Document:

Exhibit 10.3

 

AMENDED
AND RESTATED

ASSET SERVICING AGREEMENT

 

THIS AMENDED AND RESTATED ASSET SERVICING AGREEMENT
(this “Agreement”), dated as of April 19, 2006, is made by and between GKK
Manager LLC, a Delaware limited liability company (the “Manager”), and SLG
Gramercy Services LLC, a Delaware limited liability company (“Servicer”).

 

WHEREAS, Manager provides management services to
Gramercy Capital Corp., a Maryland corporation (the “Parent”), and GKK Capital
LP, a Delaware limited partnership (the “Operating Partnership” and
collectively with the Parent and subsidiaries and other entities controlled by
either of them, the “Company”), pursuant to that certain Management Agreement
dated as of August 2, 2004, by and among the Parent, the Operating Partnership
and the Manager, as amended and restated as of the date hereof (the “Management
Agreement”);

 

WHEREAS, the Manager desires to engage Servicer to
manage and service certain assets of the Company;

 

WHEREAS, Servicer is willing to perform the services
described herein on the terms and conditions hereinafter set forth;

 

WHEREAS, the Manager and Servicer entered into the
original asset servicing agreement as of August 2, 2004 (the “Original Asset
Servicing Agreement”); and

 

WHEREAS, the Manager and Servicer desire to amend and
restate the Original Asset Servicing Agreement in its entirety.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the mutual
agreements herein set forth and intending to be legally bound, the parties
hereto agree that the Original Asset Servicing Agreement shall be amended and
restated in its entirety as follows:

 

1.     Services.

 

(a)   Servicer agrees to provide
the following asset management services (the “Services”) to the Manager upon
request with respect to the Serviced Assets (as defined in Section 3):

 

(i)            issuing bills and payment notices,
and making all reasonable efforts to collect all payments called for under the
terms and provisions of the Serviced Assets, and shall follow such collection
procedures as are in accordance with generally applicable servicing practices;

 

(ii)           establishing, and maintaining during
the term of this Agreement, the Company Account (as defined in the Management
Agreement), and any sub or related accounts in connection therewith
(collectively, the “Accounts”).  The
Accounts shall relate solely to the Serviced Assets, and funds in the Accounts
shall be held in trust by the Servicer for the benefit of the Manager and shall
not be commingled with any other moneys.  
The Servicer shall notify the Manager in writing of the location and
account number of the Accounts and shall thereafter give

 

 

the Manager written
notice of any change of the location or account number of the Accounts promptly
following the date of such change;

 

(iii)          depositing into the Accounts all payments
on account of principal of the Serviced Assets, including any principal
prepayments thereon and all payments on account of interest or yield on the
Serviced Assets, (including any default interest or late charges), any exit
fees and any other amounts received with respect thereto (including, without
limitation, any amounts received in connection with the liquidation or other
conversion of a Serviced Asset);

 

(iv)          making withdrawals from the Accounts
of amounts on deposit therein for (without duplication) the following purposes:

(1)           to pay any amount deposited in the
Accounts in error to the Person entitled thereto;

 

(2)           to pay to itself its fees due
hereunder and to reimburse itself for any other amounts owed to it pursuant to
the Agreement;

 

(3)           after the withdrawal pursuant to the
immediately preceding clause (2), to distribute to the Manager any amounts
remaining in the Accounts; and

 

(4)           to clear and terminate the Accounts
upon termination of this Agreement;

 

(v)           preparing and distributing to Manager,
on the date on which any distribution is made to the Manager a report setting
forth each Serviced Asset (a) the servicing fee paid on such date, (b) any
other amounts paid to the Servicer on such date, and (c) any amounts of
principal interest, yield, default interest, late charges, exit fees and any
other amounts distributed to Manager on such day;

 

(vi)          processing requests for approvals and
consents received by Servicer in connection with the Serviced Assets for leases
and draw requests from escrow accounts and reserve funds;

 

(vii)         monitoring compliance with insurance
requirements;

 

(viii)        monitoring real estate tax and insurance
escrow deposits;

 

(ix)           reviewing periodic budgeting and
financial reporting under the Serviced Assets; and

 

(x)            issuing customary reporting with
respect to each of the Serviced Assets and the portfolio of all Serviced
Assets, and as may be required of the Manager under the Management Agreement.

 

(b)   In addition to the Services,
the Manager may request Servicer to be appointed as a special servicer or
sub-servicer to a special servicer in respect of any Serviced Asset.  To the extent Servicer accepts such
appointment, the Servicer agrees to provide the following special asset
management services (the “Special Services”) to the Manager:

 

2

 

(i)            reviewing loan files of the Serviced
Assets to:  (A) assess the Company’s
rights in and to collateral securing the subject loans, including bank
accounts, letters of credit and funds held in escrow; and (B) identify
guarantees, other credit support and additional sources of equity, if any;

 

(ii)           conducting due diligence with respect
to the Serviced Assets with an emphasis on exit strategies and exploring,
developing and implementing strategic opportunities and plans to restructure
debt and equity positions;

 

(iii)          reviewing current operating statements
of profit and loss and past and current rent rolls to assess operating and
financial performance and the impact of existing and potential financial and
operational issues relating to the collateral for the Serviced Assets;

 

(iv)          recommending short- and long-term
strategic alternatives for the management and disposition of the Serviced
Assets based on the relevant market and market trends;

 

(v)           overseeing rehabilitation projects
and assessing whether new appraisals or environmental assessment or physical
needs reports are necessary with respect to the collateral for the Serviced
Assets;

 

(vi)          formulating appropriate courses of
action and conducting negotiations among all concerned parties regarding the
workout of Serviced Assets;

 

(vii)         structuring workout proposals and
preparing analyses indicating the viability thereof;

 

(viii)        evaluating liquidity concerns and
capital adequacy and reserve requirements and performing liquidity analyses of
properties and ownership entities with respect to the collateral for the
Serviced Assets;

 

(ix)           preparing and delivering such reports
relating to the Serviced Assets as Manager shall reasonably request; and

 

(x)            performing such other services as
may be required from time to time for management and other activities relating
to the Serviced Assets as the Manager shall reasonably request.

 

2.     Term.  This Agreement shall remain in full force and
effect throughout the term of the Management Agreement as extended in
accordance therewith and terminate simultaneously with the expiration or
earlier termination of the Management Agreement, except that Servicer may
terminate this Agreement at any time on 60 days notice to Manager.

