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                                                                     EXHIBIT 4.6

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                               GUARANTEE AGREEMENT

                                     BETWEEN

                                    VIB CORP
                                  AS GUARANTOR

                                       AND

                            FIRST UNION NATIONAL BANK
                              AS GUARANTEE TRUSTEE

                            Dated as of July 12, 2000

                              VIBC CAPITAL TRUST I

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                                TABLE OF CONTENTS

                                    ARTICLE I

                            INTERPRETATION AND DEFINITIONS

<TABLE>
<S>                                                                                       <C>
SECTION 1.1. Interpretation..........................................................       2
SECTION 1.2. Definitions.............................................................       2

                                      ARTICLE II

                                        REPORTS

SECTION 2.1. List of Holders.........................................................       6
SECTION 2.2. Periodic Reports to the Guarantee Trustee...............................       6
SECTION 2.3. Events of Default; Waiver...............................................       6
SECTION 2.4. Event of Default; Notice................................................       6

                                      ARTICLE III

                  POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

SECTION 3.1. Powers and Duties of the Guarantee Trustee..............................       7
SECTION 3.2. Certain Rights of Guarantee Trustee.....................................       8
SECTION 3.3. Compensation............................................................      10
SECTION 3.4. Indemnity...............................................................      10
SECTION 3.5. May Hold Securities.....................................................      10

                                      ARTICLE IV

                                   GUARANTEE TRUSTEE

SECTION 4.1. Guarantee Trustee: Eligibility..........................................      11
SECTION 4.2. Appointment, Removal and Resignation of the Guarantee Trustee...........      11

                                       ARTICLE V

                                       GUARANTEE

SECTION 5.1. Guarantee...............................................................      12
SECTION 5.2. Waiver of Notice and Demand.............................................      12
SECTION 5.3. Obligations Not Affected................................................      12
SECTION 5.4. Rights of Holders.......................................................      13
</TABLE>

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<TABLE>
<S>                                                                                       <C>
SECTION 5.5. Guarantee of Payment....................................................      14
SECTION 5.6. Subrogation.............................................................      14
SECTION 5.7. Independent Obligations.................................................      14

                                      ARTICLE VI

                              COVENANTS AND SUBORDINATION

SECTION 6.1. Dividends, Distributions and Payments...................................      14
SECTION 6.2. Subordination...........................................................      15
SECTION 6.3. Pari Passu Guarantees...................................................      15

                                      ARTICLE VII

                                      TERMINATION

SECTION 7.1. Termination.............................................................      15

                                     ARTICLE VIII

                                     MISCELLANEOUS

SECTION 8.1. Successors and Assigns..................................................      16
SECTION 8.2. Amendments..............................................................      16
SECTION 8.3. Notices.................................................................      16
SECTION 8.4. Benefit.................................................................      17
SECTION 8.5. Governing Law...........................................................      17
SECTION 8.6. Counterparts............................................................      18
</TABLE>

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        GUARANTEE AGREEMENT, dated as of July 12, 2000, executed and delivered
by VIB CORP, a California corporation (the "Guarantor") having its principal
office at 1498 Main Street, El Centro, CA 92243, and FIRST UNION NATIONAL BANK,
a national banking association, as trustee (in such capacity, the "Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the Preferred Securities (as defined herein) of VIBC CAPITAL TRUST I, a New
York common law trust (the "Issuer").

                              W I T N E S S E T H :

        WHEREAS, pursuant to a Trust Agreement, dated as of July 12, 2000 (the
"Trust Agreement"), among the Guarantor, as Depositor, the Property Trustee and
the Administrative Trustees named therein and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing $10,000,000 aggregate Liquidation Amount (as defined in the Trust
Agreement) of its 11.695% Preferred Securities (Liquidation Amount $1,000 per
preferred security) (the "Preferred Securities") representing preferred
undivided beneficial interests in the assets of the Issuer and having the terms
set forth in the Trust Agreement;

        WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined below), will be used to purchase the Notes (as
defined in the Trust Agreement) of the Guarantor, which will be deposited with
First Union National Bank, as Property Trustee under the Trust Agreement, as
trust assets; and

        WHEREAS, as incentive for the Holders to purchase Preferred Securities
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth herein, to pay to the Holders of the Preferred Securities the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein.

        NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement to
provide as follows for the benefit of the Holders from time to time of the
Preferred Securities:

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                                    ARTICLE I

                         INTERPRETATION AND DEFINITIONS

        SECTION 1.1. Interpretation.

        In this Guarantee Agreement, unless the context otherwise requires:

             (a) capitalized terms used in this Guarantee Agreement but not
        defined in the preamble hereto have the respective meanings assigned to
        them in Section 1.2;

             (b) the words "include", "includes" and "including" shall be deemed
        to be followed by the phrase "without limitation";

             (c) all references to "the Guarantee Agreement" or "this Guarantee
        Agreement" are to this Guarantee Agreement as modified, supplemented or
        amended from time to time;

             (d) all references in this Guarantee Agreement to Articles and
        Sections are to Articles and Sections of this Guarantee Agreement unless
        otherwise specified;

             (e) the words "hereby", "herein", "hereof" and "hereunder" and
        other words of similar import refer to this Guarantee Agreement as a
        whole and not to any particular Article, Section or other subdivision;

             (f) a reference to the singular includes the plural and vice-versa;
        and

             (g) the masculine, feminine or neuter genders used herein shall
        include the masculine, feminine and neuter genders.

        SECTION 1.2. Definitions.

        As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings:

             "Affiliate" of any specified Person means any other Person directly
        or indirectly controlling or controlled by or under direct or indirect
        common control with such specified Person; provided, that the Issuer
        shall not be deemed to be an Affiliate of the Guarantor. For the
        purposes of this definition, "control" when used with respect to any
        specified Person means the power to direct the management and policies
        of such Person, directly or indirectly, whether through the ownership of
        voting securities, by contract or otherwise; and the terms "controlling"
        and "controlled" have meanings correlative to the foregoing.

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             "Board of Directors" means either the board of directors of the
        Guarantor or any duly authorized committee of that board.

             "Common Securities" means the securities representing common
        undivided beneficial interests in the assets of the Issuer.

             "Debt" means with respect to any Person, whether recourse is to all
        or a portion of the assets of such Person, whether currently existing or
        hereafter incurred, and whether or not contingent and without
        duplication, (i) every obligation of such Person for money borrowed;
        (ii) every obligation of such Person evidenced by bonds, debentures,
        notes or other similar instruments, including obligations incurred in
        connection with the acquisition of property, assets or businesses; (iii)
        every reimbursement obligation of such Person with respect to letters of
        credit, bankers' acceptances or similar facilities issued for the
        account of such Person, (iv) every obligation of such Person issued or
        assumed as the deferred purchase price of property or services (but
        excluding trade accounts payable arising in the ordinary course of
        business); (v) every capital lease obligation of such Person; (vi) all
        indebtedness of such Person, whether incurred on or prior to the date of
        this Guarantee Agreement or thereafter incurred, for claims in respect
        of derivative products, including interest rate, foreign exchange rate
        and commodity forward contracts, options, swaps and similar
        arrangements; (vii) every obligation of the type referred to in clauses
        (i) through (vi) of another Person and all dividends of another Person
        the payment of which, in either case, such Person has guaranteed or is
        responsible or liable for, directly or indirectly, as obligor or
        otherwise, and (viii) any renewals, extensions, refundings, amendments
        or modifications of any obligation of the type referred to in clauses
        (i) through (vii).

             "Event of Default" means a default by the Guarantor on any of its
        payment or other obligations under this Guarantee Agreement; provided,
        that except with respect to a default in payment of any Guarantee
        Payments, the Guarantor shall have received notice of default from the
        Guarantee Trustee and shall not have cured such default within 30 days
        after receipt of such notice.

        "Guarantee Payments" means the following payments or distributions,
        without duplication, with respect to the Preferred Securities, to the
        extent not paid or made by or on behalf of the Issuer: (i) any
        accumulated and unpaid Distributions (as defined in the Trust Agreement)
        required to be paid on the Preferred Securities, to the extent the
        Issuer shall have funds on hand available therefor at such time, (ii)
        the redemption price, including all accumulated and unpaid Distributions
        to the date of redemption and any premium paid on the redemption of any
        notes comprising assets of the Issuer (the "Redemption Price"), with
        respect to any Preferred Securities called for redemption by the Issuer,
        to the extent the Issuer shall have funds on hand available therefor at
        such time, and (iii) upon a voluntary or involuntary termination,
        winding up or liquidation of the Issuer, unless Notes are distributed to
        the Holders,

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        the lesser of (a) the aggregate of the Liquidation Amount of $1,000 per
        Preferred Security plus accumulated and unpaid Distributions on the
        Preferred Securities to the date of payment, to the extent that the
        Issuer shall have funds available therefor at such time and (b) the
        amount of assets of the Issuer remaining available for distribution to
        Holders in liquidation of the Issuer after satisfaction of liabilities
        to creditors of the Issuer in accordance with applicable law (in either
        case, the "Liquidation Distribution").

             "Guarantee Trustee" means First Union National Bank, until a
        Successor Guarantee Trustee has been appointed and has accepted such
        appointment pursuant to the terms of this Guarantee Agreement, and
        thereafter means each such Successor Guarantee Trustee.

             "Holder" means any holder, as registered on the books and records
        of the Issuer, of any Preferred Securities; provided, that in
        determining whether the holders of the requisite percentage of Preferred
        Securities have given any request, notice, consent or waiver hereunder,
        "Holder" shall not include the Guarantor, the Guarantee Trustee or any
        Affiliate of the Guarantor or the Guarantee Trustee.

             "Indenture" means the Junior Subordinated Indenture, dated as of
        July 12, 2000, as supplemented and amended, between the Guarantor and
        First Union National Bank, as trustee.

             "List of Holders" has the meaning specified in Section 2.1.

             "Majority in Liquidation Amount of the Preferred Securities" means
        a vote by the Holder(s), voting separately as a class, of more than 50%
        of the aggregate Liquidation Amount of all then outstanding Preferred
        Securities issued by the Issuer.

             "Officers' Certificate" means, with respect to any Person, a
        certificate signed by the Chief Executive Officer, Chief Financial
        Officer, President or a Vice President of such Person, and by the
        Treasurer, an Assistant Treasurer, the Secretary or an Assistant
        Secretary of such Person, and delivered to the Guarantee Trustee. Any
        Officers' Certificate delivered with respect to compliance with a
        condition or covenant provided for in this Guarantee Agreement (other
        than the certificate provided pursuant to Section 2.4) shall include:

                    (a) a statement that each officer signing the Officers'
             Certificate has read the covenant or condition and the definitions
             relating thereto;

                    (b) a brief statement of the nature and scope of the
             examination or investigation undertaken by each officer in
             rendering the Officers' Certificate;

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                    (c) a statement that each officer has made such examination
             or investigation as, in such officer's opinion, is necessary to
             enable such officer to express an informed opinion as to whether or
             not such covenant or condition has been complied with; and

                    (d) a statement as to whether, in the opinion of each
             officer, such condition or covenant has been complied with.

