**Exhibit 10.10**

 

**1st CENTENNIAL BANCORP**

 

**2001 StockIncentive Plan**

**as Amended and Restated**

**March 19, 2004**

 

**Section 1. Purpose**

 

The purpose of the 1st Centennial Bancorp 2001 Stock Incentive Plan, as amended (the “Plan”) is to (i) encourage selected employees and directors of 1st Centennial Bancorp (the “Company”) and its subsidiaries to acquire a proprietary and vested interest in the growthand 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 theCompany 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, Tandem SAR, Stand-Alone SAR, Restricted StockAward, or share of Phantom Stock. 

 

(b) “AwardAgreement” 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 Personnel and CompensationCommittee of 1st Centennial Bancorp and 1st Centennial Bank. 

 

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

 

(g) “Fair Market Value” means as of any given date (a) if the Stockis listed on any established stock exchange or a national market system, either the closing sale price for the Stock or the closing bid if no sales were reported, or the average of the bid and ask prices, as selected by the Committee in itsdiscretion, as quoted on such system or exchange, as reported in The Wall Street Journal; or (b) in the absence of an established market for the Stock, the fair market value of the Stock as determined by the Committee or the Board in good faith.

(h) “Holder” means the holder of a Restricted Stock Award. 

 

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

 

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

 

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

 

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

 

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

 

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

 

(o) A share of “Phantom Stock” shallmean the right, granted pursuant to Section 10, to receive in cash the Fair Market Value of a share of Stock. 

 

(p) “Restricted Stock” or “Restricted Stock Award” means an Award of Stock subject to restrictions, as more fully described in Section7. 

 

(q) “Restriction Period” means the perioddetermined by the Committee or the Board under Section 7(b). 

 

(r) “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. 

 

(s) “Stand-Alone SAR” shall mean a stock appreciation right granted pursuant to Section 9, which is not related to any Option. 

 

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

 

(u) “Tandem SAR” shallmean a stock appreciation right granted pursuant to Section 8, which is related to an Option. 

 

(v) “Terminating Event” has the meaning set forth in Section 11(a). 

 

(w) “Termination” means, for purposes of the Plan, with respect to a Participant, that (a) if the Participant is a director of the Company, heor 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. 

(x) “Termination for Cause” in the case of an employee, shall mean termination for malfeasanceor 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 ofregulatory 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 of Directors with respect thereto shall be final andconclusive. 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 banksupervisory agency. 

 

(y) “Vesting Date” means, for anOption 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 inthe hands of the Participant. 

 

**Section 3. Administration**

 

(a) **General.** The Plan shall be administered by the Committee withrespect to (i) approving Option grants and Restricted Stock or other 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 toNamed Executive Officers; or (iii) imposing limitations, restrictions and conditions upon any such grant or award as the Committee deems necessary or advisable. The members of the Committee shall at all times (i) meet the independence requirementsof 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. In connection with theadministration 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 suchadministration to the Committee with respect to such other aspects of the Plan. Nothing contained herein shall prevent the Board of Directors from delegating to the Committee full power and authority over the administration of the Plan. In addition,the Board or the Committee may, in its discretion, delegate to the Chief Executive Officer and/or the Chief Financial Officer, authority to grant stock options or other awards to officers and employees who are neither executive officers nordirectors of the Company or its subsidiaries, subject to such limitations or conditions on such authority as the Board or the Committee may impose. 

 

Any action of the Board of Directors or the Committee with respect to administration of the Plan shall be taken pursuant to a majority vote of itsmembers; provided, however, that with respect to action by the Board of Directors 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 interesteddirector, who shall abstain as to any vote on his option or award. An interested director may be counted in determining the presence of a quorum at a meeting of the Board of Directors where such action will be taken. 

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

 

(i) elect the directors, officers and other employees to whom wards 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 grantedunder the Plan; and 

 

(iv) determine the terms and conditions ofany Award granted under the Plan and any related loans to be made by the Company, based upon factors determined by the Committee. 