 

3.     Fees.

 

(a)   Servicer shall receive fees
for Services rendered under this Agreement equal to 0.15% per annum of the Book
Value of each Serviced Asset, except that the fees shall be 0.05% per annum of
the Book Value of each Serviced Asset that constitutes a credit tenant lease
asset or non-investment grade bond.  “Book
Value” means the book value of a Serviced Asset as reflected in the Company’s
most recent financial statements.  “Serviced
Assets” means the fixed income investments of the Company, other than
(i) any securities which are rated investment grade by a nationally
recognized

 

3

 

rating agency,
unless the investment grade bonds have a first-loss position;
(ii) securities (whether or not rated) issued by any corporation which are
not secured by any pledge of collateral; or (iii) any securities issued by
the U.S. government or other temporary investments, such as commercial paper or
money market investments, made by the Company, provided, however, that for
purposes of this definition, fixed income investments shall include the Company’s
credit tenant lease assets.  The fee
shall be calculated and paid monthly on or before the fifth day following each
month end.  Manager shall be directly
obligated to pay accrued fees hereunder, whether or not reimbursed by the
Company for such fees as contemplated by the Management Agreement.

 

(b)   To the extent Servicer
accepts appointment as a special servicer or sub-servicer to a special
servicer, Servicer shall receive additional fees in such amounts as are
customary for fees paid to third parties in similar instances, which are
approved by the Independent Directors of the Parent.  Such fees shall be agreed upon by Servicer and
such Independent Directors on a case-by-case basis.  The Manager and Servicer shall share equally
any fees received by Manager or Servicer for performance of Special Services
(but not any Servicer Termination Payment (as defined below)).

 

(c)   To the extent Manager
receives any payment from the Company on account of a termination of the
Management Agreement, and such payment is based in part upon the fees for
Services and/or Special Services (the “Services Termination Payment”), the
Servicer shall be entitled to fifty percent of the Services Termination
Payment.

 

4.     Confidentiality.

 

(a)   Servicer shall keep
confidential any nonpublic information obtained relating to the Serviced Assets
and its performance of the Services and shall not disclose any such information
(or use the same except in furtherance of its duties under this Agreement),
except as permitted or contemplated by, and subject to the limitations in, the
Management Agreement.  The provisions of
this Section 4(a) shall survive the expiration or earlier termination of
this Agreement.

 

(b)   Promptly after the
expiration or earlier termination of this Agreement, Servicer shall return to
Manager all confidential and proprietary information provided to or obtained by
Servicer pursuant to or in connection with this Agreement and the performance
of the Services hereunder, including all copies and extracts thereof in
whatever form, in its possession or under its control.

 

5.     Notices.  All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and mailed,
faxed or delivered by hand or courier service:

 

(a)   If to Manager, to:

 

GKK Manager LLC 

c/o SL Green Realty Corp.

420 Lexington Avenue 

New York, New York 10170

Attention: General Counsel

(b)   If to Servicer, to:

 

SLG Gramercy Services LLC

c/o SL Green Realty Corp. 

420 Lexington Avenue 

4

 

New York, New York 10170

Attention: President and General Counsel

 

6.     Cooperation; Further
Assistance.  Each party hereto shall
cooperate with and provide assistance to the other parties consistent with the
terms and conditions hereof to enable (a) the full performance of all
obligations hereunder, and (b) the review and audit of books and records
as they relate to the provision of the Services; such cooperation and
assistance to include, without limitation, providing the other parties and
their respective representatives and agents (including, without limitation,
outside auditors) with reasonable access, during normal business hours and upon
reasonable advance notice, to its employees, representatives and agents and its
books, records, offices and properties relating to the Services.

 

7.     Entire Agreement.  Except for the applicable provisions of the
Management Agreement, this Agreement shall constitute the entire agreement
among the parties relating to the subject matter hereof and shall supersede all
other prior or contemporary agreements, understandings, negotiations and
discussions whether oral or written.

 

8.     Amendment and
Modification; Assignment.  Neither
this Agreement nor any of the terms or provisions hereof may be changed,
supplemented, waived or modified except by a written instrument executed by the
parties hereto (or in the case of a waiver, by the party granting such waiver).  Servicer shall have the right to assign,
sub-contract or delegate its rights and obligations hereunder to one or more
entities which (a) meet in all material respects the then applicable rating
criteria issued by Standard & Poor’s for rated servicers of mortgage-backed
securities and (b) are reasonably acceptable to the Manager.

 

9.     Counterparts.  This Agreement may be executed in two or more
counterparts, each of which may be signed by any of the parties hereto, each of
which shall be deemed an original and all of which together shall constitute
one and the same instrument.

 

10.   Governing Law.  This Agreement and all questions relating to
its validity, interpretation, performance and enforcement shall be governed by,
construed, interpreted and enforced in accordance with the internal laws of the
State of New York, without regard to any conflicts of laws principles thereof.

 

11.   Invalid Provisions.  If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable, this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of hereof and the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom.

 

12.   Definitions and
Interpretation.

 

(a)   Defined Terms.  Capitalized terms used but not defined herein
shall have the meanings ascribed thereto in the Management Agreement.

 

(b)   Singular and Plural Forms.  The use herein of the singular form shall
also denote the plural form, and the use herein of the plural form shall denote
the singular form, as in each case the context may require.

 

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IN WITNESS WHEREOF, the
parties hereto have duly executed this Agreement as of the day and year first
written above.

 

	
   

  	
  GKK MANAGER LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  SLG GRAMERCY SERVICES
  LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

6Exhibit 10.1

 

FIRST
COMMUNITY BANCORP 2003 STOCK INCENTIVE PLAN

 

as amended
and restated, effective April 19, 2006

 

1.  Purpose of the Plan.  The
purpose of this First Community Bancorp 2003 Stock Incentive Plan is to offer
certain Employees, Non-Employee Directors, and Consultants the opportunity to
acquire a proprietary interest in the Company. Through the Plan, the Company
and its subsidiaries seek to attract, motivate, and retain highly competent
persons. The success of the Company and its affiliates are dependent upon the
efforts of these persons. The Plan provides for the grant of options,
restricted stock awards, performance stock awards, and stock appreciation
rights. An option granted under the Plan may be a Non-Statutory Stock
Option or an Incentive Stock Option, as determined by the Administrator. This
Plan amends and restates the 2003 Plan.

 

2.  Definitions.  As used herein,
the following definitions shall apply.

 

“2003 Plan” shall mean the
First Community Bancorp 2003 Stock Incentive Plan, originally adopted as of April     18,
2003, and as amended and restated hereby.

 

“Act” shall mean the
Securities Act of 1933, as amended.

 

“Administrator” shall mean
the Board or any one of the Committees.

 

“Affiliate” shall mean any
parent or subsidiary (as defined in Sections 424(e) and (f) of the
Code) of the Company.

 

“APB 25” shall mean Opinion
25 of the Accounting Principles Board, as amended, and any successor thereof.

 

“Award” shall mean an
Option, Stock Award, or a SAR.

 

“Board” shall mean the Board
of Directors of the Company.

 

“Cause” shall have the
meaning given to it under the Participant’s employment agreement with the
Company or Affiliate, or a policy of the Company or an Affiliate. If the
Participant does not have an employment agreement or the employment agreement
does not define this term, or the Company or an Affiliate does not have a
policy that defines this term, then Cause shall include malfeasance or gross
misfeasance in the performance of duties or conviction of illegal activity in
connection therewith or any conduct detrimental to the interests of the Company
or an Affiliate which results in termination of the Participant’s service with
the Company or an Affiliate, as determined by the Administrator.