             "Person" means a legal person, including any individual,
        corporation, estate, partnership, joint venture, association, joint
        stock company, limited liability company, trust, unincorporated
        association, government or any agency or political subdivision thereof
        or any other entity of whatever nature.

             "Responsible Officer" means, with respect to the Guarantee Trustee,
        any Senior Vice President, any Vice President, any Assistant Vice
        President, the Secretary, any Assistant Secretary, the Treasurer, any
        Assistant Treasurer, any Trust Officer or Assistant Trust Officer or any
        other officer of the Corporate Trust Department of the Guarantee Trustee
        and also means, with respect to a particular corporate trust matter, any
        other officer to whom such matter is referred because of that officer's
        knowledge of and familiarity with the particular subject.

             "Senior Debt" means the principal of and any premium and interest
        on (including interest accruing on or after the filing of any petition
        in bankruptcy or for reorganization relating to the Guarantor whether or
        not such claim for post-petition interest is allowed in such proceeding)
        all Debt of the Guarantor, whether incurred on or prior to the date of
        this Guarantee Agreement or thereafter incurred, unless, in the
        instrument creating or evidencing the same or pursuant to which the same
        is outstanding, it is provided that such obligations are not superior in
        right of payment to the Notes or this Guarantee Agreement or to other
        Debt which is pari passu with, or subordinated to, the Notes or this
        Guarantee Agreement; provided, that Senior Debt shall not be deemed to
        include (i) any Notes, (ii) any Debt of the Guarantor which when
        incurred and without respect to any election under Section 1111(b) of
        the United States Bankruptcy Code, as amended, was without recourse to
        the Guarantor, (iii) any Debt of the Guarantor to any of its
        subsidiaries which are not "banks" as defined in the Bank Holding
        Company Act of 1956, as amended, (iv) any Debt to any employee of the
        Guarantor and (v) any other debt securities issued pursuant to the
        Junior Subordinated Indenture dated February 5, 1999 with First
        Tennessee Bank, N.A., as trustee, and any guarantee issued in connection
        therewith, which Debt described in this subparagraph (v) is pari passu
        with the Notes and this Guarantee Agreement.

             "Successor Guarantee Trustee" means a successor Guarantee Trustee
        possessing the qualifications to act as Guarantee Trustee under Section
        4.1.

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        Capitalized or otherwise defined terms used but not otherwise defined
        herein shall have the meanings assigned to such terms in the Trust
        Agreement as in effect on the date hereof.

                                   ARTICLE II

                                     REPORTS

             SECTION 2.1. List of Holders.

             The Guarantor shall furnish or cause to be furnished to the
        Guarantee Trustee (a) semiannually, on or before June 30 and December 31
        of each year, a list, in such form as the Guarantee Trustee may
        reasonably require, of the names and addresses of the Holders (the "List
        of Holders") as of a date not more than 15 days prior to the delivery
        thereof and (b) at such other times as the Guarantee Trustee may request
        in writing, within 30 days after the receipt by the Guarantor of any
        such request, a List of Holders as of a date not more than 15 days prior
        to the time such list is furnished, in each case to the extent such
        information is in the possession or control of the Guarantor and is not
        identical to a previously supplied list of Holders or has not otherwise
        been received by the Guarantee Trustee in its capacity as such. The
        Guarantee Trustee may destroy any List of Holders previously given to it
        on receipt of a new List of Holders.

             SECTION 2.2. Periodic Reports to the Guarantee Trustee.

             The Guarantor shall deliver to the Guarantee Trustee, within 120
        days after the end of each fiscal year of the Guarantor ending after the
        date of this Guarantee Agreement, an Officers' Certificate covering the
        preceding fiscal year, stating whether or not to the knowledge of the
        signers thereof the Guarantor is in default in the performance or
        observance of any of the terms, provisions and conditions of this
        Guarantee Agreement (without regard to any period of grace or
        requirement of notice provided hereunder) and, if the Guarantor shall be
        in default, specifying all such defaults and the nature and status
        thereof of which they have knowledge.

             SECTION 2.3. Events of Default; Waiver.

             The Holders of a Majority in Liquidation Amount of the Preferred
        Securities may, on behalf of the Holders, waive any past Event of
        Default and its consequences. Upon such waiver, any such Event of
        Default shall cease to exist, and any Event of Default arising therefrom
        shall be deemed to have been cured, for every purpose of this Guarantee
        Agreement, but no such waiver shall extend to any subsequent or other
        default or Event of Default or impair any right consequent therefrom.

             SECTION 2.4. Event of Default; Notice.

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             (a) The Guarantee Trustee shall, within 90 days after the
        occurrence of a default, transmit to the Holders, notices of all
        defaults actually known to the Guarantee Trustee, unless such defaults
        have been cured or waived before the giving of such notice, provided,
        that except in the case of a default in the payment of a Guarantee
        Payment, the Guarantee Trustee shall be protected in withholding such
        notice if and so long as the Board of Directors, the executive committee
        or a trust committee of directors and/or Responsible Officers of the
        Guarantee Trustee in good faith determines that the withholding of such
        notice is in the interests of the Holders. For the purpose of this
        Section, the term "default" means any event that is, or after notice or
        lapse of time or both would become, an Event of Default.

             (b) The Guarantee Trustee shall not be deemed to have knowledge of
        any Event of Default unless the Guarantee Trustee shall have received
        written notice, or a Responsible Officer charged with the administration
        of this Guarantee Agreement shall have obtained written notice, of such
        Event of Default from the Guarantor or a Holder.

                                   ARTICLE III

               POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

             SECTION 3.1. Powers and Duties of the Guarantee Trustee.

             (a) This Guarantee Agreement shall be held by the Guarantee Trustee
        for the benefit of the Holders, and the Guarantee Trustee shall not
        transfer this Guarantee Agreement to any Person except a Holder
        exercising its rights pursuant to Section 5.4(iv) or to a Successor
        Guarantee Trustee on acceptance by such Successor Guarantee Trustee of
        its appointment to act as Successor Guarantee Trustee. The right, title
        and interest of the Guarantee Trustee shall automatically vest in any
        Successor Guarantee Trustee, upon acceptance by such Successor Guarantee
        Trustee of its appointment hereunder, and such vesting and cessation of
        title shall be effective whether or not conveyancing documents have been
        executed and delivered pursuant to the appointment of such Successor
        Guarantee Trustee.

             (b) The rights, immunities, duties and responsibilities of the
        Guarantee Trustee shall be as provided by this Guarantee Agreement and
        there shall be no other duties or obligations, express or implied, of
        the Guarantee Trustee. Notwithstanding the foregoing, no provisions of
        this Guarantee Agreement shall require the Guarantee Trustee to expend
        or risk its own funds or otherwise incur any financial liability in the
        performance of any of its duties hereunder, or in the exercise of any of
        its rights or powers, if it shall have reasonable grounds for believing
        that repayment of such funds or adequate indemnity against such risk or
        liability is not reasonably assured to it. Whether or not herein
        expressly so provided, every provision of this Guarantee Agreement
        relating to the conduct or affecting the liability of or affording
        protection to the Guarantee Trustee shall be subject to the provisions
        of this Section 3.1. To the extent that, at law or in equity, the
        Guarantee Trustee has duties and

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        liabilities relating to the Guarantor or the Holders, the Guarantee
        Trustee shall not be liable to any Holder for the Guarantee Trustee's
        good faith reliance on the provisions of this Guarantee Agreement. The
        provisions of this Guarantee Agreement, to the extent that they restrict
        the duties and liabilities of the Guarantee Trustee otherwise existing
        at law or in equity, are agreed by the Guarantor and the Holders to
        replace such other duties and liabilities of the Guarantee Trustee.

             (d) No provision of this Guarantee Agreement shall be construed to
        relieve the Guarantee Trustee from liability for its own negligent
        action, negligent failure to act or own willful misconduct, except that:

                    (i) the Guarantee Trustee shall not be liable for any error
             of judgment made in good faith by a Responsible Officer of the
             Guarantee Trustee, unless it shall be proved that the Guarantee
             Trustee was negligent in ascertaining the pertinent facts upon
             which such judgment was made; and

                    (ii) the Guarantee Trustee shall not be liable with respect
             to any action taken or omitted to be taken by it in good faith in
             accordance with the direction of the Holders of not less than a
             Majority in Liquidation Amount of the Preferred Securities relating
             to the time, method and place of conducting any proceeding for any
             remedy available to the Guarantee Trustee, or exercising any trust
             or power conferred upon the Guarantee Trustee under this Guarantee
             Agreement.

             SECTION 3.2. Certain Rights of Guarantee Trustee.

             (a) Subject to the provisions of Section 3.1:

                    (i) the Guarantee Trustee may conclusively rely and shall be
             fully protected in acting or refraining from acting upon any
             resolution, certificate, statement, instrument, opinion, report,
             notice, request, direction, consent, order, bond, debenture, note,
             other evidence of indebtedness or other paper or document
             reasonably believed by it to be genuine and to have been signed,
             sent or presented by the proper party or parties;

                    (ii) any direction or act of the Guarantor contemplated by
             this Guarantee Agreement shall be sufficiently evidenced by an
             Officers' Certificate unless otherwise prescribed herein;

                    (iii) the Guarantee Trustee may consult with counsel, and
             the advice of such counsel shall be full and complete authorization
             and protection in respect of any action taken, suffered or omitted
             to be taken by it hereunder in good faith and in reliance thereon
             and in accordance with such advice. Such counsel may be counsel to
             the Guarantee Trustee, the Guarantor or any of its Affiliates and
             may be one of its employees. The Guarantee Trustee shall have the
             right at any time to seek

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        instructions concerning the administration of this Guarantee Agreement
        from any court of competent jurisdiction;

             (iv) the Guarantee Trustee shall be under no obligation to exercise
        any of the rights or powers vested in it by this Guarantee Agreement at
        the request or direction of any Holder, unless such Holder shall have
        provided to the Guarantee Trustee reasonable security or indemnity
        against the costs, expenses (including attorneys' fees and expenses) and
        liabilities that might be incurred by it in complying with such request
        or direction, including such reasonable advances as may be requested by
        the Guarantee Trustee; provided, that nothing contained in this Section
        3.2(a)(iv) shall be taken to relieve the Guarantee Trustee, upon the
        occurrence of an Event of Default, of its obligation to exercise the
        rights and powers vested in it by this Guarantee Agreement;

             (v) the Guarantee Trustee shall not be bound to make any
        investigation into the facts or matters stated in any resolution,
        certificate, statement, instrument, opinion, report, notice, request,
        direction, consent, order, bond, debenture, note, other evidence of
        indebtedness or other paper or document, but the Guarantee Trustee, in
        its discretion, may make such further inquiry or investigation into such
        facts or matters as it may see fit, and if the Guarantee Trustee shall
        determine to make such inquiry or investigation, it shall be entitled to
        examine the books, record, and premises of the Guarantor, personally or
        by agent or attorney;

             (vi) the Guarantee Trustee may execute any of the trusts or powers
        hereunder or perform any duties hereunder either directly or by or
        through its agents, attorneys, custodians or nominees and the Guarantee
        Trustee shall not be responsible for any misconduct or negligence on the
        part of any such agent, attorney, custodian or nominee appointed with
        due care by it hereunder;

             (vii) whenever in the administration of this Guarantee Agreement
        the Guarantee Trustee shall deem it desirable to receive instructions
        with respect to enforcing any remedy or right or taking any other action
        hereunder, the Guarantee Trustee (A) may request instructions from the
        Holders of a Majority in Liquidation Amount of the Preferred Securities,
        (B) may refrain from enforcing such remedy or right or taking such other
        action until such instructions are received and (C) shall be protected
        in acting in accordance with such instructions.

