10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2008
or
o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________ to __________

Commission File Number: 333-141453

BELVEDERE SOCAL

(Exact name of registrant as specified in its charter)

California	20-8356735
(State of incorporation)	(I.R.S. Employer Identification No.)

One Maritime Plaza, Suite 825 San Francisco, CA	94111
(Address of principal executive offices)	(Zip Code)

(415) 434 - 1236

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of August 8, 2008, there were 3,331,271 shares of common stock, no par value, outstanding.

BELVEDERE SoCAL

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	F-1
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	15
ITEM 4T.	CONTROLS AND PROCEDURES	15
PART II – OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	16
ITEM 1A.	RISK FACTORS	16
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	16
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	16
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	16
ITEM 5.	OTHER INFORMATION	16
ITEM 6.	EXHIBITS	16
	SIGNATURES	17
	CERTIFICATIONS

2

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

BELVEDERE SoCAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	June 30, 2008			December 31, 2007
Cash and due from banks	$	10,154,514		$	4,401,632
Federal Funds sold		34,080,000			9,130,000
Total cash and cash equivalents		44,234,514			13,531,632
Interest-bearing deposits in other financial institutions		614,000			100,000
Investment securities available for sale		31,957,642			8,786,293
Loans, net of allowance for loan losses of $5,384,728 at June 30, 2008 and $4,077,213 at December 31, 2007		302,966,691			210,257,162
Premises and equipment, net		5,218,899			461,760
Goodwill		57,291,432			29,459,783
Other intangible assets, net		2,844,610			2,368,172
Federal Home Loan Bank stock, at cost		1,078,400			916,300
Other real estate owned		1,536,905			-
Accrued interest and other assets		11,178,849			4,198,740
Total assets	$	458,921,942		$	270,079,842
Deposits
Noninterest bearing demand	$	111,385,625		$	73,358,729
NOW, savings and money market accounts		84,800,613			49,514,411
Time deposits under $100,000		79,112,536			45,460,646
Time deposits over $100,000		67,441,060			25,715,811
Total deposits		342,739,834			194,049,597
Federal Home Loan Bank advances		12,600,000			18,000,000
Notes payable		8,000,000			-
Junior subordinated debentures		15,464,000			-
Accrued interest and other liabilities		4,526,440			3,044,416
Total liabilities		383,330,274			215,094,013
Commitments and Contingencies (Note 3)
Shareholders’ equity:
Preferred Stock - non-cumulative, perpetual, no par value; authorized 20,000,000 shares; 868,299 and 806,666 shares issued and outstanding at June 30, 2008 and December 31, 2007, respectively		21,307,475			19,766,650
Common Stock - no par value; authorized 20,000,000 shares; 3,330,738 and 2,011,343 shares issued and outstanding at June 30, 2008 and December 31, 2007, respectively		57,917,066			35,749,587
Accumulated deficit		(3,337,564	)		(540,408	)
Accumulated other comprehensive (loss) income, net of taxes		(295,309	)		10,000
Total shareholders’ equity		75,591,668			54,985,829
Total liabilities and shareholders' equity	$	458,921,942		$	270,079,842

See notes to unaudited consolidated financial statements

F-1

BELVEDERE SoCAL AND SUBSIDIARIES

AND ITS PREDECESSOR BUSINESS PROFESSIONAL BUSINESS BANK

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three-month period ended June 30,						Six-month period ended June 30,
	Belvedere SoCal and Subsidiaries			Professional Business Bank			Belvedere SoCal and Subsidiaries			Professional Business Bank
	2008			2007			2008			2007
Interest income:
Interest and fees on loans	$	5,431,718		$	3,583,107		$	10,816,269		$	6,772,985
Interest on investment securities		370,949			91,970			685,662			339,300
Other interest income		133,542			250,287			273,647			440,221
Total interest income		5,936,209			3,925,364			11,775,578			7,552,506
Interest expense:
Deposits		1,662,062			1,226,122			3,043,746			2,333,663
Junior subordinated debentures		442,442			0			644,334			0
Other borrowings		175,324			29,467			441,149			75,675
Total interest expense		2,279,828			1,255,589			4,129,229			2,409,338
Net interest income before provision for loan losses		3,656,381			2,669,775			7,646,349			5,143,168
Provision for loan losses		1,103,235			380,000			2,060,530			537,000
Net interest income after provision for loan losses		2,553,146			2,289,775			5,585,819			4,606,168
Non-interest income
Service charges and fees		277,141			59,394			546,817			191,374
Other income		86,082			43,704			143,281			45,073
Total non-interest income		363,223			103,098			690,098			236,447
Non-interest expense
Salaries and employee benefits		2,152,490			1,547,897			4,621,273			2,850,982
Occupancy and equipment		389,972			172,582			715,075			319,956
Professional fees		515,543			242,054			1,101,640			625,981
Data processing		389,971			162,125			657,630			296,980
Marketing and business promotion		64,432			31,966			113,295			64,344
Office and administrative expenses		251,033			222,900			492,960			385,343
Other expenses		402,618			216,029			829,010			331,670
Total non-interest expense		4,166,059			2,595,553			8,530,883			4,875,256
Loss before income taxes		(1,249,690	)		(202,680	)		(2,254,966	)		(32,641	)
Provision for income tax (benefit) expense		(554,758	)		(20,577	)		(998,635	)		120,737
Net loss	$	(694,932	)	$	(182,103	)	$	(1,256,331	)	$	(153,378	)
Net loss per share - basic and diluted	$	(0.44	)	$	(0.09	)	$	(0.90	)	$	(0.08	)
Weighted average shares:
Basic and diluted		3,330,263			1,970,070			3,104,569			1,992,131