 

“Change in Control” shall
mean:

 

(i)    the
consummation of a plan of dissolution or liquidation of the Company;

 

(ii)  the individuals who, as of the effective date hereof,
are members of the Board (“Incumbent Board”), cease for any reason to
constitute at least two-thirds of the members of the Board; provided, however,
that if the election, or nomination for election by the Company’s shareholders,
of any new director was approved by a vote of at least

 

 

two-thirds
of the Incumbent Board, such new director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board; provided, further, however, that
no individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened “election contest” or other actual or threatened solicitation of
proxies or consents by or on behalf of an individual, entity or group (within
the meaning of Section 13(d) or 14(d) of the Exchange Act)(a “Person”)
other than the Board (a “Proxy Contest”) including by reason of any agreement
intended to avoid or settle any election contest or Proxy Contest;

 

(iii)  the consummation of a plan
of reorganization, merger or consolidation involving the Company, except for a
reorganization, merger or consolidation where (A) the shareholders of the
Company immediately prior to such reorganization, merger or consolidation own
directly or indirectly at least 70% of the combined voting power of the
outstanding voting securities of the company resulting from such
reorganization, merger or consolidation (the “Surviving Company”) in
substantially the same proportion as their ownership of voting securities of
the Company immediately prior to such reorganization, merger or consolidation,
and (B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for such
reorganization, merger or consolidation constitute at least two-thirds of the
members of the board of directors of the Surviving Company, or of a company
beneficially owning, directly or indirectly, a majority of the voting
securities of the Surviving Company;

 

(iv)  the sale of all or substantially all the assets of the
Company to another person; or

 

(v)  the acquisition by another Person of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of stock representing more than fifty percent (50%) of the voting power of
the Company then outstanding by another Person.

 

“Code” shall mean the
Internal Revenue Code of 1986, as amended.

 

“Committee” shall mean a
committee appointed by the Board in accordance with Section 3 below.

 

“Common Stock” shall mean
the common stock of the Company, no par value.

 

“Company” shall mean First
Community Bancorp, a California corporation.

 

“Consultant” shall mean any
natural person who performs bona fide services for the Company or an Affiliate
as a consultant or advisor, excluding Employees and Non-Employee Directors.

 

“Date of Grant” shall mean
the effective date as of which the Administrator grants an Option to an
Optionee, a Stock Award to a Grantee, or a SAR to an Optionee.

 

“Disability” shall mean
total and permanent disability as defined in Section 22(e)(3) of the
Code.

 

“Employee” shall mean any
individual who is a common-law employee of the Company or an Affiliate.

 

2

 

“Exchange Act” shall mean
the Securities Exchange Act of 1934, as amended.

 

“Exercise Price,” in the
case of an Option, shall mean the exercise price of a share of Optioned Stock. “Exercise
Price,” in the case of a SAR, shall be determined by the Administrator but
shall not be less than 100% of the Fair Market Value of a Share on the Date of
Grant of such SAR.

 

“Fair Market Value” shall
mean, as of any date, the value of Common Stock determined as follows:

 

(i)    If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation, the Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to the time of
determination, as reported in The Wall
Street Journal or such other source as the Administrator deems
reliable;

 

(ii)  If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common
Stock quoted by such recognized securities dealer on the last market trading
day prior to the day of determination; or

 

(iii)  In the absence of an established market for the Common
Stock, its Fair Market Value shall be determined, in good faith, by the
Administrator.

 

“FASB” shall mean the
Financial Accounting Standards Board.

 

“Granted Stock” shall mean
the shares of Common Stock that were granted pursuant to a Stock Award.

 

“Grantee” shall mean any
person who is granted a Stock Award.

 

“Incentive Stock Option”
shall mean an Option intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code.

 

“Mature Shares” shall mean
Shares that had been held by the Participant for a meaningful period of time
such as six months or such other period of time that is consistent with FASB’s
interpretation of APB 25.

 

“Non-Employee Director”
shall mean a non-employee member of the Board.

 

“Non-Statutory Stock Option”
shall mean an Option not intended to qualify as an Incentive Stock Option.

 

“Notice of Stock
Appreciation Rights Grant” shall mean the notice delivered by the Company to
the Optionee evidencing the grant of an SAR.

 

“Notice of Stock Option
Grant” shall mean the notice delivered by the Company to the Optionee
evidencing the grant of an Option.

 

3

 

“Option” shall mean a stock
option granted pursuant to the Plan.

 

“Option Agreement” shall
mean a written agreement that evidences an Option in such form as the
Administrator shall approve from time to time.

 

“Optioned Stock” shall mean
the Common Stock subject to an Option.

 

“Optionee” shall mean any
person who receives an Option or a SAR.

 

“Participant” shall mean an
Optionee or a Grantee.

 

“Performance Stock Award”
shall mean an Award granted pursuant to Section 9 of the Plan.

 

“Plan” shall mean this First
Community Bancorp 2003 Stock Incentive Plan, as amended and restated to date.

 

“Qualified Note” shall mean
a recourse note, with a market rate of interest, that may, at the discretion of
the Administrator, be secured by the Optioned Stock or otherwise.

 

“Restricted Stock Award”
shall mean an Award granted pursuant to Section 8 of the Plan.

 

“Risk of Forfeiture” shall
mean the Grantee’s risk that the Granted Stock may be forfeited and
returned to the Company in accordance with Section 8 or 9 of the Plan.

 

“Rule 16b-3” shall mean
Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3.

 

“SAR” or “Stock Appreciation
Right” shall mean a stock appreciation right granted pursuant to the Plan.

 

“SAR Agreement” shall mean a
written agreement that evidences a SAR in such form as the Administrator
shall approve from time to time.

 

“Service” shall mean the
performance of services for the Company (or any Affiliate) by an Employee,
Non-Employee Director, or Consultant, as determined by the Administrator in its
sole discretion. Service shall not be considered interrupted in the case of: (i) a
change of status (i.e., from Employee to
Consultant, Non-Employee Director to Consultant, or any other combination); (ii) transfers
between locations of the Company or between the Company and any Affiliate; or (iii) a
leave of absence approved by the Company or an Affiliate. A leave of absence
approved by the Company or an Affiliate shall include sick leave, military
leave, or any other personal leave approved by an authorized representative of
the Company or an Affiliate.

 

“Service Provider” shall
mean an Employee, Non-Employee Director, or Consultant.

 

“Share” shall mean a share
of Common Stock.

 

“Stock Award” shall mean a
Restricted Stock Award or a Performance Stock Award.

 

“Stock Award Agreement”
shall mean a written agreement that evidences a Restricted Stock Award or
Performance Stock Award in such form as the Administrator shall approve
from time to time.

 

4

 

“Tax” or “Taxes” shall mean
the federal, state, and local income, employment and excise tax liabilities
incurred by the Participant in connection with his/her Awards.