             (viii) except as otherwise expressly provided by this Guarantee
        Agreement, the Guarantee Trustee shall not be under any obligation to
        take any action that is discretionary under the provisions of this
        Guarantee Agreement; and

             (ix) whenever, in the administration of this Guarantee Agreement,
        the Guarantee Trustee shall deem it desirable that a matter be proved or
        established before taking, suffering or omitting to take any action
        hereunder, the Guarantee

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        Trustee (unless other evidence is herein specifically prescribed) may,
        in the absence of bad faith on its part, request and rely upon an
        Officers' Certificate which, upon receipt of such request from the
        Guarantee Trustee, shall be promptly delivered by the Guarantor;

        (b) no provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.

        SECTION 3.3. Compensation.

        The Guarantor agrees to pay to the Guarantee Trustee from time to time
reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provisions of law in regard to the
compensation of a trustee of an express trust) and to reimburse the Guarantee
Trustee upon request for all reasonable expenses, disbursements and advances
(including the reasonable fees and expenses of its attorneys and agents)
incurred or made by the Guarantee Trustee in accordance with any provisions of
this Guarantee Agreement.

        SECTION 3.4. Indemnity.

        The Guarantor agrees to indemnify and hold harmless the Guarantee
Trustee and any of its Affiliates and any of their officers, directors,
shareholders, employees, representatives or agents from and against any loss,
damage, liability, tax (other than income, franchise or other taxes imposed on
amounts paid pursuant to Section 3.3), penalty, expense or claim of any kind or
nature whatsoever incurred without negligence, bad faith or willful misconduct
on its part, arising out of or in connection with the acceptance or
administration of this Guarantee Agreement, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. The Guarantee Trustee
will not claim or exact any lien or charge on any Guarantee Payments as a result
of any amount due to it under this Guarantee Agreement.

        SECTION 3.5. May Hold Securities.

        The Guarantee Trustee or any other agent of the Guarantee Trustee, in
its individual or any other capacity, may become the owner or pledgee of Common
or Preferred Securities.

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                                   ARTICLE IV

                                GUARANTEE TRUSTEE

        SECTION 4.1. Guarantee Trustee: Eligibility.

        (a) There shall at all times be a Guarantee Trustee which shall:

             (i) not be an Affiliate of the Guarantor; and

             (ii) be a corporation organized and doing business under the laws
        of the United States or of any State thereof, authorized to exercise
        corporate trust powers, having a combined capital and surplus of at
        least $50,000,000, subject to supervision or examination by Federal or
        State authority and having an office within the United States. If such
        corporation publishes reports of condition at least annually, pursuant
        to law or to the requirements of such supervising or examining
        authority, then, for the purposes of this Section 4.1, the combined
        capital and surplus of such corporation shall be deemed to be its
        combined capital and surplus as set forth in its most recent report of
        condition so published.

        (b) If at any time the Guarantee Trustee shall cease to be eligible to
so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in
the manner and with the effect set out in Section 4.2(c).

        SECTION 4.2. Appointment, Removal and Resignation of the Guarantee
Trustee.

        (a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.

        (b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and delivered to
the Guarantor.

        (c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.

        (d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor

                                       11
<PAGE>   15

of an instrument of resignation, the resigning Guarantee Trustee may petition,
at the expense of the Guarantor, any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Guarantee Trustee.

                                    ARTICLE V

                                    GUARANTEE

        SECTION 5.1. Guarantee.

        The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by or on behalf of the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim which the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders. The Guarantor shall give prompt
written notice to the Guarantee Trustee in the event it makes any direct payment
to the Holders hereunder.

        SECTION 5.2. Waiver of Notice and Demand.

        The Guarantor hereby waives notice of acceptance of the Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.

        SECTION 5.3. Obligations Not Affected.

        The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:

             (a) the release or waiver, by operation of law or otherwise, of the
        performance or observance by the Issuer of any express or implied
        agreement, covenant, term or condition relating to the Preferred
        Securities to be performed or observed by the Issuer;

             (b) the extension of time for the payment by the Issuer of all or
        any portion of the Distributions (other than an extension of time for
        payment of Distributions that results from the extension of any interest
        payment period on the Notes as provided in the Indenture), Redemption
        Price, Liquidation Distribution or any other sums

                                       12
<PAGE>   16

        payable under the terms of the Preferred Securities or the extension of
        time for the performance of any other obligation under, arising out of,
        or in connection with, the Preferred Securities;

             (c) any failure, omission, delay or lack of diligence on the part
        of the Holders to enforce, assert or exercise any right, privilege,
        power or remedy conferred on the Holders pursuant to the terms of the
        Preferred Securities, or any action on the part of the Issuer granting
        indulgence or extension of any kind;

             (d) the voluntary or involuntary liquidation, dissolution, sale of
        any collateral, receivership, insolvency, bankruptcy, assignment for the
        benefit of creditors, reorganization, arrangement, composition or
        readjustment of debt of, or other similar proceedings affecting, the
        Issuer or any of the assets of the Issuer;

             (e) any invalidity of, or defect or deficiency in, the Preferred
        Securities;

             (f) the settlement or compromise of any obligation guaranteed
        hereby or hereby incurred; or

             (g) any other circumstance whatsoever that might otherwise
        constitute a legal or equitable discharge or defense of a guarantor, it
        being the intent of this Section 5.3 that the obligations of the
        Guarantor hereunder shall be absolute and unconditional under any and
        all circumstances.

There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the foregoing.

        SECTION 5.4. Rights of Holders.

        The Guarantor expressly acknowledges that: (i) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) the Holders of a Majority in
Liquidation Amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) any Holder may institute a legal proceeding directly against
the Guarantor to enforce its rights under this Guarantee Agreement, without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
or any other Person.

                                       13
<PAGE>   17

        SECTION 5.5. Guarantee of Payment.

        This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer) or upon distribution of Notes to Holders as provided in the Trust
Agreement.

        SECTION 5.6. Subrogation.

        The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement and shall have the right to waive
payment by the Issuer pursuant to Section 5.1; provided, that the Guarantor
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee Agreement, if, at the time of any such
payment, any amounts are due and unpaid under this Guarantee Agreement. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.

        SECTION 5.7. Independent Obligations.

        The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.3.

                                   ARTICLE VI

                           COVENANTS AND SUBORDINATION

        SECTION 6.1. Dividends, Distributions and Payments.

        So long as any Preferred Securities remain outstanding, if there shall
have occurred and be continuing an Event of Default or the Guarantor shall have
selected an Extension Period as provided for in the Indenture, then the
Guarantor may not (a) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make liquidation payment with respect to, any of
the Guarantor's capital stock or (b) make any payment of principal of or any
interest or premium on or repay, repurchase or redeem any debt securities of the
Guarantor that rank pari passu in all respects with or junior in interest to the
Preferred Securities (other than (i) repurchases, redemptions or other
acquisitions of shares of capital

                                       14
<PAGE>   18

stock of the Guarantor in connection with any employment contract, benefit plan
or other similar arrangement with or for the benefit of any one of more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of capital stock of the Guarantor (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (ii) as a
result of an exchange or conversion of any class or series of the Guarantor's
capital stock (or any capital stock of a subsidiary of the Guarantor) for any
class or series of the Guarantor's capital stock or any class of series of the
Guarantor's indebtedness for any class or series of the Guarantor's capital
stock, (iii) the purchase of fractional interests in shares of the Guarantor's
capital stock pursuant to the conversions or exchange provisions of such capital
stock or the security being converted or exchanged, (iv) any declaration of a
dividend in connection with any rights plan, the issuance of rights, stock or
other property under any rights plan or the redemption or repurchase of rights
pursuant thereto, or (v) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock).

        SECTION 6.2. Subordination.

        The obligations of the Guarantor under this Guarantee Agreement will
constitute unsecured obligations of the Guarantor and will rank subordinate and
junior in right of payment to all Senior Debt of the Guarantor.

        SECTION 6.3. Pari Passu Guarantees.

        The obligations of the Guarantor under this Guarantee Agreement shall
rank pari passu with the obligations of the Guarantor under any similar
guarantee agreements issued by the Guarantor on behalf of the holders of
preferred securities issued by the Trust (as defined in the Indenture).

                                   ARTICLE VII

                                   TERMINATION

        SECTION 7.1. Termination.

        This Guarantee Agreement shall terminate and be of no further force and
effect upon (a) full payment of the Redemption Price of all Preferred
Securities, (b) the distribution of Notes to the Holders in exchange for all of
the Preferred Securities or (c) full payment of the amounts payable in
accordance with the Trust Agreement upon liquidation of the Issuer.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
must restore payment of any

                                       15
<PAGE>   19

sums paid with respect to Preferred Securities or this Guarantee Agreement. The
obligations of the Guarantor under Section 3.3 and 3.4 shall survive any such
termination and the resignation or removal of the Guarantee Trustee.

                                  ARTICLE VIII

                                  MISCELLANEOUS

        SECTION 8.1. Successors and Assigns.

        All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the successor or assignee agrees in writing to
perform the Guarantor's obligations hereunder, the Guarantor shall not assign
its obligations hereunder.

        SECTION 8.2. Amendments.