 

(c) **Board and Committee Determinations Binding.** Subject to the express provisions of the Plan, the Board (or the Committee, if authorized) shallhave 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 andpurposes 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 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 theAward or, unless in contravention of any express term of the Plan or Award, at any later time. Determinations of the Board (or the Committee, if authorized) on matters referred to in this section shall be final and conclusive, and shall be bindingon all persons, including the Company and Participants. 

 

**Section 4. StockSubject to Plan**

 

(a) **Shares Available for Awards.**The total number of shares of Stock reserved and available for issuance pursuant to Awards under this Plan shall be 450,684 shares (30% of the number of shares of the Company’s stock issued and outstanding as of March 19, 2004), including170,030 shares which were previously subject to Options granted under the Company’s 1990 Stock Option Plan, and were transferred to this Plan on February 20, 2002. Such shares may consist, in whole or in part, of authorized and unissued sharesor treasury shares or shares reacquired in private transactions or open market purchases, but all shares issued under the Plan, regardless of source, shall be counted against the 450,684 share limitation. If any Option terminates or expires withoutbeing exercised in full or if any shares of Stock subject to a Restricted Stock Award are forfeited, or if an Award otherwise terminates without a payment being made to the Participant in the form of Stock, the shares issuable under such Option orAward 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, stocksplit 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 thenumber 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 solediscretion; provided, however, that the number of shares subject to any Award shall always be a whole number. 

 

(c) **Individual Limitation.** The Company may not grant Awards under the Plan for more than 150,000 shares to any one Participant in any one fiscalyear, 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. Theprovisions 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 salaried employees, including officers and directors, and non-employee directors of the Companyand its subsidiaries. However, directors of the Company and its subsidiary corporations who are not also salaried officers or employees of the Company or a subsidiary corporation are not eligible to receive Incentive Options under the Plan, but onlyother types of Awards. 

 

**Section 6. Stock Options**

 

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

 

(b) **Incentive Options.** Incentive Options may be granted only tosalaried 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 besubject to the following terms and conditions: 

 

(i) **OptionTerm.** Each Option and all rights or obligations thereunder shall expire on such date as the Board of Directors or the Committee may determine, but not later than ten (10) years from the date such Option is granted, and shall be subject toearlier 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 (whetheracquired 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 of Directors(or the Committee, as applicable) described in Section 3(a) hereof; provided, however, that if appropriate resolutions of the Board of Directors (or the Committee) indicate that an Option is to be granted as of and on some future date, the time suchOption is granted shall be such future date. If action by the Board of Directors (or the Committee) is taken by the unanimous written consent of its members, the action of the Board of Directors (or the Compensation Committee) shall be deemed to beat 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 bedetermined by the Board of Directors 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, immediatelybefore 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 suchOption is granted. The fair market value of such stock shall be determined in accordance with any reasonable valuation method, including the valuation methods described in Treas. Reg. § 20.2031-2. The purchase price of any shares purchasedshall 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 of Directors or the Committee shall determine; provided, however, that if an Optionee shallnot 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 untilthe 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 precedingsentence. 

 

(v) **Method of Exercise; Payment.** Options maybe 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 sharespurchased 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 Optionand 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’scommission, 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)(viii) hereof, as a condition of exercising any such Option, to give written assurances satisfactory to the Company stating that suchperson 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 givenpursuant 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) adetermination is made by counsel for the Company that such written assurances are not required in the circumstances under the then applicable federal securities laws. 

(vi) **Cessation of Employment; Disability.** Except as provided in Subsections 6(c)(i) above and6(c)(vii) below, 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 or disability, such Optionee’s Option shall expire ninety (90) days thereafter, andduring 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 employedby or ceased to serve as a director of the Company or such subsidiary corporation. Except as provided in Subsections 6(c)(i) above 6(c)(vii) below, if an Optionee ceases to be employed by or ceases to serve as a director of the Company or asubsidiary 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 employeeor 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 suchsubsidiary corporation. 

 

(vii) **Termination of Employment forCause.** 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 of Directors may, inits 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 mayexercise 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 suchtermination for a reason other than Cause, disability, or death. 