 

“10% Shareholder” shall mean
the owner of stock (as determined under Section 424(d) of the Code)
possessing more than 10% of the total combined voting power of all classes of
stock of the Company (or any Affiliate).

 

“Termination Date” shall
mean the date on which a Participant’s Service terminates, as determined by the
Administrator in its sole discretion.

 

“Vesting Event” shall mean
the earlier of: (i) the occurrence of a Change in Control; (ii) the
termination of a Participant’s Service (other than for Cause) following the
approval by the shareholders of the Company of any matter, plan or transaction
which would constitute a Change in Control; (iii) the death of the
Participant, for all Stock Awards granted with an effective date of November 2,
2005 and afterward.

 

3.  Administration of the Plan.

 

(a)  Except as otherwise provided for below, the Plan shall
be administered by (i) the Board or (ii) a Committee, which Committee
shall be constituted to satisfy applicable laws.

 

(i)    Section 162(m).
 To the extent that the Administrator determines that it is
desirable to qualify Awards as “performance-based compensation” within the
meaning of Section 162(m) of the Code, the Plan shall be administered by a
Committee comprised solely of two or more “outside directors” within the
meaning of Section 162(m) of the Code.

 

(ii)    Rule 16b-3.
 To the extent desirable to qualify transactions hereunder as
exempt under Rule 16b-3, the transactions contemplated hereunder shall be
structured to satisfy the requirements for exemption under Rule 16b-3.

 

(b)    Powers of
the Administrator.  Subject to the provisions of the Plan and
in the case of specific duties delegated by the Administrator, and subject to
the approval of relevant authorities, including the approval, if required, of
any stock exchange or national market system upon which the Common Stock is
then listed, the Administrator shall have the authority, in its sole
discretion:

 

(i)    to
determine the Fair Market Value of the Common Stock;

 

(ii)    to
select the Service Providers to whom Awards may, from time to time, be granted
under the Plan;

 

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

 

(iv)    to
determine the number of Shares that pertain to each Award;

 

(v)    to approve the terms of the Option Agreements,
Stock Award Agreements, and SAR Agreements;

 

5

 

(vi)    to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Award. Such terms and
conditions may include, but are not limited to, the Exercise Price, the
status of an Option (Non-Statutory Stock Option or Incentive Stock Option), the
time or times when Awards may be exercised, any vesting acceleration or
waiver of forfeiture restrictions, and any restriction or limitation regarding
any Award or the Shares relating thereto, based in each case on such factors as
the Administrator, in its sole discretion, shall determine;

 

(vii)    to determine the method of payment of the
Exercise Price;

 

(viii)    to reduce the Exercise Price of any
Option to the then current Fair Market Value if the Fair Market Value of the
Optioned Stock has declined since the Date of Grant of such Option;

 

(ix)    to delegate to others responsibilities to
assist in administering the Plan;

 

(x)    to construe and interpret the terms of the
Plan, Option Agreements, Stock Award Agreements, SAR Agreements and any other
documents related to the Awards;

 

(xi)    to interpret and administer the terms of
the Plan to comply with all Tax rules and regulations; and

 

(xii)   to adopt, alter and repeal such
administrative rules, guidelines and practices governing the operation of the
Plan as it shall from time to time deem advisable.

 

(c)    Effect of
Administrator’s Decision.  All decisions, determinations, and
interpretations of the Administrator shall be final and binding on all
Participants and any other holders of any Awards. The Administrator’s decisions
and determinations under the Plan need not be uniform and may be made
selectively among Participants whether or not such Participants are similarly
situated.

 

(d)    Liability.
 No member of the Committee shall be personally liable by
reason of any contract or other instrument executed by such member or on
his/her behalf in his/her capacity as a member of the Committee for any mistake
of judgment made in good faith, and the Company shall indemnify and hold
harmless each member of the Committee and each other employee, officer or
director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim) arising out of any act or
omission to act in connection with the Plan unless arising out of such person’s
own fraud or bad faith. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company’s Articles of Incorporation or Bylaws, as a matter of
law, or otherwise, or any power the Company may have to indemnify them or
hold them harmless.

 

6

 

4.  Stock Subject To The Plan.

 

(a)    Basic
Limitation.  The total number of Options, Stock Awards, and SARs
that may be awarded under the Plan may not exceed 3,500,000, subject
to the adjustments provided for in Section 11 of the Plan.

 

(b)    Additional
Shares.  In the event that any outstanding Award expires or is
canceled or otherwise terminated, the Shares that pertain to the unexercised
Award shall again be available for the purposes of the Plan. In the event that
Shares issued under the Plan are reacquired by the Company at their original
purchase price, such Shares shall again be available for the purposes of the
Plan, except that the aggregate number of Shares which may be issued upon
the exercise of Incentive Stock Options shall in no event exceed 3,500,000
Shares, subject to the adjustments provided for in Section 11 of the Plan.

 

5.  Eligibility.  The persons
eligible to participate in the Plan shall be limited to Employees, Non-Employee
Directors, and Consultants who have the potential to impact the long-term
success of the Company and/or its Affiliates and who have been selected by the
Administrator to participate in the Plan.

 

6.  Option Terms.  Each Option
shall be evidenced by an Option Agreement, in the form approved by the
Administrator and may contain such provisions as the Administrator deems
appropriate; provided, however, that each Option Agreement shall comply with
the terms specified below. No person may be granted (in any calendar year)
Options to purchase more than 250,000 Shares, subject to the adjustments
provided for in Section 11 of the Plan. Each Option Agreement evidencing
an Incentive Stock Option shall, in addition, be subject to Section 7
below.

 

(a)    Exercise
Price.

 

(i)    The Exercise Price of an Option shall be
determined by the Administrator but shall not be less than 100% of the Fair
Market Value of a Share on the Date of Grant of such Option.

 

(ii)  Notwithstanding the foregoing, where the outstanding
shares of stock of another corporation are changed into or exchanged for shares
of Common Stock without monetary consideration to that other corporation, then,
subject to the approval of the Board, Options may be granted in exchange
for unexercised, unexpired stock options of the other corporation and the
exercise price of the Optioned Shares subject to each Option so granted may be
fixed at a price less than 100% of the Fair Market Value of the Common Stock at
the time such Option is granted if said exercise price has been computed to be
not less than the exercise price set forth in the stock option of the other
corporation, with appropriate adjustment to reflect the exchange ratio of the
shares of stock of the other corporation into the shares of Common Stock of the
Company.

 

(iii)  The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator and may consist entirely of (A) cash,
(B) check, (C) Mature Shares, (D) Qualified Note, or (e) any
combination of the foregoing methods of payment. The Administrator may also
permit Optionees, either on a selective or aggregate

 

7

 

basis,
to simultaneously exercise Options and sell the shares of Common Stock thereby
acquired, pursuant to a brokerage or similar arrangement, approved in advance
by the Administrator, and use the proceeds from such sale as payment of part or
all of the exercise price of such shares. Notwithstanding the foregoing, a
method of payment may not be used if it causes the Company to: (i) recognize
compensation expense for financial reporting purposes; (ii) violate Section 402
of the Sarbanes-Oxley Act of 2002 or any regulations adopted pursuant thereto;
or (iii) violate Regulation O, promulgated by the Board of Governors
of the Federal Reserve System, as determined by the Administrator in its sole
discretion.