        Except with respect to any changes that do not adversely affect the
rights of the Holders in any material respect (in which case no consent of the
Holders will be required), this Guarantee Agreement may only be amended with the
prior approval of the Guarantor, the Guarantee Trustee and the Holders of not
less than a Majority in Liquidation Amount of the Preferred Securities. The
provisions of Article VI of the Trust Agreement concerning meetings or consents
of the Holders shall apply to the giving of such approval.

        SECTION 8.3. Notices.

        Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:

             (a) if given to the Guarantor, to the address or facsimile number
        set forth below or such other address, facsimile number or to the
        attention of such other Person as the Guarantor may give notice to the
        Guarantee Trustee and the Holders:

                      VIB CORP
                      1498 Main Street
                      El Centro, CA 92243
                      Facsimile No.: (760) 337-3229
                      Attention: Harry G. Gooding

                                       16
<PAGE>   20

             (b) if given to the Issuer, at the Issuer's address or facsimile
        number set forth below or such other address, facsimile number or to the
        attention of such other Person as the Issuer may give notice to the
        Guarantee Trustee and the Holders:

                      VIBC Capital Trust I
                      1498 Main Street
                      El Centro, CA 92243
                      Facsimile No.: (760) 337-3229
                      Attention: Harry G. Gooding

             (c) if given to the Guarantee Trustee, at the address or facsimile
        number set forth below or such other address, facsimile number or to the
        attention of such other Person as the Guarantee Trustee may give notice
        to the Guarantor and the Holders:

                      First Union National Bank
                      401 S. Tryon Street, 12th Floor
                      Charlotte, North Carolina 28288-1179
                      Facsimile No.: (704) 383-7316
                      Attention: Corporate Trust

             (d) if given to any Holder, at the address set forth on the books
        and records of the Issuer.

        All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

        SECTION 8.4. Benefit.

        This Guarantee Agreement is solely for the benefit of the Holders and is
not separately transferable from the Preferred Securities.

        SECTION 8.5. Governing Law.

        THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAWS PROVISIONS THEREOF.

                                       17
<PAGE>   21

        SECTION 8.6. Counterparts.

        This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

                      [THE NEXT PAGE IS THE SIGNATURE PAGE]

                                       18
<PAGE>   22

        IN WITNESS WHEREOF, the undersigned have executed this Guarantee
Agreement as of the date first above written.

                                       VIB CORP

                                       By:
                                          ------------------------------------
                                          Name:
                                          Title:

                                       FIRST UNION NATIONAL BANK,
                                            not in its individual capacity, but
                                            solely as Guarantee Trustee

                                       By:
                                          ------------------------------------
                                          Name:
                                          Title:

                                       19<PAGE>   1
                                                                    EXHIBIT 10.1

                  SKYWEST, INC. EXECUTIVE STOCK INCENTIVE PLAN

<PAGE>   2
<TABLE>
                                TABLE OF CONTENTS

<S>     <C>                                                                                  <C>
1.      ESTABLISHMENT AND PURPOSE.............................................................1

2.      DEFINITIONS   ........................................................................1

3.      STOCK SUBJECT TO THE PLAN.............................................................5
        (a)    Aggregate Limitation on Shares Available for Issuance..........................5
        (b)    Aggregate Annual Limitation on Awards..........................................5
        (c)    Individual Annual Limitation...................................................5
        (d)    Adjustment for Change in Capitalization........................................5
        (e)    Re-Use of Shares...............................................................6

4.      ADMINISTRATION OF THE PLAN............................................................6

5.      ELIGIBILITY   ........................................................................7

6.      AWARDS UNDER THE PLAN; AWARD AGREEMENT................................................7

7.      OPTIONS ..............................................................................7
        (a)    Identification of Options......................................................7
        (b)    Exercise Price.................................................................7
        (c)    Term and Exercise of Options...................................................8
        (d)    Limitations on Incentive Stock Options.........................................8
        (e)    Effect of Termination of Employment............................................9
        (f)    Effect of Removal from Board of Directors......................................9
        (g)    Acceleration of Exercise Date Upon Change in Control...........................9
        (h)    Reload Stock Options...........................................................10
        (i)    Restrictions on Transferability................................................10

8.      TANDEM SARS ..........................................................................10
        (a)    Benefit Upon Exercise..........................................................10
        (b)    Term and Exercise of Tandem SAR................................................10

9.      NON-TANDEM SARS.......................................................................11
        (a)    Benefit Upon Exercise..........................................................11
        (b)    Term and Exercise of Non-Tandem SARs...........................................11
        (c)    Effect of Termination of Employment or Removal from Board of Directors.........12
        (d)    Acceleration of Exercise Date Upon Change in Control...........................12

10.     RESTRICTED SHARES.....................................................................12
        (a)    Grants ........................................................................12
        (b)    Issue Date and Vesting Date....................................................12
        (c)    Conditions to Vesting..........................................................12
        (d)    Restrictions on Transfer Prior to Vesting......................................13
        (e)    Dividends on Restricted Stock..................................................13
        (f)    Issuance of Certificates.......................................................13
        (g)    Consequences of Vesting........................................................13
        (h)    Effect of Termination of Employment............................................13
        (i)    Effect of Change in Control....................................................14

</TABLE>

                                       i
<PAGE>   3

<TABLE>

<S>     <C>                                                                                  <C>
11.     PERFORMANCE UNITS.....................................................................14
        (a)    Grants ........................................................................14
        (b)    Vesting Date...................................................................14
        (c)    Benefit Upon Vesting...........................................................14
        (d)    Conditions to Vesting..........................................................14
        (e)    Effect of Termination of Employment............................................15
        (f)    Effect of Change in Control....................................................15

12.     RIGHTS AS A STOCKHOLDER AND DIVIDEND EQUIVALENTS......................................15
        (a)    General........................................................................15
        (b)    Dividend Equivalents...........................................................15

13.     DEFERRAL OF AWARDS....................................................................15

14.     NO SPECIAL EMPLOYMENT OR DIRECTORSHIP RIGHTS; NO RIGHT TO AWARDS......................16

15.     SECURITIES LAW AND LISTING MATTERS....................................................16

16.     WITHHOLDING TAXES.....................................................................16

17.     NOTIFICATION OF ELECTION UNDER SECTION 83(b) OF THE CODE..............................16

18.     NOTIFICATION UPON DISQUALIFYING DISPOSITION UNDER SECTION 421(b)
        OF THE CODE   ........................................................................17

19.     AMENDMENT OR TERMINATION OF THE PLAN..................................................17

20.     TRANSFERS UPON DEATH; NONASSIGNABILITY................................................17

21.     EXPENSES AND RECEIPTS.................................................................17

22.     FAILURE TO COMPLY.....................................................................17

23.     RELATION TO BENEFIT PLANS.............................................................18

24.     APPLICABLE LAW .......................................................................18

25.     PARTICIPANT RIGHTS....................................................................18

26.     UNFUNDED STATUS OF AWARDS.............................................................18

27.     NO FRACTIONAL SHARES..................................................................18

28.     BENEFICIARY ..........................................................................18

29.     INTERPRETATION .......................................................................18
</TABLE>

                                       ii

<PAGE>   4

                                  SKYWEST, INC.

                         EXECUTIVE STOCK INCENTIVE PLAN

1.      ESTABLISHMENT AND PURPOSE

        Skywest, Inc. hereby adopts the Skywest, Inc. Executive Stock Incentive
Plan (the "Plan"). The Plan is intended to promote the interests of the Company
and the shareholders of the Company by providing officers, directors and other
key management employees of the Company and its subsidiaries with appropriate
incentives and rewards to encourage them to enter into and continue in the
employ of the Company and/or to acquire a proprietary interest in the long-term
success of the Company, thereby aligning their interest more closely to the
interest of the shareholders of the Company.

        The Board of Directors of the Company adopted the Plan on May 9, 2000.
Subject to approval of the Plan by the shareholders of the Company at the annual
shareholders meeting scheduled for August 8, 2000, the Plan shall become
effective on January 1, 2001.

2.      DEFINITIONS

        As used in the Plan, the following definitions apply to the terms
indicated below:

        (a)    "Award" shall mean an Option, SAR, Restricted Share or
               Performance Unit granted pursuant to the terms of the Plan.

        (b)    "Award Agreement" shall mean the written agreement between the
               Company and a Participant evidencing an Award.

        (c)    "Board of Directors" shall mean the Board of Directors of the
               Company.

        (d)    "Change in Control" shall mean a change in the beneficial
               ownership of the Company, the composition of the Board or the
               Company's business that occurs upon and as a result of:

                      (i) The acquisition by any "person," as such term is used
               in Sections 13(d) and 14(d) of the Exchange Act (other than the
               Company, any trustee or other fiduciary holding securities under
               an employee benefit plan of the Company or any corporation owned,
               directly or indirectly, by the stockholders of the Company in
               substantially the same proportions as their ownership of Common
               Stock of the Company) of beneficial ownership (as defined in Rule
               13d-3 under the Exchange Act), directly or indirectly, of
               securities of the Company representing 50 percent or more of the
               combined voting power of the Company's then outstanding
               securities;

                      (ii) The individuals who at the beginning of any two-year
               period constituted the members of the Board of Directors and any
               new director (other than a director designated by a person who
               has entered into an agreement with the Company to effect a
               transaction described in clause (i) or (iii) of this Section
               2(d)) whose election by the Board of Directors or nomination for
               election was approved by a vote of at least two-thirds (2/3) of
               the directors then in office who either were directors at the
               beginning of the two-year period or whose election or nomination
               for election was previously so approved, ceasing for any reason
               to constitute at least a majority of the Board;

                                       1
<PAGE>   5

                      (iii) The shareholders of the Company approving and the
            Company consummating a merger or consolidation of the Company with
            any other entity, or the sale or other transfer of all or
            substantially all of the Company's assets to another entity, other
            than (A) a merger or consolidation which would result in the voting
            securities of the Company outstanding immediately prior thereto
            continuing to represent (either by remaining outstanding or by being
            converted into voting securities of the surviving entity) more than
            50 percent of the combined voting power of the voting securities of
            the Company or such surviving entity outstanding immediately after
            such merger or consolidation, (B) a merger or consolidation effected
            to implement a recapitalization of the Company (or similar
            transaction) in which no "person" (as herein above defined) acquires
            50 percent or more of the combined voting power of the Company's
            then outstanding securities, or (C) a sale or other transfer to
            another entity of all or substantially all of the Company's assets
            if the shareholders of the Company immediately prior to the sale own
            immediately after the sale more than 50 percent of the combined
            voting power of the equity interests in the acquiror; or

                      (iv) The shareholders of the Company approving and the
            Company consummating a plan of complete liquidation of the Company.

      (e)   "Code" shall mean the Internal Revenue Code of 1986, as amended from
            time to time.