See notes to unaudited consolidated financial statements

F-2

BELVEDERE SoCAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)

FOR THE PERIOD FROM JANUARY 17, 2007 (INCEPTION) TO JUNE 30, 2008

	Preferred Stock				Common Stock											Accumulated Other
	Number of Shares		Amount		Number of Shares		Amount			Comprehensive Loss			Accumulated Deficit			Comprehensive (Loss) Income
Common stock issued						1,125,539	$	11,500,000
Series A non-cumulative perpetual preferred stock
issued, net of issuance cots		800,000	$	19,600,000
Common stock issued for acquisition of Professional Business Bank, net of issuance costs						885,804		24,249,587
Comprehensive loss:
Net loss										$	(373,758	)	$	(373,758	)
Unrealized gain on available-for-sale securities, net of tax											10,000					$	10,000
Total comprehensive loss										$	(363,758	)
Series A preferred stock dividend declared		6,666		166,650										(166,650	)
Balance December 31, 2007		806,666		19,766,650		2,011,343		35,749,587						(540,408)			10,000
Warrants exercised						5,963		60
Stock-based compensation								167,470
Common stock issued						1,313,432		22,000,000
Cash payments for fractional shares								(51	)
Comprehensive loss:
Net loss											(1,256,331	)		(1,256,331	)
Change in unrealized gain (loss) on available-for-sale securities, net of tax											(305,309)						(305,309)
Total comprehensive loss										$	(1,925,398	)
Series A preferred stock dividends declared		61,633		1,540,825										(1,540,825	)
Balance June 30, 2008		868,299	$	21,307,475		3,330,738	$	57,917,066					$	(3,337,564	)	$	(295,309	)

See notes to unaudited consolidated financial statements

F-3

BELVEDERE SoCAL AND SUBSIDIARIES

AND ITS PREDECESSOR BUSINESS PROFESSIONAL BUSINESS BANK

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

SIX-MONTH PERIODS ENDED JUNE 30, 2008 AND 2007

	Belvedere SoCal and Subsidiaries			Professional Business Bank
	2008			2007
Operating activities:
Net loss	$	(1,256,331	)	$	(153,378)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization expense		356,972			68,348
Provision for loan losses		2,060,530			537,000
Stock-based compensation		167,470			129,693
Net decrease (increase) in accrued interest and other assets		2,073,421			(422,121	)
Net (decrease) increase in accrued interest and other liabilities		(7,502,560)			1,674
Net cash (used in) provided by operating activities		(4,885,099	)		161,216
Investing activities:
Proceeds from maturities and principal paydowns of available-for-sale investment securities		18,368,178			1,543,570
Proceeds from issuance of junior subordinated debentures		464,000			-
Net decrease in interest-bearing deposits in other financial institutions		2,094,000			4,799,000
Increase in loans, net		(16,858,787	)		(36,100,305	)
Purchases of premises and equipment		(45,454	)		(157,524	)
Purchase of FHLB stock		(162,100	)		(76,300	)
Cash received in connection with the acquisition of Spectrum Bank, net of cash paid		127,811			-
Net cash provided by (used in) investing activities		3,523,648			(29,991,559	)
Financing activities:
Net increase in deposits		6,679,724			22,583,602
Net (decrease) increase in Federal Home Loan Bank advances		(5,400,000)			4,000,000
Proceeds from note payable		8,000,000			-
Investment in Belvedere Statutory Trust I		(464,000	)		-
Proceeds from exercise of stock options		-			12,321
Proceeds from sale of stock		22,000,000			-
Cash payments for fractional shares		(51	)		-
Proceeds from exercise of warrants		60			-
Net cash provided by financing activities		31,279,733			26,595,923
Increase (decrease) in cash and cash equivalents		30,702,882			(3,234,420)
Cash and cash equivalents, beginning of period		13,531,632			9,683,852
Cash and cash equivalents, end of period	$	44,234,514		$	6,449,432
Noncash financing activities
Loans transferred to other real estate owned	$	1,536,905		$	-
Preferred stock dividends declared	$	1,540,825		$	-
Supplemental cash flow information
Interest paid	$	4,262,894		$	1,153,388
Taxes paid	$	2,400		$	268,000