 

(b)    Vesting.  Any
Option granted hereunder shall be exercisable and shall vest at such times and
under such conditions as determined by the Administrator and set forth in the
Option Agreement, but in the case of an Optionee who is not an officer of the
Company, a Non-Employee Director, or a Consultant, an Option or Shares
purchased thereunder shall vest at a rate of at least 20% per year. An Option may not
be exercised for a fraction of a Share. Notwithstanding anything herein to the
contrary, upon the occurrence of a Vesting Event, all Options that are
outstanding on the date of the Vesting Event shall become exercisable on such
date (whether or not previously vested).

 

(c)    Term of
Options.  No Option shall have a term in excess of
10 years measured from the Date of Grant of such Option.

 

(d)    Procedure
for Exercise.  An Option shall be deemed to be exercised when
written notice of such exercise has been given to the Administrator in
accordance with the terms of the Option Agreement by the person entitled to
exercise the Option and full payment of the applicable Exercise Price for the
Share being exercised has been received by the Administrator. Full payment may,
as authorized by the Administrator, consist of any consideration and method of
payment allowable under Subsection (a)(iii) above. In the event of a
cashless exercise, the broker shall not be deemed to be an agent of the
Administrator.

 

(e)    Effect of
Termination of Service.

 

(i)    Termination
of Service.  Upon termination of an Optionee’s Service, other
than due to death, Disability, or Cause, the Optionee may exercise his/her
Option, but only on or prior to the date that is three months following the
Optionee’s Termination Date, and only to the extent that the Optionee was
entitled to exercise such Option on the Termination Date (but in no event later
than the expiration of the term of such Option, as set forth in the Notice of
Stock Option Grant to the Option Agreement). If, on the Termination Date, the
Optionee is not entitled to exercise the Optionee’s entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan.
If, after termination of Service, the Optionee does not exercise his/her Option
within the time specified herein, the Option shall terminate, and the Optioned
Stock shall revert to the Plan.

 

(ii)    Disability
of Optionee.  In the event of termination of an Optionee’s
Service due to his/her Disability, the Optionee may exercise his/her
Option, but only on or prior to the date that is twelve months following the
Termination Date,

 

8

 

and
only to the extent that the Optionee was entitled to exercise such Option on
the Termination Date (but in no event later than the expiration date of the
term of his/her Option, as set forth in the Notice of Stock Option Grant to the
Option Agreement). To the extent the Optionee is not entitled to exercise the
Option on the Termination Date, or if the Optionee does not exercise the Option
to the extent so entitled within the time specified herein, the Option shall
terminate, and the Optioned Stock shall revert to the Plan.

 

(iii)    Death
of Optionee.  In the event that an Optionee should die while in
Service, the Optionee’s Option may be exercised by the Optionee’s estate
or by a person who has acquired the right to exercise the Option by bequest or
inheritance, but only on or prior to the date that is twelve months following
the date of death, and only to the extent that the Optionee was entitled to
exercise the Option at the date of death (but in no event later than the
expiration date of the term of his/her Option, as set forth in the Notice of
Stock Option Grant to the Option Agreement). If, at the time of death, the
Optionee was not entitled to exercise his/her entire Option, the Shares covered
by the unexercisable portion of the Option shall immediately revert to the
Plan. If after death, the Optionee’s estate or a person who acquires the right
to exercise the Option by bequest or inheritance does not exercise the Option
within the time specified herein, the Option shall terminate, and the Optioned
Stock shall revert to the Plan.

 

(iv)    Cause.  In
the event of termination of an Optionee’s Service due to Cause, the Optionee’s
Options shall terminate on the Termination Date.

 

(v)  To the extent that the Company does not violate Section 402
of the Sarbanes-Oxley Act of 2002 or any regulations adopted pursuant thereto
or Regulation O, promulgated by the Board of Governors of the Federal
Reserve System (as determined by the Administrator in its sole discretion), the
Administrator shall have complete discretion, exercisable either at the time an
Option or SAR is granted or at any time while the Option or SAR remains
outstanding, to:

 

(A)  extend the period of time for which the Option or SAR is
to remain exercisable following the Optionee’s cessation of Service from the
limited exercise period otherwise in effect for that Option or SAR to such
greater period of time as the Administrator shall deem appropriate, but in no
event beyond the expiration of the Option or SAR term; and/or

 

(B)  permit the Option or SAR to be exercised, during the
applicable post-Service exercise period, not only with respect to the number of
vested Shares for which such Option or SAR is exercisable at the time of the
Optionee’s cessation of Service but also with respect to one or more additional
installments in which the Optionee would have vested had the Optionee continued
in Service.

 

(f)    Shareholder
Rights.  Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any

 

9

 

other
rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause
to be issued) such certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in Section 11
below.

 

(g)    Non-transferability
of Options.  Options may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or
by the laws of descent and distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee. Notwithstanding the immediately
preceding sentence, the Administrator may permit an Optionee to transfer
any Award which is not an Incentive Stock Option to one or more of the Optionee’s
immediate family members or to trusts established in whole or in part for
the benefit of the Optionee and/or one or more of such immediate family
members. For purposes of the Plan, (i) the term “immediate family” shall mean the Optionee’s spouse and
issue (including adopted and step children) and (ii) the phrase “immediate
family members or to trusts established in whole or in part for the
benefit of the Optionee and/or one or more of such immediate family members”
shall be further limited, if necessary, so that neither the transfer of an
Award other than an Incentive Stock Option to such immediate family member or
trust, nor the ability of a Optionee to make such a transfer shall have adverse
consequences to the Company or the Optionee by reason of Section 162(m) of
the Code.

 

7.  Incentive Stock Options.  The
terms specified below shall be applicable to all Incentive Stock Options, and
these terms shall, as to such Incentive Stock Options, supercede any
conflicting terms in Section 6 above. Options which are specifically
designated as Non-Statutory Stock Options when issued under the Plan shall not be subject to the terms of this
Section.

 

(a)    Eligibility.  Incentive
Stock Options may only be granted to Employees.

 

(b)    Exercise Price.
 The Exercise Price of an Incentive Stock Option shall not be less than
100% of the Fair Market Value of a Share on the Date of Grant of such Option,
except as otherwise provided for in Subsection (d) below.

 

(c)    Dollar Limitation.
 In the case of an Incentive Stock Option, the aggregate Fair Market Value
of the Optioned Stock (determined as of the Date of Grant of each Option) with
respect to Options granted to any Employee under the Plan (or any other option
plan of the Company or any Affiliate) that may for the first time become
exercisable as Incentive Stock Options during any one calendar year shall not
exceed the sum of $100,000. To the extent the Employee holds two or more such Options
which become exercisable for the first time in the same calendar year, the
foregoing limitation on the exercisability of such Options as Incentive Stock
Options shall be applied on the basis of the order in which such Options are
granted. Any Options in excess of such limitation shall automatically be
treated as Non-Statutory Stock Options.