      (f)   "Committee" shall mean the Compensation Committee of the Board.

      (g)   "Company" shall mean Skywest, Inc., a Utah corporation, or any
            successor corporation.

      (h)   "Common Stock" shall mean the common stock, no par value, of the
            Company.

      (i)   "Covered Employee" shall mean a "covered employee" of the Company or
            any Subsidiary as defined in Code Section 162(m)(3).

      (j)   "Director" shall mean any member of the Board of Directors.

      (k)   "Disability" shall mean permanent and total disability within the
            meaning of Section 22(e)(3) of the Code.

      (l)   "Effective Date" shall mean January 1, 2001.

      (m)   "Eligible Employee" shall mean an officer or other management
            employee (as determined by the Committee) of the Company or any
            Subsidiary.

      (n)   "Exchange Act" shall mean the Securities Exchange Act of 1934, as
            amended from time to time.

      (o)   "Executive Officer" shall have the meaning set forth in Rule 3b-7
            promulgated under the Exchange Act.

      (p)   "Exercise Date" shall mean the effective date as of which a
            Participant exercises an Award.

                                       2
<PAGE>   6

        (q)    "Fair Market Value" of a share of Common Stock , as of a date of
               determination, shall mean the fair market value of a share of
               Common Stock, as determined by the Committee in good faith
               pursuant to the following rules:

                      (i) If the principal market for the Common Stock is a
               national securities exchange or the NASDAQ stock market, then the
               "Fair Market Value" as of that date shall be the mean between the
               lowest and highest reported sale prices of the Stock on that date
               on the principal exchange or market on which the Common Stock is
               then listed or admitted to trading.

                      (ii) If sale prices are not available or if the principal
               market for the Stock is not a national securities exchange and
               the Common Stock is not quoted on the NASDAQ stock market, the
               average between the highest bid and lowest asked prices for the
               Common Stock on such day as reported on the NASDAQ OTC Bulletin
               Board Service or by the National Quotation Bureau, Incorporated
               or a comparable service.

                      (iii) If the day is not a business day, and as a result,
               paragraphs (i) and (ii) next above are inapplicable, the Fair
               Market Value of the Stock shall be determined as of the next
               earlier business day. If paragraphs (i) and (ii) above are
               otherwise inapplicable, then the Fair Market Value of the Common
               Stock shall be determined in good faith by the Committee.

        (r)    "Incentive Stock Option" shall mean an Option that is an
               "incentive stock option" within the meaning of Section 422 of the
               Code.

        (s)    "Issue Date" shall mean the date established by the Company on
               which certificates representing shares of Restricted Stock shall
               be issued by the Company pursuant to the terms of Section 10(e)of
               the Plan.

        (t)    "Non-Employee Director" shall mean a Director who is not also an
               employee of the Company or any Subsidiary of the Company.

        (u)    "Non-Statutory Stock Option" or "Non-Qualified Stock Option"
               shall mean an Option that is not an Incentive Stock Option.

        (v)    "Non-Tandem SAR" shall mean a stock appreciation right granted
               pursuant to Section 9 of the Plan which is not related to any
               Option.

        (w)    "Option" shall mean an option to purchase shares of Common Stock
               granted pursuant to Section 7 of the Plan.

        (x)    "Participant" shall mean an Employee of the Company or a
               Subsidiary of the Company or any Non-Employee Director to whom an
               Award is granted pursuant to the Plan, and, upon such
               individual's death, such individual's successors, heirs,
               executors and administrators, as the case may be.

        (y)    "Performance Goals" mean the targeted levels of financial
               performance upon which vesting of Restricted Shares and
               Performance Units may be based. Performance Goals, if any, will
               be determined by the Committee and will be based on any one or
               more of the following performance factors, measured at the
               Company or, if so designated, Subsidiary or divisional level:
               price of Common Stock, total shareholder return, return on
               equity,

                                       3
<PAGE>   7

               return on investment, return on capital, economic profit, net
               income or profit, operating income, operating income margin, net
               income margin, sales, sales growth, net sales, cash flow,
               earnings before interest and taxes ("EBIT"), earnings before
               interest, taxes, depreciation and amortization ("EBITDA"),
               earnings per share, operating expenses, and market share. Any
               Performance Goals designated by the Compensation Committee
               will have a minimum performance standard below which vesting
               will occur and no payments will be made and a maximum
               performance standard above which no additional payments will
               be made. Achievement of Performance Goals shall be measured
               over a specified Performance Period set forth in the Award
               Agreement. The Performance Goals may be based on an analysis
               of historical performance and growth expectations for the
               business, financial results of other comparable businesses,
               and progress towards achieving the long-range strategic plan
               for the business. The Performance Goals and determination of
               results will be based entirely on financial measures.

        (z)    "Performance Period" means the period over which the attainment
               of designated Performance Goals is measured.

        (aa)   "Performance Unit" shall mean the contractual right, granted
               pursuant to Section 11 of the Plan, to receive in shares of
               Common Stock, cash or a combination thereof, as determined by the
               Committee, a pre-determined amount or value, contingent upon the
               attainment of designated financial results, Performance Goals or
               other factors. Performance Units do not constitute actual shares
               of Common Stock even if denominated in shares of Common Stock.

       (bb)    "Plan" shall mean this Executive Stock Incentive Plan, as amended
               from time to time.

        (cc)   "Predecessor Plan" shall mean the Amended and Combined Incentive
               and Nonstatutory Stock Option Plan adopted by the Company in
               1991.

        (dd)   "Reference Value" shall mean, with respect to Non-Tandem SARs,
               the greater of the Fair Market Value of a share of Common Stock
               or the value set by the Committee on the date of the grant.

        (ee)   "Restricted Share" shall mean a share of Common Stock which is
               granted pursuant to the terms of Section 10 hereof and which is
               subject to the restrictions set forth in Section 10 of the Plan.

        (ff)   "SAR" shall mean a stock appreciation right granted pursuant to
                Sections 8 or 9 below.

        (gg)   "Subsidiary" shall mean a "subsidiary corporation" of the Company
               within the meaning of Section 424(f) of the Code.

        (hh)   "Tandem SAR" shall mean an SAR right granted pursuant to Section
                8 of the Plan which is related to an Option.

        (ii)   "Vesting Date" shall mean the date established by the Committee
               on which a Restricted Share or Performance Unit vests.

                                       4
<PAGE>   8

3.      STOCK SUBJECT TO THE PLAN.

        (a)     Aggregate Limitation on Shares Available for Issuance.

               The maximum number of shares of Common Stock reserved for
               issuance pursuant to all Awards, including Incentive Stock
               Options, under the Plan shall be 2,000,000 shares (subject to
               adjustment as provided herein), plus any shares of Common Stock
               (not in excess of 1,378,000) which are subject to options granted
               under the Predecessor Plan to the extent those Predecessor Plan
               options are forfeited, canceled or expire after December 31, 2000
               without delivery of shares of Common Stock. The shares of Common
               Stock reserved for issuance hereunder may be authorized but
               unissued Common Stock or authorized and issued Common Stock held
               in the Company's treasury or acquired by the Company for the
               purposes of the Plan. Upon the exercise of any Tandem SAR, the
               related Option shall be canceled to the extent of the number of
               shares of Common Stock as to which the Tandem SAR is exercised
               and such number of shares shall no longer be available for Awards
               under the Plan.

        (b)    Aggregate Annual Limitation on Awards.

               The number of shares of Common Stock with respect to which Awards
               (including SARs denominated in shares but payable in cash) may be
               granted in any calendar year (the "Annual Limit") may not exceed
               the sum of: (a) one percent of the Company's total issued and
               outstanding shares of Common Stock at the beginning of each
               calendar year (the "Annual One Percent Limit"), subject to
               adjustment as described below; plus (b) such additional number of
               shares of Common Stock as the Compensation Committee determines,
               not to exceed, on a cumulative basis for all calendar years
               during the term of the Plan, four percentage of the Company's
               issued and outstanding shares of Common Stock on January 1 of the
               calendar year in question. To the extent that Awards granted with
               respect to shares of Common Stock in any calendar year beginning
               with 2001 are less than the Annual One Percent Limit for that
               calendar year, the unused portion of the Annual One Percent Limit
               (expressed in terms of percentage points, not number of shares)
               shall be carried forward and added to the Annual One Percent
               Limit for each succeeding calendar year until fully realized.

        (c)    Individual Annual Limitation.

               Subject to adjustment as provided herein, the total number of
               shares of Common Stock subject to Awards (including Incentive
               Stock Options and SARs) granted to any Participant during any
               calendar year shall not exceed 250,000 shares. The maximum value
               of any Performance Units that are denominated in cash rather than
               shares which may be granted in any calendar year to any
               Participant shall not exceed $500,000.

        (d)    Adjustment for Change in Capitalization.

               In the event that the Committee shall determine that any dividend
               or other distribution (whether in the form of cash, Common Stock,
               or other property), recapitalization, stock split, reverse stock
               split, reorganization, merger, consolidation, spin-off,
               combination, repurchase, or share exchange, or other similar
               corporate transaction or event, affects the Common Stock such
               that an adjustment is appropriate in order to prevent dilution or
               enlargement of the rights of Participants under the Plan, then
               the Committee shall make such equitable changes or adjustments as
               it deems necessary or appropriate to any or all

                                       5
<PAGE>   9

               of (i) the number and kind of shares of Common Stock which may
               thereafter be issued in connection with Awards, including
               adjustment of the maximums specified in Sections 3(a) through
               3(c) above, (ii) the number and kind of shares of Common Stock
               issued or issuable in respect of outstanding Awards, and (iii)
               the exercise price, grant price, purchase price, formula value
               and/or Performance Goals relating to any Award; provided that,
               with respect to Incentive Stock Options, such adjustment shall be
               made in accordance with Section 424 of the Code.

        (e)    Re-Use of Shares.

               Subject to the last sentence of Section 3(a), the following
               shares of Common Stock shall again become available for delivery
               under the Plan: (i) any shares subject to an Award that remain
               unissued upon the cancellation, surrender, exchange or
               termination of such Award for any reason whatsoever; (ii) any
               Restricted Shares that are forfeited; (iii) except as provided in
               Section 3(a) above with respect to Tandem SARs, any shares that
               are not delivered upon exercise or vesting of an Award because
               the shares are held back to pay the Exercise Price and/or
               withholding taxes due upon exercise or because the share-based
               Award is otherwise settled in cash; and (iv) in any case in which
               a Participant pays the Exercise Price of an Option and/or
               applicable withholding taxes by tendering shares of Common Stock
               (whether by actual delivery or by attestation), that number of
               shares covered by the Option being exercised that equal the
               number of shares so tendered.