 

(viii) **Death of Optionee.** Except as provided in Subsections 6(c)(i) and 6(c)(vii) above, if any Optionee dies while employed by or serving as a director of the Company or a subsidiary corporation or during the 90-day or one-yearperiod referred to in Subsection 6(c)(vi) 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 shallhave 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 on which the Optionee ceased to be employed by or ceased toserve as a director of the Company or such subsidiary corporation. 

 

**Section7. Restricted Stock**

 

(a) **General.** Restricted StockAwards 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 ofRestricted 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 subsequentlyforfeited 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 Boardor 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 theshares subject to the Award shall have different Vesting Dates. The Board or the Committee also may provide that the Vesting Dates will be accelerated upon the subsequent occurrence of a “change in control” of the Company, as defined bythe Committee, or such other occurrence (e.g., early retirement of the Holder) as the Committee may specify. The Committee also may establish upon grant of a Restricted Stock Award that some or all of the shares subject thereto shall be subjectafter 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 beissued 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 powerduly 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 (includingforfeiture provisions and restrictions against transfer) contained in the 1st Centennial Bancorp 2001 StockIncentive Plan and related Award Agreement, and such rules, regulations and interpretations as 1st CentennialBancorp’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 1st Centennial Bancorp, 218 East State Street, Redlands, California 92373.” 

 

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 thestock 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 andthe applicable Plan Agreement, the restrictions on transfer described in Section 7(c) shall cease to apply to such share. Reasonably promptly after a share of Restricted Stock vests, the Company shall cause to be delivered to the Participant to whomsuch shares were granted, a certificate evidencing such share, free of the legend set forth in Section 7(c). Notwithstanding the foregoing, such share 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 theCommittee 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 orcomparable 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 thePlan, 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 otherequity 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 inits 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 beentitled to vote or direct the voting of such shares after the grant date and until the Vesting Date. 

 

(g) **Termination.** Except to the extent otherwise provided in the Award Agreement and pursuant to this section, in the event of a Termination duringthe 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 eventthat 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.

 

**Section 8. Tandem SARS**

 

The Board or the Committee may grant in connection with any Option grantedhereunder one or more Tandem SARS relating to a number of shares of Stock less than or equal to the number of shares of Stock subject to the related Option. A Tandem SAR may be granted at the same time as, or, in the case of a Non-Qualified StockOption, subsequent to the time that its related Option is granted. 

 

(a) **Benefit Upon Exercise.** The exercise of a Tandem SAR with respect to any number of shares of Stock shall entitle the Participant to a payment, for each such share, equal to the excess of (i) the Fair Market Value of a share ofStock on the exercise date over (ii) the option exercise price of the related Option. Such payment shall be made as soon as practicable after the effective date of such exercise. The Board or the Committee shall specify at the time of grant that thevalue of the SAR shall be paid in cash, in Stock reserved under the Plan, or a combination of both, or that the Participant can choose the method of payment at the time of exercise. 

 

(b) **Term and Exercise of Tandem SAR.**

 

(i) A Tandem SAR shall be exercisable only if and to the extent that its related Option is exercisable. 

 

(ii) The exercise of a Tandem SAR with respect to a number of shares of Stockshall cause the immediate and automatic cancellation of its related Option with respect to an equal number of shares. The exercise of an Option, or the cancellation, termination or expiration of an Option (other than pursuant to this Section8(b)(ii)), with respect to a number of shares of Stock shall cause the automatic and immediate cancellation of any related Tandem SARS to the extent that the number of shares of Stock remaining subject to such Option is less than the number ofshares subject to such Tandem SARS. 

Tandem SARS shall be cancelled in the order in which they became exercisable. 

 

(iii) A Tandem SAR may be exercised for all or any portion of the shares asto which it is exercisable; provided, that no partial exercise of a Tandem SAR shall be for an aggregate exercise price of the related Option of less than $1,000. The partial exercise of a Tandem SAR shall not cause the expiration, termination orcancellation of the remaining portion thereof. 

 

(iv) No TandemSAR shall be assignable or transferable otherwise than together with its related Option. 