 

10

 

(d)    10%
Shareholder.  If any Employee to whom an Incentive Stock Option
is granted is a 10% Shareholder, then the Exercise Price shall not be less than
110% of the Fair Market Value of a Share on the Date of Grant of such Option,
and the Option term shall not exceed five years measured from the Date of Grant
of such Option.

 

(e)    Change in
Status.  In the event of an Optionee’s change of status from
Employee to Consultant or to Non-Employee Director, an Incentive Stock Option
held by the Optionee shall cease to be treated as an Incentive Stock Option and
shall be treated for tax purposes as a Non-Statutory Stock Option three months
and one day following such change of status.

 

(f)    Approved
Leave of Absence.  If an Optionee is on an approved leave of
absence, and the Optionee’s reemployment upon expiration of such leave is not
guaranteed by statute or contract, including Company policies, then on the 91st
day of such leave any Incentive Stock Option held by the Optionee shall cease
to be treated as an Incentive Stock Option and shall be treated for tax
purposes as a Non-Statutory Stock Option.

 

8.  Restricted Stock Award.  Each
Restricted Stock Award shall be evidenced by a Stock Award Agreement, in the form approved
by the Administrator and may contain such provisions as the Administrator
deems appropriate; provided, however, such Stock Award Agreement shall comply
with the terms specified below.

 

(a)    Risk of
Forfeiture.

 

(i)    General
Rule.  Shares issued pursuant to a Restricted Stock Award shall
initially be subject to a Risk of Forfeiture. The Risk of Forfeiture shall be
set forth in the Stock Award Agreement, and shall comply with the terms
specified below.

 

(ii)    Lapse of
Risk of Forfeiture.  The Risk of Forfeiture shall lapse as the
Grantee vests in the Granted Stock. The Grantee shall vest in the Granted Stock
at such times and under such conditions as determined by the Administrator and
set forth in the Stock Award Agreement. Notwithstanding the foregoing, upon the
occurrence of a Vesting Event, the Grantee shall become 100% vested in those
shares of Granted Stock that are outstanding on the date of the Vesting Event.

 

(iii)    Forfeiture
of Granted Stock.  Except as otherwise determined by the
Administrator in its discretion, the Granted Stock that is subject to a Risk of
Forfeiture shall automatically be forfeited and immediately returned to the
Company on the Grantee’s Termination Date or the date on which the
Administrator determines that any other conditions to the vesting of the
Restricted Stock were not satisfied during the designated period of time.

 

(b)    Rights as
a Stockholder.  Upon vesting of a Restricted Stock Award, the
Grantee shall have the rights of a stockholder with respect to the voting of
the vested shares of Granted Stock, subject to the conditions contained in the
Stock Award Agreement.

 

11

 

(c)    Dividends.  The
Stock Award Agreement may require or permit the immediate payment, waiver,
deferral or investment of dividends paid on the Granted Stock.

 

(d)    Non-transferability
of Restricted Stock Award.  Except as otherwise provided for in
Section 12 of the Plan, Restricted Stock Awards may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent and distribution and may be
exercised, during the lifetime of the Grantee, only by the Grantee.
Notwithstanding the immediately preceding sentence, the Administrator may permit
a Grantee to transfer any Award which is not an Incentive Stock Option to one
or more of the Grantee’s immediate family members or to trusts established in
whole or in part for the benefit of the Grantee and/or one or more of such
immediate family members. For purposes of the Plan, (i) the term “immediate family” shall mean the Grantee’s
spouse and issue (including adopted and step children) and (ii) the phrase
“immediate family members or to trusts established in whole or in part for
the benefit of the Grantee and/or one or more of such immediate family members”
shall be further limited, if necessary, so that neither the transfer of an
Award other than an Incentive Stock Option to such immediate family member or
trust, nor the ability of a Grantee to make such a transfer shall have adverse
consequences to the Company or the Grantee by reason of Section 162(m) of
the Code.

 

9.  Performance Stock Award.  Each
Performance Stock Award shall be evidenced by a Stock Award Agreement, in the form approved
by the Administrator, and may contain such provisions as the Administrator
deems appropriate; provided, however, such Stock Award Agreement shall comply
with the terms specified below.

 

(a)    Risk of
Forfeiture.

 

(i)    General
Rule.  Shares issued pursuant to a Performance Stock Award
shall initially be subject to a Risk of Forfeiture. The Risk of Forfeiture
shall be set forth in the Stock Award Agreement, and shall comply with the
terms specified below.

 

(ii)    Lapse of
Risk of Forfeiture.  The Risk of Forfeiture shall lapse as the
Grantee vests in the Granted Stock. The Grantee shall vest in or accelerate
vesting in the Granted Stock, in whole or in part, if certain goals established
by the Administrator are achieved over a designated period of time, but not in
any event more than 10 years. At the discretion of the
Administrator, the goals may be based upon the attainment of one or more
of the following business criteria (determined either in absolute terms or
relative to the performance of one or more similarly situated companies or a
published index covering the performance of a number of companies): net income; return on average assets (“ROA”);
cash ROA; cash ROA; return on average equity (“ROE”); cash ROE; earnings per
share (“EPS”); cash EPS; stock price; and efficiency ratio. Performance goals may be
established on a Company-wide basis or with respect to one or more business
units or divisions. When establishing performance goals, the Administrator may exclude
any or all “extraordinary items” as determined under U.S. generally accepted
accounting principles including, without limitation, the

 

12

 

charges or costs associated with restructurings of the Company,
discontinued operations, other unusual or non-recurring items, and the
cumulative effects of accounting changes. The Administrator may also
adjust the performance goals for any performance cycle as it deems equitable in
recognition of unusual or non-recurring events affecting the Company, changes
in applicable tax laws or accounting principles, or such other factors as the
Administrator deems appropriate. Notwithstanding the foregoing, upon the
occurrence of a Vesting Event, the Grantee shall become 100% vested in those
shares of Granted Stock that are outstanding on the date of the Vesting Event.

 

(iii)    Forfeiture
of Granted Stock.  The Granted Stock that is subject to a Risk
of Forfeiture shall automatically be forfeited and immediately returned to the
Company on the Grantee’s Termination Date or the date on which the
Administrator determines that any other conditions to the vesting of the
Performance Stock Award, including performance goals, were not satisfied during
the designated period of time.

 

(b)    Rights as
a Stockholder.  Upon vesting of a Performance Stock Award, the
Grantee shall have the rights of a stockholder with respect to the voting of
the vested shares of Granted Stock, subject to the conditions contained in the
Stock Award Agreement.

 

(c)    Dividends.
 The Stock Award Agreement may require or permit the
immediate payment, waiver, deferral or investment of dividends paid on Granted
Stock.