4.      ADMINISTRATION OF THE PLAN.

        The Plan shall be administered by the Committee. The Committee shall
have the authority in its sole discretion, subject to and not inconsistent with
the express provisions of the Plan, to administer the Plan and to exercise all
the powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Awards; to determine the persons to whom and
the time or times at which Awards shall be granted; to determine the type and
number of Awards to be granted, the number of shares of Common Stock to which an
Award may relate and the terms, conditions, restrictions and performance
criteria relating to any Award; to determine whether, to what extent, and under
what circumstances an Award may be settled, canceled, forfeited, exchanged, or
surrendered; to set Performance Goals and make adjustments in the Performance
Goals in recognition of unusual or non-recurring events affecting the Company or
the financial statements of the Company (to the extent such adjustments are in
accordance with Section 162(m)of the Code, if applicable), or in response to
changes in applicable laws, regulations, or accounting principles; to construe
and interpret the Plan and any Award; to prescribe, amend and rescind rules and
regulations relating to the Plan; to determine the terms and provisions of Award
Agreements; and to make all other determinations deemed necessary or advisable
for the administration of the Plan.

        The Committee may, in its absolute discretion, without amendment to the
Plan (but subject to consent of the affected Participant if such act would
result in adverse tax consequences under the Code), accelerate the date on which
any Award becomes exercisable, waive or amend the operation of Plan provisions
respecting exercise after termination of employment of any Award or otherwise
adjust any of the terms of any Award.

        Except to the extent prohibited by applicable law, the Board may
allocate and delegate all or any portion of the Committee's responsibilities and
powers (including the power to grant Awards and the power to determine the
grantees of such Awards) to any two or more Non-Employee Directors who are
members of the Committee. The Board may revoke any such delegation at any time.

                                       6
<PAGE>   10

        No member of the Committee shall be liable for any action, omission or
determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination relating to the Plan, if, in either case, such action, omission or
determination was taken or made by such member, director or employee in good
faith and in a manner such member, director or employee reasonably believed to
be in or not opposed to the best interests of the Company.

5.      ELIGIBILITY.

        The persons who shall be eligible to receive Awards pursuant to the Plan
shall be all Eligible Employees and Non-Employee Directors of the Company and
its Subsidiaries. Notwithstanding the foregoing, only individuals who are
employees of the Company or any Subsidiary of the Company as of the date of the
grant of any Incentive Stock Option shall be eligible to receive such Incentive
Stock Options.

6.      AWARDS UNDER THE PLAN; AWARD AGREEMENT.

        The Committee may grant Options, Tandem SARs, Non-Tandem SARs,
Restricted Shares, and Performance Units, in such amounts and with such terms
and conditions as the Committee shall determine, subject to the provisions of
the Plan. Unless otherwise established by the Committee or specified in the
Award Agreement, each Award shall be deemed granted on the date it is approved
by the Committee.

        Each Award granted under the Plan shall be evidenced by an Award
Agreement that shall contain such provisions as the Committee may in its sole
discretion deem necessary or desirable. By accepting an Award, a Participant
thereby agrees that the Award and any shares of Common Stock issuable in
connection with the Award shall be subject to all of the terms and provisions of
the Plan and the Award Agreement.

7.      OPTIONS.

        The Committee may grant Awards to Participants in the form of Options.

        (a)    Identification of Options.

               Each Option shall be identified in the applicable Award Agreement
               as either an Incentive Stock Option or a Non-Qualified Stock
               Option.

       (b)     Exercise Price.

               Each Award Agreement with respect to an Option shall set forth
               the amount (the "Exercise Price") payable by the grantee to the
               Company upon exercise of the Option. The Option Exercise Price
               per share shall be determined by the Committee, and in no event
               shall be less than the Fair Market Value of a share of Common
               Stock on the date the Option is granted.

                                       7
<PAGE>   11

        (c)    Term and Exercise of Options.

                      (i) The Committee shall determine the expiration date of
               each Option; provided, however, that no Incentive Stock Option
               shall be exercisable more than 10 years after the date of grant.

                      (ii) An Option may be exercised for all or any portion of
               the shares as to which it is exercisable, provided, that no
               partial exercise of an Option shall be for an aggregate Exercise
               Price of less than $1,000. The partial exercise of an Option
               shall not cause the expiration, termination or cancellation of
               the remaining portion thereof.

                      (iii) An Option shall be exercised by delivering written
               notice (in the form attached to the Award Agreement or such other
               form as the Company prescribes) to the Company's principal
               office, to the attention of its Secretary, no less than one
               business day in advance of the effective date of the proposed
               exercise. Such notice shall specify the number of shares of
               Common Stock with respect to which the Option is being exercised
               and the effective date of the proposed exercise and shall be
               signed by the Participant or other person then having the right
               to exercise the Option. Such notice may be withdrawn in writing
               at any time prior to the close of business on the business day
               immediately preceding the effective date of the proposed
               exercise. Payment for shares of Common Stock purchased upon the
               exercise of an Option shall be made in cash, by certified check,
               bank cashier's check or wire transfer; provided, however, that if
               approved by the Committee on a case-by-case basis at the time of
               exercise payment also may be made by: (A) by tendering (through
               actual delivery or attestation) shares of Common Stock owned by
               the Participant with appropriate stock powers; (B) electing to
               have the Company retain shares of Common Stock which would
               otherwise be issued on the exercise of the Option; (C)
               irrevocably authorizing and directing a third party to sell
               shares of Common Stock acquired upon exercise of the Option and
               remit to the Company a sufficient amount of the proceeds to pay
               the Exercise Price and any applicable withholding tax; or (D) any
               combination of the foregoing forms. In determining the number of
               shares of Common Stock necessary to be delivered to or retained
               by the Company, such shares shall be valued at their Fair Market
               Value as of the Exercise Date.

                      (iv) Certificates for shares of Common Stock purchased
               upon the exercise of an Option shall be issued in the name of the
               Participant or other person entitled to receive such shares, and
               delivered to the Participant or such other person as soon as
               practicable following the Exercise Date.

(d)    Limitations on Incentive Stock Options.

               (i) To the extent that the aggregate Fair Market Value of shares
        of Common Stock with respect to which Incentive Stock Options are
        exercisable for the first time by a Participant during any calendar year
        under the Plan and any other incentive stock option plan of the Company
        (or any Subsidiary of the Company) shall exceed $100,000, such Options
        shall be treated as Non-Qualified Stock Options. Such Fair Market Value
        shall be determined as of the date on which each such Incentive Stock
        Option is granted.

               (ii) No Incentive Stock Option may be granted to an individual
        if, at the time of the grant, such individual owns stock possessing more
        than 10 percent of the total voting power of the Common Stock of the
        Company unless: (A) the exercise price per share of such Incentive Stock
        Option is at least 110 percent of the Fair Market Value of a share of
        Common Stock at the

                                       8
<PAGE>   12

        time such Incentive Stock Option is granted, and (B) such Incentive
        Stock Option is not exercisable after the expiration of five years from
        the date such Incentive Stock Option is granted.

(e)     Effect of Termination of Employment.

               (i) Unless the applicable Award Agreement provides otherwise and
        except as provided by Sections 7(g) and 9(d) with respect to a Change in
        Control, in the event that the employment of a Participant with the
        Company or a Subsidiary of the Company shall terminate for any reason
        other than death or Disability, (A) Options granted to the Participant,
        to the extent that they are exercisable at the time of such termination,
        shall remain exercisable until the date that is three months after such
        termination (or one year after the date of death, if death occurs within
        three months after the date of termination), on which date they shall
        expire, and (B) Options granted to such Participant, to the extent that
        they were not exercisable at the time of such termination, shall expire
        at the close of business on the date of such termination.
        Notwithstanding the foregoing, no Option shall be exercisable after the
        expiration of its term.

               (ii) Unless the applicable Award Agreement provides otherwise, in
        the event that the employment of a Participant with the Company or a
        Subsidiary of the Company shall terminate on account of the Disability
        or death of the Participant, (A) Options granted to such Participant, to
        the extent that they were exercisable at the time of such termination,
        shall remain exercisable until the first anniversary of such
        termination, on which date they shall expire, and (B) Options granted to
        such Participant, to the extent that they were not exercisable at the
        time of such termination, shall expire at the close of business on the
        date of such termination. Notwithstanding the foregoing, no Option shall
        be exercisable after the expiration of its term.

(f)     Effect of Removal from Board of Directors.

        Unless the applicable Award Agreement provides otherwise, in the event a
        Non-Employee Director ceases to serve on the Board of Directors for any
        reason, the Committee shall determine the effect such termination has
        with respect to Options granted to such director; provided, that (i)
        Options granted to a Non-Employee Director, to the extent that they were
        not exercisable at the time of such termination, shall expire at the
        close of business on the date of such termination and (ii) no Option
        shall be exercisable after the expiration of its term. Notwithstanding
        the foregoing, Options granted to a Non-Employee Director while such
        Director was also an employee of the Company or any Subsidiary of the
        Company shall be governed by the provisions set forth in Section 7(e).

(g)     Acceleration of Exercise Date Upon Change in Control.

               (i) Except as provided in the applicable Award Agreement, upon
        the occurrence of a Change in Control described in Section 2(d) then
        each Option granted under the Plan and outstanding at such time shall
        become fully and immediately exercisable. Notwithstanding the foregoing,
        no Option shall be exercisable after the expiration of its term.

              (ii) In connection with a pending or completed Change in Control
        the Committee in its sole discretion may require that the Options be:
        (A) cashed out and terminated in exchange for a lump sum cash payment or
        shares of Common Stock having a value equal to the fair market value of
        the Options immediately preceding the Change in Control; and/or (B)
        converted into options in the acquiring entity having a fair market
        value immediately after the Change in Control equal to the fair market
        value of the Options immediately prior to the Change in Control. For
        this

                                       9
<PAGE>   13

        purpose, the fair market value of an Option shall equal the
        excess of the Fair Market Value of the underlying shares over the
        Exercise Price.

(h)     Reload Stock Options.

        The Committee shall have the authority to specify, at the time of grant
        of Option, that upon exercise of all or a portion of that Option through
        the tender of shares previously owned by the Participant for more than
        six months a reload stock option shall automatically be granted under
        specified conditions. A reload stock option entitles the grantee to
        purchase that number of shares of owned Common Stock that the
        Participant has tendered to pay the Option Exercise Price or withholding
        taxes. The per share Exercise Price of the reload stock Option shall be
        the Fair Market Value of a share of Common Stock at the time of exercise
        of the original Option. The duration of a reload stock Option shall not
        extend beyond the expiration date of the original Option it replaces.

(i)     Restrictions on Transferability.