 

(v) A Tandem SAR shall be exercised by delivering notice to the Company’s principal office, to the attention of its Secretary (or the Secretary’s designee), no less than two (2) business days in advance ofthe effective date of the proposed exercise. Such notice shall be accompanied by the applicable Award Agreement, shall specify the number of shares of Stock with respect to which the Tandem SAR is being exercised and the effective date of theproposed exercise and shall be signed by the Participant or other person then having the right to exercise the Option to which the Tandem SAR is related. Such notice may be withdrawn at any time prior to the close of business on the business dayimmediately preceding the effective date of the proposed exercise. 

 

**Section9. Stand-Alone SARS**

 

(a) **Exercise Price.** Theexercise price per share of a Stand-Alone SAR shall be determined by the Board or the Committee at the time of grant, but shall in no event be less than the Fair Market Value of a share of Stock on the date of grant. 

 

(b) **Benefit Upon Exercise.** The exercise of a Stand-Alone SAR withrespect to any number of shares of Stock shall entitle the Participant to a payment, for each such share, equal to the excess of (i) the Fair Market Value of a share of Stock on the exercise date over (ii) the exercise price of the Stand-Alone SAR.Such payments shall be made as soon as practicable. The Board or the Committee shall specify at the time of grant that the value of the SAR shall be paid in cash, in Stock reserved under the Plan, or a combination of both, or that the Participantcan choose the method of payment at the time of exercise. 

 

(c)**Term and Exercise of Stand-Alone SARS.**

 

(i) AStand-Alone SAR shall become cumulatively exercisable as provided in the applicable Award Agreement. The Board or the Committee shall determine the vesting schedule and expiration date of each Stand-Alone SAR. 

 

(ii) A Stand-Alone SAR may be exercised for all or any portion of the sharesas to which it is exercisable; provided, that no partial exercise of a Stand-Alone SAR shall be for an aggregate exercise price of less than $1,000. The partial exercise of a Stand-Alone SAR shall not cause the expiration, termination orcancellation of the remaining portion thereof. 

(iii) A Stand-Alone SAR shall be exercised by delivering notice to the Company’s principal office,to the attention of its Secretary (or the Secretary’s designee), no less than two (2) business days in advance of the effective date of the proposed exercise. Such notice shall be accompanied by the applicable Plan Agreement, shall specify thenumber of shares of Stock with respect to which the Stand-Alone SAR is being exercised, and the effective date of the proposed exercise, and shall be signed by the Participant. The Participant may withdraw such notice at any time prior to the closeof business on the business day immediately preceding the effective date of the proposed exercise. 

 

(d) **Effect of Termination of Employment.** The provisions set forth in Section 6(vi) through (viii) with respect to the exercise of Options followingcessation or termination of employment or service as a director shall apply as well to such exercise of Stand-Alone SARS. 

 

**Section 10. Phantom Stock**

 

(a) **Vesting Date.**At the time of the grant of shares of Phantom Stock, the Board or the Committee shall establish a Vesting Date or Vesting Dateswith respect to such shares. The Board or the Committee may divide such shares into classes and assign a different Vesting Date for each class. Provided that all conditions to the vesting of a share of Phantom Stock imposed pursuant to Section 10(c)are satisfied, and except as provided in Section 10(d), upon the occurrence of the Vesting Date with respect to a share of Phantom Stock, such share shall vest. 

 

(b) **Benefit Upon Vesting.** Upon the vesting of a share of Phantom Stock, the Participant shall be entitled to receive in cash, within 30 days ofthe date on which such share vests, an amount equal to the sum of (i) the Fair Market Value of a share of Stock on the date on which such share of Phantom Stock vests and (ii) the aggregate amount of cash dividends paid with respect to a share ofStock during the period commencing on the date on which the share of Phantom Stock was granted and terminating on the date on which such share vests. 

 

(c) **Conditions to Vesting.** At the time of the grant of shares of Phantom Stock, the Board or the Committee may impose such restrictions orconditions to the vesting of such shares as it, in its absolute discretion, deems appropriate. By way of example and not by way of limitation, the Board or the Committee may require, as a condition to the vesting of any class or classes of shares ofPhantom Stock, that the Participant or the Company achieves such performance goals as the Board or the Committee may specify. 