 

(d)    Non-transferability
of Performance Stock Award.  Except as otherwise provided for
in Section 12 of the Plan, Performance Stock Awards may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent and distribution and may be
exercised, during the lifetime of the Grantee, only by the Grantee.
Notwithstanding the immediately preceding sentence, the Administrator may permit
a Grantee to transfer any Award which is not an Incentive Stock Option to one
or more of the Grantee’s immediate family members or to trusts established in
whole or in part for the benefit of the Grantee and/or one or more of such
immediate family members. For purposes of the Plan, (i) the term “immediate family” shall mean the Grantee’s
spouse and issue (including adopted and step children) and (ii) the phrase
“immediate family members or to trusts established in whole or in part for
the benefit of the Grantee and/or one or more of such immediate family members”
shall be further limited, if necessary, so that neither the transfer of an
Award other than an Incentive Stock Option to such immediate family member or
trust, nor the ability of a Grantee to make such a transfer shall have adverse
consequences to the Company or the Grantee by reason of Section 162(m) of
the Code.

 

10.  Stock Appreciation Rights.  Each
SAR shall be evidenced by a SAR Agreement, in the form approved by the
Administrator and may contain such provisions as the Administrator deems
appropriate; provided, however, that each SAR Agreement shall comply with the
terms specified below. No person may be granted (in any calendar year)
SARs that pertain to more than 250,000 Shares, subject to the adjustments
provided for in Section 11 of the Plan.

 

13

 

(a)    Exercise
Price.  The Exercise Price of a SAR shall be determined by the
Administrator but shall not be less than 100% of the Fair Market Value of a
Share on the Date of Grant of such SAR.

 

(b)    Vesting.  Any
SAR granted hereunder shall be exercisable and shall vest at such times and
under such conditions as determined by the Administrator and set forth in the
SAR Agreement. Notwithstanding anything herein to the contrary, upon the
occurrence of a Vesting Event, all SARs that are outstanding on the date of the
Vesting Event shall become exercisable on such date (whether or not previously
vested).

 

(c)    Term of
SARs.  No SAR shall have a term in excess of 10 years
measured from the Date of Grant of such SAR.

 

(d)    Non-transferability
of SARs.  SARs may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or
by the laws of descent and distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee. Notwithstanding the immediately
preceding sentence, the Administrator may permit an Optionee to transfer
any Award which is not an Incentive Stock Option to one or more of the Optionee’s
immediate family members or to trusts established in whole or in part for
the benefit of the Optionee and/or one or more of such immediate family
members. For purposes of the Plan, (i) the term “immediate family” shall mean the Optionee’s spouse and
issue (including adopted and step children) and (ii) the phrase “immediate
family members or to trusts established in whole or in part for the
benefit of the Optionee and/or one or more of such immediate family members”
shall be further limited, if necessary, so that neither the transfer of an
Award other than an Incentive Stock Option to such immediate family member or
trust, nor the ability of a Optionee to make such a transfer shall have adverse
consequences to the Company or the Optionee by reason of Section 162(m) of
the Code.

 

(e)    Procedure for Exercise.  A
SAR shall be deemed to be exercised when written notice of such exercise has
been given to the Administrator in accordance with the terms of the SAR
Agreement by the person entitled to exercise the SAR. Upon exercise of a SAR,
the Optionee (or any person having the right to exercise the SAR after his or
her death) shall receive an amount equal to the amount by which the Fair Market
Value (on the date of surrender) of a Share exceeds the Exercise Price of such
SAR. The Company shall pay this amount in the form of: (i) Common Stock;
(ii) cash; or (iii) a combination of Common Stock and cash, as
determined by the Administrator.

 

(f)    Effect of
Termination of Service.

 

(i)    Termination
of Service.  Upon termination of an Optionee’s Service, other
than due to death, Disability, or Cause, the Optionee may exercise his/her
SARs, but only on or prior to the date that is three months following the
Optionee’s Termination Date, and only to the extent that the Optionee was
entitled to exercise such SARs on the Termination Date (but in no event later
than the expiration of the term of such SAR, as set forth in the Notice of
Stock Appreciation Rights Grant to the SAR Agreement). If, on the Termination
Date, the Optionee is not entitled to exercise all of the Optionee’s SARs, then
the Shares that pertain to the unexercisable SARs shall revert to the Plan. If,
after termination

 

14

 

of
Service, the Optionee does not exercise his/her SARs within the time specified
herein, the SARs shall terminate, and the Shares that pertain to the SARs shall
revert to the Plan.

 

(ii)    Disability
of Optionee.  In the event of termination of an Optionee’s
Service due to his/her Disability, the Optionee may exercise his/her SARs,
but only on or prior to the date that is twelve months following the
Termination Date, and only to the extent that the Optionee was entitled to
exercise such SARs on the Termination Date (but in no event later than the
expiration date of the term of his/her SAR, as set forth in the Notice of Stock
Appreciation Rights Grant to the SAR Agreement). To the extent the Optionee is
not entitled to exercise the SARs on the Termination Date, or if the Optionee
does not exercise the SARs to the extent so entitled within the time specified
herein, the SARs shall terminate, and the Shares that pertain to the SARs shall
revert to the Plan.

 

(iii)    Death
of Optionee.  In the event that an Optionee should die while in
Service, the Optionee’s SARs may be exercised by the Optionee’s estate or
by a person who has acquired the right to exercise the SARs by bequest or
inheritance, but only on or prior to the date that is twelve months following
the date of death, and only to the extent that the Optionee was entitled to
exercise the SARs at the date of death (but in no event later than the
expiration date of the term of his/her SAR, as set forth in the Notice of Stock
Appreciation Rights Grant to the SAR Agreement). If, at the time of death, the
Optionee was not entitled to exercise all of his/her SARs, the Shares that
pertain to the unexercisable SARs shall immediately revert to the Plan. If
after death, the Optionee’s estate or a person who acquires the right to
exercise the SARs by bequest or inheritance does not exercise the SARs to the
extent so entitled within the time specified herein, the SARs shall terminate,
and the Shares that pertain to the SARs shall revert to the Plan.

 

(iv)   Cause.  In
the event of termination of an Optionee’s Service due to Cause, the Optionee’s
SARs shall terminate on the Termination Date.

 

11.  Adjustments Upon Changes in Capitalization.

 

(a)    Changes in Capitalization.  The
limitations set forth in Sections 4, 6, and 10 of the Plan, the number of
Shares that pertain to each outstanding Award, and the Exercise Price of each
Option and SAR shall be proportionately adjusted for any increase or decrease
in the number of issued and outstanding Shares resulting from a stock split,
reverse stock split, stock dividend, recapitalization, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued and outstanding Shares, effected without the receipt of
consideration by the Company. Such adjustment shall be made by the
Administrator, to the extent possible, so that the adjustment shall not result
in an accounting consequence under APB 25 and FASB Interpretation No. 44,
as amended, and so that the adjustment shall not result in any taxes to the
Company or the Participant. The Administrator’s determination with respect to
the adjustment shall be final, binding, and conclusive.

