date") shall be equal to the average of the
high bid and low asked prices per Common Share or unit of such other security
on the business day immediately preceding the Determination Date in the market
where the security is traded, or, if the Common shares or such other security
were not quoted by any such organization on such immediately preceding business
day, as determined by the Board. for purposes of this Section 10, the term
"Change of Control" shall mean the occurrence of either of the
following events: (a) the Company consolidates with or merges with or into any
person or conveys, transfers or leases all or substantially all of its assets
to any person, or any corporation consolidates with or merges into or with the
Company in any event pursuant to a transaction in which the outstanding voting
stock or units of the Company is changed into or exchanged for cash, securities
or other property, other than any such transaction where the outstanding voting
stock or units of the Company is not changed or exchanged at all (except to the
extent necessary to reflect a change in the jurisdiction of incorporation or
organization of the Company) or where the outstanding voting stock or units of
the Company is changed into or exchanged for voting stock or units of the
surviving corporation or organization which is not redeemable, or no
"person" or "group" owns immediately after such
transaction, directly or indirectly, an amount of outstanding voting stock or
units necessary to effect the change of control of, or influence over, the surviving
corporation or organization, as the case may be, or (b) the Company is
liquidated or dissolved or adopts a plan of liquidation or dissolution.



(h)              Each Nonemployee Director Option
shall be nontransferable by the optionee other than by will or the laws of
descent and distribution, and shall be exercisable during the optionee's
lifetime only by the optionee or the optionee's guardian or legal
representative.



(i)               Nonemployee Director Options are
not intended to qualify as Incentive Stock Options.



(j)               Any options granted to
Nonemployee Directors in addition to the automatic options granted under
Section 10(a) shall be considered "Nonemployee Director Options" for
purposes of this Section 10.