 

(d) **Effect of Termination of Employment.** Unless the applicable Award Agreement or the Board or the Committee provides otherwise, shares of PhantomStock that have not vested, together with any dividends credited on such shares, shall be forfeited upon the Participant’s termination of employment for any reason. 

 

(e) **Effect of Change in Control.** Upon the occurrence of a Change in Control all outstanding shares of Phantom Stockwhich have not theretofore vested shall immediately vest. 

 

**Section 11.Terminating Events**

 

(a) **Definition of a“Terminating Event.”** For purposes of Section 11(b), a “Terminating Event” means: (i) a reorganization, merger, or consolidation of the Company with 

one or more corporations as a result of which the Company will not be the surviving corporation, (ii) a sale ofsubstantially all the assets and property of the Company to another person, corporation or entity, or (iii) a “change in control,” i.e., any other single transaction involving the Company (such as a tender offer) where there is a change inownership of at least twenty-five percent (25%) of the Company’s outstanding shares, unless such change in ownership results from (i) a transfer of shares to another corporation in exchange for at least eighty percent (80%) control of thatcorporation, or (ii) the issuance of additional shares of stock by the Company in a public stock offering or similar transaction. 

 

(b) **Impact of Event.** In the event of a “Terminating Event” as defined in Section 11(a), any surviving corporation or entity or acquiringcorporation or entity, or affiliate of such corporation or entity, may assume any Options, Restricted Stock Awards or any other Awards outstanding under the Plan or may substitute similar awards for those outstanding under the Plan. In the event anysurviving 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 ofsuch 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 theTerminating Event, any Options outstanding under the Plan shall be terminated if not exercised prior to the closing, unless the Board of Directors in its sole discretion determines prior to the effective date of the Terminating Event that alloutstanding Options and the Plan itself should continue in full force and effect. In the case of such a determination by the Board of Directors, or in the event that any pending Terminating Event does not occur, the Plan and all outstanding Optionsand other Awards thereunder shall continue in force with all original vesting schedules in effect. 

 

(c) **Notice to Participants of Terminating Event.** Not less than thirty (30) days prior to a Terminating Event, the Board of Directors or theCommittee shall notify each Participant of the pendancy of the Terminating Event. With respect to Holders, the notice shall simply inform such Holders of the pendancy of the Terminating Event and of the fact that the restrictions on their RestrictedStock will lapse on the closing of the Terminating Event. 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 onlyas 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 factoccurs. 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 ofDirectors in connection with the Terminating Event. 

 

**Section 12.Acceleration of Options or other Awards.**

 

Notwithstandingthe provisions of Sections 6(c)(iv), 7(b), 8(b)(i) or 9(c)(i) hereof or any provision to the contrary contained in any Award Agreement, the Board of Directors (or the Committee), in its sole discretion, may accelerate the vesting of all or any Awardthen outstanding. The decision by the Board of Directors to accelerate an Award or to decline to accelerate an Award shall be final. In the event of the acceleration of Options or SARs as the result of a decision by the 

Board of Directors pursuant to this Section 12, each outstanding Option or SAR so accelerated shall be exercisable for aperiod from and after the date of such acceleration and upon such other terms and conditions as the Board of Directors may determine in its sole discretion, provided that such terms and conditions (other than terms and conditions relating solely tothe acceleration of exercisability and the related termination of an Option or SAR) may not adversely affect the rights of any Participant without the consent of the Participant so adversely affected. Any outstanding Option or SAR which has not beenexercised by the holder at the end of such period shall terminate automatically at that time. 

 

**Section 13. 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 theconsideration, 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 theattainment 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 toParticipant 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. Theother 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 Committee to grant theAward. 

 

(b) **Award Agreement.** As soon as practicableafter 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 ofthe 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 suchstock transfer orders, legends and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Commission, any market in which the Stock is then traded and any applicable federal, state orforeign securities law. 