 

15

 

(b)    Dissolution
or Liquidation.  In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Participant as
soon as practicable prior to the effective date of such proposed transaction.
In such event, the Administrator, in its discretion, may provide for a
Participant to fully vest in his/her Option and SAR, and the Right of
Forfeiture to lapse on his/her Granted Stock. To the extent it has not been
previously exercised, an Award will terminate upon termination or liquidation
of the Company.

 

12.  Deferral of Stock Awards and SARs.  The
Administrator, in its sole discretion, may permit a Grantee to defer
his/her Stock Awards, and an Optionee to defer his/her SARs pursuant to the
terms and conditions provided for in the First Community Bancorp Directors
Deferred Compensation Plan.

 

13.  Cancellation and Regrant of Awards.  The
Administrator shall have the authority to effect, at any time and from time to
time, with the consent of the affected Optionee, the cancellation of any or all
outstanding Options or SARs and to grant in substitution new Options or SARs
covering the same or a different number of Shares but with an Exercise Price
per Share based on the Fair Market Value per Share on the new Date of Grant of
the Option or SAR. The Administrator shall also have the authority to effect,
at any time and from time to time, with the consent of the affected Grantee,
the cancellation of any or all outstanding Stock Awards and to grant in
substitution new Stock Awards covering the same or a different number of
Shares. Notwithstanding the foregoing or anything in this Plan to the contrary,
the Administrator may not take any action which would constitute a “repricing”
of Options or other Awards without recommending that such repricing be subject
to the approval of the Company’s shareholders prior to effectiveness. For
purposes of Section 4 hereof, Shares underlying any Award cancelled by the
Company in such exchange shall be available for issuance under the Plan;
furthermore, except with respect to a Participant subject to Section 162(m)
of the Code, a grant of any Award to a Participant pursuant to such exchange
shall be disregarded for purposes of determining whether such Participant has
exceeded any limitations hereunder limiting the amount of any type of Award or
aggregate amount of Awards that may be granted to a Participant (except to
the extent the number of Shares underlying such Awards exceeds the number of
Shares underlying the Participant’s cancelled Awards).

 

14.  Share Escrow/Legends.  Unvested
Shares issued under the Plan may, in the Administrator’s discretion, be held in
escrow by the Company until the Participant’s interest in such Shares vests or may be
issued directly to the Participant with restrictive legends on the certificates
evidencing those unvested Shares.

 

15.  Tax Withholding.

 

(a)  For corporate purposes, the Company’s obligation to
deliver Shares upon the exercise of Options, deliver Shares or cash upon the
exercise of SARs, or deliver Shares or remove any restrictive legends upon
vesting of such Shares under the Plan shall be subject to the satisfaction of
all applicable federal, state and local income and employment tax withholding
requirements.

 

16

 

(b)  To
the extent permitted under Section 402 of the Sarbanes-Oxley Act of 2002
and the regulations adopted pursuant thereto, the Administrator may, in its
discretion, provide any or all holders of Non-Statutory Stock Options or SARS,
or unvested Shares under the Plan with the right to use previously vested
Shares in satisfaction of all or part of the Taxes incurred by such
holders in connection with the exercise of their Non-Statutory Stock Options or
SARs, or the vesting of their Shares; provided, however, that this form of
payment shall be limited to the withholding amount calculated using the minimum
statutory rates. Such right may be provided to any such holder in either
or both of the following formats:

 

(i)    Stock
Withholding:    The election to have the Company
withhold, from the Shares otherwise issuable upon the exercise of such
Non-Statutory Stock Option or SAR, or the vesting of such Shares, a portion of
those Shares with an aggregate Fair Market Value equal to the Taxes calculated
using the minimum statutory withholding rates interpreted in accordance with
APB 25 and FASB Interpretation No. 44.

 

(ii)    Stock
Delivery:    The election to deliver to the Company,
at the time the Non-Statutory Stock Option or SAR is exercised or the Shares
vest, one or more Shares previously acquired by such holder (other than in
connection with the Option or SAR exercise, or Share vesting triggering the
Taxes) with an aggregate Fair Market Value equal to the Taxes calculated using
the minimum statutory rates interpreted in accordance with APB 25 and FASB
Interpretation No. 44.

 

16.  Effective Date and Term of the Plan.  The
Plan, as an amendment and restatement of the 2003 Plan, was approved by the Board
on    February 8, 2006 and became effective upon approval
by the Company’s shareholders on April 19, 2006. Unless sooner terminated
by the Administrator, the Plan shall continue until April 17, 2010. When
the Plan terminates, no Awards shall be granted under the Plan thereafter. The
termination of the Plan shall not affect any Shares previously issued or any
Award previously granted under the Plan.

 

17.  Time of Granting Awards.  The
Date of Grant of an Award shall, for all purposes, be the date on which the
Administrator makes the determination to grant such Award, or such other date
as determined by the Administrator; provided, however, that any Award granted
prior to the date on which the Plan is approved by the Company’s shareholders
shall be subject to the shareholder’s approval of the Plan. Notice of the
determination shall be given to each Service Provider to whom an Award is so
granted within a reasonable period of time after the date of such grant.

 

18.  Amendment and Termination of the Plan.

 

(a)    Amendment
and Termination.  The Board may at any time amend, alter,
suspend, or discontinue the Plan, but no amendment, alteration, suspension, or
discontinuation shall be made which would impair the rights of any Participant
under any grant theretofore made without his/her consent. In addition, to the
extent necessary and desirable to comply with Section 422 of the Code (or
any other applicable law or regulation, including the requirements of any stock
exchange or national market system upon which the Common Stock is then listed),
the Company shall obtain shareholder approval of any Plan amendment in such a
manner and to such a degree as required.

 

17

 

(b)    Effect of
Amendment and Termination.  Any such amendment or termination
of the Plan shall not affect Awards already granted, and such Awards shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Participant and the
Board, which agreement must be in writing and signed by the Participant and the
Company.

 

19.  Regulatory Approvals.

 

(a)  The implementation of the Plan, the granting of any
Awards and the issuance of any Shares upon the exercise of any granted Awards
shall be subject to the Company’s procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
Awards granted under it, and the Shares issued pursuant to it.

 

(b)  No
Shares or other assets shall be issued or delivered under the Plan unless and
until there shall have been compliance with all applicable requirements of
federal and state securities laws, including the filing and effectiveness of
the Form S-8 registration statement (if required) for the Shares issuable
under the Plan, and all applicable listing requirements of any stock exchange
(or the Nasdaq National Market, if applicable) on which the Common Stock is
then listed for trading (if any).

 

20.  No Employment/Service Rights.  Nothing
in the Plan shall confer upon the Participant any right to continue in Service
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Company (or any Affiliate employing or retaining such
person) or of the Participant, which rights are hereby expressly reserved by
each, to terminate such person’s Service at any time for any reason, with or
without cause.

 

21.  Governing Law.  This Plan shall
be governed by California law, applied without regard to conflict of laws
principles.

 

18

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