        No Option may be transferred except by will or the laws of descent and
        distribution and is exercisable during the grantee's lifetime only by
        the grantee or his personal representative. Notwithstanding the
        foregoing, the Committee may permit a Participant to transfer by sale or
        by gift all or a portion of his or her Non-Qualified Stock Options to
        the Participant's spouse and/or to the Participant's lineal descendants,
        parents, or siblings, or to the spouse(s) of such persons.

8.      TANDEM SARS.

        The Committee may, in connection with any Option granted hereunder, also
grant one or more Tandem SARs relating to a number of shares of Common Stock
less than or equal to the number of shares of Common 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 Stock Option, 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 Common Stock shall entitle the Participant to receive a
               benefit, for each such underlying Option share, equal to the
               excess of (i) the Fair Market Value of a share of Common Stock on
               the exercise date, over (ii) the Option Exercise Price per share
               of the related Option. All SAR benefits shall be satisfied with
               shares of Common Stock except to the extent the Committee elects
               to make payment under the exercised SAR in cash. Such payment
               shall be made as soon as practicable after the effective date of
               such 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 and only if, at the
               time of such exercise, the Fair Market Value of a share of Common
               Stock exceeds the Option Exercise Price per share of the related
               Option.

                      (ii) The exercise of a Tandem SAR with respect to a number
               of shares of Common Stock shall 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 Section

                                       10
<PAGE>   14

               8(b)(2)), with respect to a number of shares of Common
               Stock shall cause the automatic and immediate cancellation of any
               related Tandem SARs to the extent that the number of shares of
               Common Stock remaining subject to such Option is less than the
               number of shares then subject to such Tandem SAR. Such Tandem
               SARs shall be canceled in the order in which they become
               exercisable.

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

                      (iv) No Tandem SAR shall be assignable or transferable
               otherwise than together with its related Option, and any such
               transfer or assignment will be subject to the provisions of
               Section 20 of the Plan.

                      (v) A Tandem SAR shall be exercised by delivering written
               notice to the Company's principal office, to the attention of its
               Secretary, no less than one business day in advance of the
               effective date of the proposed exercise. Such notice shall
               specify the number of shares of Common Stock with respect to
               which the Tandem SAR is being exercised and the effective date of
               the proposed 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 in
               writing at any time prior to the close of business on the
               business day immediately preceding the effective date of the
               proposed exercise.

9.  NON-TANDEM SARS.

        The Committee may grant Awards to Participants in the form of Non-Tandem
SARs as to a designated number of shares of Common Stock at a specified
Reference Value.

        (a)    Benefit Upon Exercise.

               The exercise of a Non-Tandem SAR with respect to any number of
               shares of Common Stock shall entitle the Participant to receive,
               for each underlying share, shares of Common Stock having a Fair
               Market Value on the date of exercise (or, in the discretion of
               the Committee, cash or a combination of cash and shares in an
               amount) equal to the excess of (i) the Fair Market Value of a
               share of Common Stock on the exercise date, over (ii) the
               Reference Value of the Non-Tandem SAR. All Non-Tandem SARs shall
               be satisfied with shares of Common Stock except to the extent the
               Committee elects to make payment for the exercised SAR in cash.
               Such payments shall be made as soon as practicable after the
               effective date of such exercise.

        (b)    Term and Exercise of Non-Tandem SARs.

                      (i) The Committee shall determine the expiration date of
               each Non-Tandem SAR.

                      (ii) A Non-Tandem SAR may be exercised for all or any
               portion of the shares as to which it is exercisable; provided,
               that no partial exercise of a Non-Tandem SAR shall be for an
               aggregate Reference Value of less than $1,000. The partial
               exercise

                                       11
<PAGE>   15

               of a Non-Tandem SAR shall not cause the expiration,
               termination or cancellation of the remaining portion thereof.

                      (iii) A Non-Tandem SAR shall be exercised by delivering
               notice to the Company's principal office, to the attention of its
               Secretary, no less than one business day in advance of the
               proposed Exercise Date. Such notice shall specify the number of
               shares of Common Stock with respect to which the Non-Tandem SAR
               is being exercised, and the desired Exercise Date, and shall be
               signed by the Participant. The Participant may withdraw such
               notice at any time prior to the close of business on the business
               day immediately preceding the effective date of the proposed
               exercise.

                      (iv) No Non-Tandem SAR shall be assignable or transferable
               except by will or the laws of descent and distribution, and any
               such transfer or assignment will be subject to the provisions of
               Section 20 of the Plan.

        (c)    Effect of Termination of Employment or Directorship.

               The provisions set forth in Section 7(e) and 7(f) with respect to
               the exercise of Options shall apply as well to the exercise of
               Non-Tandem SARs.

        (d)    Acceleration of Exercise Date Upon Change in Control.

               Unless the applicable Award Agreement provides otherwise, the
               provisions set forth in Section 7(g)(i) and (ii) with respect to
               Options shall apply as well to the exercise of Non-Tandem SARs.

10.     RESTRICTED SHARES.

        (a)    Grants.

               The Committee may grant Awards to employees of the Company and
               its Subsidiaries in the form of Restricted Shares.

        (b)    Issue Date and Vesting Date.

               At the time of the grant of Restricted Shares, the Committee
               shall establish an Issue Date or Issue Dates and a Vesting Date
               or Vesting Dates with respect to such shares. The Committee may
               divide such shares into classes and assign a different Issue Date
               and/or Vesting Date for each class. If the grantee is still
               employed by the Company or a Subsidiary on an Issue Date (which
               may or may not be the date of grant), the number of Restricted
               Shares specified by the Committee in the applicable Award
               Agreement shall be issued in accordance with the provisions of
               Section 10(f) of the Plan. Provided that all conditions to
               vesting of a Restricted Share imposed pursuant to Section 10(c)
               of the Plan are satisfied or excused as provided in Section 10(i)
               of the Plan, upon the occurrence of the Vesting Date with respect
               to a Restricted Share, such share shall vest and the restrictions
               of Section 10(d) of the Plan shall lapse.

        (c)    Conditions to Vesting.

               At the time of the issuance of Restricted Shares, the Committee
               may impose such restrictions or conditions to the vesting of such
               shares as it, in its absolute discretion,

                                       12
<PAGE>   16

               deems appropriate. The Committee may designate that the Award of
               Restricted Shares is intended to constitute "performance based
               compensation" within the meaning of Section 162(m) of the Code,
               in which case the vesting conditions will include attainment of
               one or more Performance Goals and/or other standards established
               by the Committee at the time of grant. Any Restricted Shares
               granted contingent upon achievement of Performance Goals shall be
               released from restriction only after the Committee certifies that
               those Performance Goals have been met.

        (d)    Restrictions on Transfer Prior to Vesting.

               Prior to the vesting of a Restricted Share, no transfer of a
               Participant's rights with respect to such share, whether
               voluntary or involuntary, by operation of law or otherwise, shall
               be permitted. Immediately upon any attempt to transfer such
               rights, the Participant shall forfeit such share and all of the
               rights related thereto.

        (e)    Dividends on Restricted Stock.

               The Committee in its discretion may require that any dividends
               paid on Restricted Shares be held in escrow until all vesting
               requirements with respect to the shares have lapsed.

        (f)    Issuance of Certificates.

                      (i) Reasonably promptly after the Issue Date with respect
               to Restricted Shares, 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 by the Participant with respect to such shares. Each such
               stock certificate shall bear such legend, if any, as the
               Committee requires. That legend shall not be removed until the
               Restricted Shares vest pursuant to the terms of the applicable
               Award Agreement and this Plan.

                      (ii) Each certificate issued pursuant to this Section
               10(f), together with the stock powers relating to the Restricted
               Shares evidenced by such certificate, shall be held in escrow by
               the Company until vested, unless the Committee determines
               otherwise.

        (g)    Consequences of Vesting.

               Upon the vesting of a Restricted Share pursuant to the terms of
               the applicable Award Agreement, the restrictions of Section 10(d)
               of the Plan shall lapse. Reasonably promptly after a Restricted
               Share vests, 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 described in Section
               10(f) of the Plan plus any escrowed of retained dividends on such
               shares.

        (h)    Effect of Termination of Employment.

               Unless the applicable Award Agreement provides otherwise, upon
               the termination of a Participant's employment by the Company or
               any Subsidiary of the Company for any reason, any and all
               non-vested Restricted Shares to which restrictions on
               transferability apply shall be immediately forfeited by the
               Participant and transferred to the Company; provided that if the
               Committee, in its sole discretion and within 30 days after such

                                       13
<PAGE>   17

               termination of employment notifies the Participant in writing of
               its decision not to terminate the Participant's rights in such
               shares, then the Participant shall continue to be the owner of
               such shares subject to such continuing restrictions as the
               Committee may prescribe in such notice. If Restricted Shares are
               forfeited in accordance with the provision of this Section 10,
               then unless the applicable Award Agreement provides otherwise,
               the Company shall also 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.

        (i)    Effect of Change in Control.

               Except as otherwise provided in the applicable Award Agreement,
               notwithstanding any provision herein to the contrary, upon the
               occurrence of a Change in Control described in Section 2(d), then
               each Restricted Share granted under the Plan and outstanding at
               the date of such Change in Control above shall immediately vest
               and all restrictions on such shares shall immediately lapse.

11.     PERFORMANCE UNITS.

        (a)    Grants.

               The Committee may grant Awards to employees of the Company and
               its Subsidiaries in the form of Performance Units.

        (b)    Vesting Date.

               At the time of the grant of Performance Units, the Committee
               shall establish a Vesting Date or Vesting Dates with respect to
               such units. The Committee may divide such units into classes and
               assign a different Vesting Date for each class. Provided that all
               conditions to the vesting of a Performance Unit imposed pursuant
               to Section 11(d) of the Plan are satisfied, upon the occurrence
               of the Vesting Date with respect to a Performance Unit, such unit
               shall vest and become payable.

        (c)    Benefit Upon Vesting.

               Upon the vesting of a Performance Unit, the Participant shall be
               entitled to receive a specified number of shares of Common Stock,
               shares of Common Stock having a specified Fair Market Value on
               the Vesting Date, and/or a specified amount of cash, as
               determined by the Committee and set forth in the applicable Award
               Agreement. Payment of such benefit shall be made within 30 days
               of the date on which the Performance Unit vests.

        (d)    Conditions to Vesting.

               At the time of the grant of Performance Units, the Committee may
               impose such restrictions or conditions on the vesting of the
               Performance Units as it, in its absolute discretion, deems
               appropriate, including the applicable Performance Goals, if any,
               that must be satisfied for the units to vest. The Committee may
               designate that the Award of Performance Units is intended to
               constitute "performance based compensation" within the meaning of
               Section 162(m) of the Code, in which case vesting of the Award
               will be contingent upon the attainment of one or more Performance
               Goals designated by the

                                       14
<PAGE>   18

               Committee at the time of grant. Performance Units granted
               contingent upon achievement of Performance Goals will vest only
               after the Committee certifies that those Performance Goals have
               been met.