See notes to unaudited consolidated financial statements

F-4

BELVEDERE SoCAL AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

1. Nature of Business and Basis of Presentation

Belvedere SoCal ("SoCal"), a bank holding company incorporated in 2007 in the state of California, was formed by its majority shareholder, Belvedere Capital Fund II L.P. (the “Fund”), a Delaware limited partnership formed in 2002.  SoCal was formed specifically to acquire Professional Business Bank (“PBB"), which occurred on November 23, 2007, and to be the platform for acquiring other banks in southern California.  SoCal closed the acquisition of Spectrum Bank (“Spectrum”) on January 31, 2008, further expanding its market presence.  Collectively, PBB and Spectrum are referred to as the “Subsidiary Banks.”  SoCal issued an additional 1,313,432 shares of common stock to the Fund for proceeds of $22 million to fund the Spectrum acquisition. After sale of the shares, the Fund now owns approximately 73% of SoCal's common stock on a fully diluted basis.   

Prior to November 23, 2007 SoCal had no significant operations. The consolidated balance sheet at June 30, 2008 and the results of operations for the three-month and six-month periods ended June 30, 2008 include the operations of Spectrum subsequent to January 31, 2008. The results of operations for the three-month and six-month periods ended June 30, 2007 are for Professional Business Bank only. Securities and Exchange Commission rules require the presentation of certain prior period comparative financial statements of the acquired business when the acquiring company succeeds to substantially all of the business and the registrant’s own operations prior to the acquisition appear insignificant relative to the business acquired.

The June 30, 2008 unaudited consolidated financial statements include the accounts of SoCal and the Subsidiary Banks.  SoCal has one other wholly-owned subsidiary, Belvedere SoCal Statutory Trust I (the “Trust”), which was formed in 2008, to issue trust preferred securities. FIN 46R does not allow the consolidation of the Trust into SoCal's consolidated financial statements. As a result, the accompanying consolidated balance sheets include the investment in the Trust of $464 thousand in other assets.

The financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation, in all material respects, of the financial position and operating results for the interim periods.   The results of operations for the six-month period ended June 30, 2008 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2008.  The year-end balance sheet data at December 31, 2007 was derived from the audited financial statements.

This information should be read in conjunction with the audited financial statements and notes thereto included in SoCal's Form 10-KSB for the fiscal year ended December 31, 2007.

2. Recent Accounting Pronouncements

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations (“SFAS No. 141(R)”). SFAS No. 141(R), among other things, establishes principles and requirements for how the acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquired business, (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SoCal is required to adopt SFAS No. 141(R) for all business combinations for which the acquisition date is on or after January 1, 2009. Earlier adoption is prohibited. This standard will change the accounting treatment for business combinations on a prospective basis.

Effective January 1, 2008, SoCal adopted SFAS No. 157, Fair Value Measurements, which among other things, requires enhanced disclosures about financial instruments carried at fair value. SFAS No. 157 establishes a hierarchical disclosure framework associated with the level of observable pricing scenarios utilized in measuring financial instruments at fair value. The degree of judgment utilized in measuring the fair value of financial instruments generally correlates to the level of the observable pricing scenario. Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of observable pricing and a lesser degree of judgment utilized in measuring fair value. Conversely, financial instruments rarely traded or not quoted will generally have little or no observable pricing and a higher degree of judgment utilized in measuring fair value. Observable pricing scenarios are impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established and the characteristics specific to the transaction.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115, which permits entities to choose to measure financial instruments and certain warranty and insurance contracts at fair value.  SFAS No. 159 applies to all reporting entities, including not-for-profit organizations, and contains financial statement presentation and disclosure requirements for assets and liabilities reported at fair value. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. SoCal adopted SFAS No. 159 on January 1, 2008. SoCal chose not to elect the option to measure eligible financial assets and liabilities at fair value.

F-5

3. Commitments and Contingencies

In the normal course of business there are outstanding various commitments to extend credit which are not reflected in the financial statements, including loan commitments of approximately $66.4 million at June 30, 2008 and $62.5 million at December 31, 2007. Such loans relate primarily to real estate construction loans and revolving lines of credit and other commercial loans. However, all such commitments will not necessarily culminate in actual extensions of credit by SoCal as some of these are expected to expire without being fully drawn upon.