 

(d) **Tax Withholding.** TheCompany shall be entitled to withhold, and shall withhold, the minimum amount of any federal, state or local tax attributable to any shares deliverable or cash payments due under the Plan, whether upon exercise of an Option, expiration of aRestriction Period for Restricted Stock or occurrence of any other event concerning an Award requiring such withholding, after giving the person entitled to receive such delivery notice as far in advance of such event as practicable. The Company maydefer making delivery as to any such shares, if any such tax is payable, until indemnified to its satisfaction. Such withholding obligation of the Company may be satisfied by any reasonable method, including, if the Board or the Committee soprovides, reducing the number of shares otherwise deliverable to or on behalf of the Holder on such Taxable Event by a number of shares of Stock having a fair value, based on the Fair Market Value 

of the Stock on the date of such Taxable Event, equal to the amount of such withholding obligation. With the approval ofthe Board or the Committee, which it shall have sole discretion to grant, a Participant may satisfy the foregoing requirement by electing to have the Company withhold from delivery shares of Stock having a value equal to the amount of tax to bewithheld. 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 (the “Tax Date”). Fractional share amounts shall be settled in cash. Such a withholding election may bemade with respect to all or any portion of the shares to be delivered pursuant to an Incentive Award. To the extent required for such a withholding of stock to qualify for the exemption available under Rule 16b-3, such an election by a grantee whosetransactions in Stock are subject to Section 16(b) of the Exchange Act shall be: (i) subject to the approval of the Board or the Committee in its sole discretion; (ii) irrevocable; (iii) made no sooner than six months after the grant of the awardwith respect to which the election is made; and (iv) made at least six months prior to the Tax Date unless such withholding election is in connection with exercise of an Option and both the election and the exercise occur prior to the Tax Date in a“window period” of ten business days beginning on the third day following release of the Company’s quarterly or annual summary statement of sales and earnings. 

 

(e) **Notification of Election Under Section 83(b) of the Code.** If any Participant shall, in connection with theacquisition 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 Participantshall 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 orotherwise 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 Participantor 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 adjustmentsas 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 theCommittee 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 Committee may waive in whole or in partany 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 ofTermination 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 onsuch terms and conditions (including conditions in addition to (i) and (ii)) as the Committee may determine. 

(i) **Dividends.** The reinvestment of dividends in additional Restricted Stock at the time of anydividend payment pursuant to Section 7(e) shall only be permissible if sufficient shares of Stock are available under Section 4 for such reinvestment (taking into account then outstanding Awards). 

 

(j) **Regulatory Compliance.** Each Award under the Plan shall be subjectto the condition that, if at any time the Board 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 Committee. 

 

(k) **Rights as Shareholder.** Unless the Plan, the Board or the Committee expressly specifies otherwise, an Optionee shall have no rights as ashareholder with respect to any shares covered by an Option until the stock certificates representing the shares are actually delivered to the Optionee. Subject to Sections 4(b) and 7(e), no adjustment shall be made for dividends or other rights forwhich 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. 

 

(l) **Beneficiary Designation.** The Board or the Committee, in itsdiscretion, 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. 

 

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

 

(n) **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 withthe 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 shall interfere in anyway 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. 

 

(o) **Rule 16b-3.** With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan areintended 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 anddeemed 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, 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 orany 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. 

 

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

 

(q) **Use of Proceeds.** All cashproceeds to the Company under the Plan shall constitute general funds of the Company. 

 

(r) **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 withinthe meaning of “Company.” 

 

**Section 14. Amendments and Termination**

 

The Board may amend, alter or discontinue the Plan or anyAward, 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 requireshareholder approval unless it would: 

 

(a) increase in thetotal 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; or 

 

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

 

Any amendment or modification requiring shareholder approval shall bedeemed adopted as of the date of the action of the Board of Directors effecting such amendment or modification and shall be effective immediately, unless otherwise provided therein, subject to approval thereof within twelve (12) months before orafter the effective date by shareholders of the Company holding not less than a majority of the voting power of the Company. 

 

**Section 15. Effective Date of Plan**

 

The effective date of the Plan is September 21, 2001. 

 

**Section 16. Term of Plan**

 

No Award shall be granted on or after September 21, 2011, but Awards granted prior to September 21, 2011 may extend beyond that date.