        (e)    Effect of Termination of Employment.

               Unless the applicable Award Agreement provides otherwise,
               Performance Units that have not vested, together with any
               dividends credited on such units, if any, shall be forfeited upon
               the Participant's termination of employment for any reason.

        (f)    Effect of Change in Control.

               Upon the occurrence of a Change in Control as defined in Section
               2(d), notwithstanding any provision herein to the contrary, each
               Performance Unit granted under the Plan and outstanding at the
               time of the Change in Control shall vest and become immediately
               payable.

12.     RIGHTS AS A STOCKHOLDER AND DIVIDEND EQUIVALENTS.

        (a)    General.

               No person shall have any rights as a stockholder with respect to
               any shares of Common Stock covered by or relating to any Award
               until the date of issuance of a stock certificate with respect to
               such shares except to the extent approved by the Committee and
               provided in the applicable Award Agreement. Except as otherwise
               expressly provided below, no adjustment to any Award shall be
               made for dividends or other rights for which the record date
               occurs prior to the date such stock certificate is issued.

        (b)    Dividend Equivalents.

               If an Award is granted in the form of Performance Units or
               Options, or in the form of any other stock-based grant, the
               Committee may choose, at the time of the grant of the Award to
               include as part of such Award an entitlement to receive dividends
               or dividend equivalents, subject to such terms, conditions,
               restrictions, limitations, if any, as the Committee may
               establish. Dividends and dividend equivalents shall be paid in
               such form and manner (i.e., lump sum or installments) and at such
               time(s) as the Committee shall determine. All dividends or
               dividend equivalents that are not paid currently may, at the
               Committee's discretion, accrue interest, be reinvested into
               additional shares of Common Stock or, in the case of dividends or
               dividend equivalents credited in connection with Performance
               Units denominated in shares of Company Stock, be credited as
               additional Performance Units and paid to the Participant if and
               when, and to the extent that, payment is made pursuant to such
               Award. The total number of shares available for grant under the
               Plan shall not be reduced to reflect any dividends or dividend
               equivalents that are reinvested into additional shares of Common
               Stock or credited as additional Performance Units.

13.     DEFERRAL OF AWARDS.

At the discretion of the Committee, a Participant may elect to defer the payment
of any Award, dividend or dividend equivalent, or any portion thereof, until
such time as the Committee may establish. All such deferrals shall be
accomplished by the delivery of a written, irrevocable election by the

                                       15
<PAGE>   19

Participant prior to the time established by the Committee for such purpose, on
a form provided by the Company. Further, all deferrals shall be made in
accordance with administrative guidelines established by the Committee to ensure
that such deferrals comply with all applicable requirements of the Code.
Deferred payments shall be paid in a lump sum or installments, as determined by
the Committee. Deferred Awards denominated in the form of Common Stock may also
be credited with dividends or dividend equivalents.

14.     NO SPECIAL EMPLOYMENT OR DIRECTORSHIP RIGHTS; NO RIGHT TO AWARDS.

        Nothing contained in the Plan or any Award Agreement shall confer upon
any Participant any right with respect to continuing as an employee or director
of the Company or any Subsidiary or interfere in any way with the right of the
Company or any Subsidiary, subject to the terms of any separate agreement to the
contrary, at any time to terminate such employment or directorship or to
increase or decrease the compensation of the Participant. No person shall have
any claim or right to receive an Award hereunder. The Committee's granting of an
Award to a Participant at any time shall neither require the Committee to grant
any other Award to such Participant or other person at any time or preclude the
Committee from making subsequent grants to such Participant or any other person.

15.     SECURITIES LAW AND LISTING MATTERS.

        Notwithstanding any other provision of the Plan, the Company shall have
no liability to deliver any shares of Common Stock under the Plan or make any
other distribution of benefits under the Plan unless such delivery or
distribution would comply with all applicable laws (including, without
limitation, the requirements of the Securities Act of 1933), and the applicable
requirements of any securities exchange or similar entity on which the shares of
Company Common Stock are listed or registered.

16.     WITHHOLDING TAXES.

        Whenever cash is to be paid pursuant to an Award, the Company shall have
the right to deduct therefrom an amount sufficient to satisfy any federal, state
and local withholding tax requirements related thereto. Whenever shares of
Common Stock are to be delivered pursuant to an Award, the Company shall have
the right to require the Participant to remit to the Company in cash an amount
sufficient to satisfy any federal, state and local withholding tax requirements
related thereto as a condition to exercise. With the approval of the Committee,
a Participant may satisfy the foregoing requirement by electing to have the
Company withhold from delivery shares of Common Stock having a fair market value
equal to the minimum amount of tax to be withheld, by tendering previously owned
shares of Common Stock having a Fair Market Value equal to the minimum
withholding tax due and/or by other means acceptable to the Committee on a case
by case basis. Shares held back or tendered to pay withholding taxes shall be
valued at their Fair Market Value on the date withheld or tendered. Fractional
share amounts shall be settled in cash.

17.     NOTIFICATION OF ELECTION UNDER SECTION 83(b) OF THE CODE.

        If any Participant shall, in connection with the acquisition of shares
of Common 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)), he or she shall notify the
Company in writing of the election within ten days of filing notice of the
election with the Internal Revenue Service. This written notification is in
addition to any filing and notification required pursuant to regulations issued
under the authority of Code Section 83(b).

                                       16
<PAGE>   20

18.     NOTIFICATION UPON DISQUALIFYING DISPOSITION UNDER SECTION 421(b) OF
        THE CODE.

        Each Award Agreement with respect to an Incentive Stock Option shall
require the Participant to notify the Company in writing of any disposition of
shares of Common Stock issued pursuant to the exercise of such Option under the
circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions), within ten days of such disposition.

19.     AMENDMENT OR TERMINATION OF THE PLAN.

        The Board of Directors may, at any time, suspend or terminate the Plan
or revise or amend it in any respect whatsoever; provided, however, that
stockholder approval shall be required if and to the extent the Board of
Directors determines that such approval is appropriate for purposes of
satisfying Section 162(m) or 422 of the Code or to the extent such approval is
required by the rules of any stock exchange on which the Common Stock is listed.
Nothing herein shall restrict the Committee's ability to exercise its
discretionary authority pursuant to Section 4 of the Plan, which discretion may
be exercised without amendment to the Plan. No action hereunder may, without the
consent of a Participant, reduce the Participant's rights under any outstanding
Award.

20.     TRANSFERS UPON DEATH; NONASSIGNABILITY.

        Upon the death of a Participant, outstanding Awards granted to such
Participant may be exercised only by the executor, administrator or
representative of the Participant's estate or by a person who shall have
acquired the right to such exercise by will or by the laws of descent and
distribution. No transfer of an Award by will or the laws of descent and
distribution shall be effective to bind the Company unless the Committee is
furnished with (a) written notice thereof and with a copy of the will and/or
such evidence as the Committee may deem necessary to establish the validity of
the transfer, and (b) an agreement by the transferee to comply with all the
terms and conditions of the Award that are or would have been applicable to the
Participant and to be bound by the acknowledgments made by the Participant in
connection with the grant of the Award.

        Except as provided in Sections 7(i) and 10(g), during a Participant's
lifetime no Award shall be assignable or transferable, by operation of law or
otherwise. Any transfer or assignment of an Award in violation of the preceding
sentence shall be void and, if voluntary, shall cause the respective Award to
immediately and automatically terminate. Without limiting the foregoing, in the
event an order by any court, arbitrator or other tribunal in any domestic
proceeding shall purport to transfer any Award, such Award shall immediately and
automatically terminate.

21.     EXPENSES AND RECEIPTS.

        The Company shall pay all expenses of the Plan. Any proceeds received by
the Company in connection with any Award will be used for general corporate
purposes.

22.     FAILURE TO COMPLY.

        In addition to the remedies of the Company elsewhere provided for
herein, failure by a Participant (or beneficiary or transferee) to comply with
any of the terms and conditions of the Plan or the applicable Award Agreement,
unless such failure is remedied by such Participant (or beneficiary or
transferee) within ten days after notice of such failure by the Committee, shall
be grounds for the cancellation and forfeiture of such Award, in whole or in
part, as the Committee, in its absolute discretion, may determine.

                                       17
<PAGE>   21

23.     RELATION TO BENEFIT PLANS.

        Options, SARs, Restricted Shares and Performance Units will not be
considered as compensation for the purpose of any other benefit plans maintained
by the Company except as expressly provided in the documents evidencing such
plans.

24.     APPLICABLE LAW.

        Except to the extent preempted by any applicable federal law, the Plan
will be construed and administered in accordance with the laws of the State of
Utah, without reference to the principles of conflicts of law.

25.     PARTICIPANT RIGHTS.

        No Participant shall have any claim to be granted any Award under the
Plan, and there is no obligation for uniformity of treatment for Participants.
Except as provided specifically herein, a Participant or a transferee of an
Award shall have no rights as a stockholder with respect to any shares covered
by any Award until the date of the issuance of a Common Stock certificate to him
for such shares or any non-contractual rights with respect to any Award granted
hereunder. Neither the Company nor its subsidiaries, officers, directors or
agents shall have any responsibility, duty or obligation with respect to any
Award, including without limitation any fiduciary or equitable duty, other than
those contractual obligations set forth in this Plan and the applicable Award
Agreement. No person connected with the Plan warrants or guarantees the federal,
state and local income, estate and gift tax consequences of Awards to
Participants.

26.     UNFUNDED STATUS OF AWARDS.

        The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant
pursuant to an Award, nothing contained in the Plan or any Award Agreement shall
give any such Participant any rights that are greater than those of a general
creditor of the Company.

27.     NO FRACTIONAL SHARES.

        No fractional shares of Common Stock shall be issued or delivered
pursuant to the Plan. The Committee shall determine whether cash, other Awards,
or other property shall be issued or paid in lieu of such fractional shares or
whether such fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.

28.     BENEFICIARY.

        A Participant may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation. If no designated beneficiary
survives the Participant, the executor or administrator of the Participant's
estate shall be deemed to be the Participant's beneficiary.

29.     INTERPRETATION

        The Plan is designed and intended to comply with 422 of the Code, and
all provisions hereof shall be construed in a manner to so comply.

                                       18
<PAGE>   22

        IN TESTIMONY WHEREOF, the Company has caused this Plan document to be
executed by its duly authorized officer this _______ day of ______, 2000.

                                           SKYWEST, INC.

                                           By: __________________________

                                           Its: __________________________

                                       19

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