Standby letters of credit are conditional commitments issued to guarantee the performance or financial obligation of a client to a third party. These guarantees are issued primarily relating to purchases of inventory or as security for real estate rents by commercial clients and are typically short-term in nature. Credit risk is similar to that involved in extending loan commitments to clients and accordingly, evaluation and collateral requirements similar to those for loan commitments are used. The majority of all such commitments are collateralized. Standby letters of credit totaled $1.4 million and $769 thousand at June 30, 2008 and December 31, 2007, respectively.  SoCal has a reserve for undisbursed commitments of $130 thousand and $141 thousand at June 30, 2008 and December 31, 2007, respectively.

In connection with the acquisition of Spectrum Bank, SoCal assumed the following :  leases for two  branches, which expire in 2008 and 2011, and an administrative office, which expires in 2010.  These leases include provisions for periodic rent increases as well as payment by the lessee of certain operating expenses.

Total rent expense for the three- and six-month periods ended June 30, 2008 was approximately $42 thousand and $106 thousand, respectively.

The approximate future minimum annual payments for these leases are as follows:

Year Ending
December 31,
2008	$	225,810
2009		58,380
2010		53,940
2011		34,960
Total	$	373,090

4. Comprehensive Income

Comprehensive income (loss) is reported in addition to net income (loss) for all periods presented. Comprehensive income (loss) is comprised of net income (loss) plus other comprehensive income (loss). Other comprehensive income (loss), net of taxes, was comprised of the unrealized losses on available-for-sale investment securities of ($305) thousand and ($149) thousand for the six-month periods ended June 30, 2008 and 2007 and ($314) thousand and ($66) thousand for the three-month periods ended June 30, 2008 and 2007. Comprehensive income (loss) was ($1.9) million and $1.1 million for the six-month periods ended June 30, 2008 and 2007 and ($1.0) million and $248 thousand for the three-month periods ended June 30, 2008 and 2007.

5. Stock-Based Compensation

SoCal has adopted SFAS No. 123(R), Shared-Based Payment.  This Statement requires entities to recognize the cost of employee services received in exchange for awards of stock options, or other equity instruments, based on the grant-date fair value of those awards.  This cost is recognized over the period which an employee is required to provide services in exchange for the award, generally the vesting period.  Stock-based compensation expense totaled $76 thousand and $65 thousand for the quarters ended June 30, 2008 and 2007, respectively.  A tax benefit of $31 thousand and $8 thousand was recognized in connection with the stock-based compensation for the quarters ended June 30, 2008 and 2007, respectively.  Stock-based compensation expense totaled $167 thousand and $130 thousand for the six-month periods ended June 30, 2008 and 2007, respectively.   A tax benefit of $69 thousand and $17 thousand was recognized  in connection with the stock-based compensation expense for the six-month periods ended June 30, 2008 and 2007, respectively.    The expense for 2007 was recognized under the Professional Business Bank 2001 Incentive and Nonqualified Stock Option Plan.

SoCal has one stock-based compensation plan, the Belvedere SoCal 2007 Equity Incentive Plan (the "Plan"), which, among other things, permits the grant of stock options and stock purchase rights.  The Plan is designed primarily to attract and retain personnel and provide additional incentives to employees, directors and consultants to promote the success of SoCal's business.  The maximum aggregate number of shares that may be issued under the Plan is 1,500,000.  The amount, frequency and terms of share-based awards are subject to all applicable terms and conditions of the Plan and such other terms and conditions as prescribed by a Committee of the Board of Directors.  New shares are issued upon the exercise of options.

The Plan requires that the option or share price may not be less than the fair market value of the stock on the grant date, except for options granted in substitution for options outstanding under the Professional Business Bank Stock Option Plan, and that the stock be paid in full at the time the option is exercised.  All options vest on a date determined by the Committee, but not later than ten years from the date of grant.

Management estimates the fair value of each option award as of the date of grant using a Black-Scholes-Merton option pricing model.  Expected volatility is based on historical volatility of similar entities over a preceding period commensurate with the expected term of the option because the Company's common stock has been publicly traded for a shorter period than the expected term of the options.  The expected term represents the period that the stock-based awards are expected to be outstanding.  The risk free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.  Expected dividend yield was not considered in the option pricing formula because SoCal has not paid cash dividends historically.  In addition to these assumptions, management makes estimates regarding pre-vesting forfeitures that will impact total compensation expense recognized under the Plan.

F-6

Two types of options were granted in the first quarter of 2008: one grant of 175,402 options with performance conditions that vest based on certain qualifying events, or cliff vest at the 7th anniversary of the grant date if no qualifying event occurs, and the second grant of 175,409 options with a time-based condition that cliff vest at the 5th anniversary of the grant date.  There were no stock options granted in the second quarter of 2008 or the first six months of 2007.

The following assumptions were utilized in the calculation of the fair value of options granted during the six-month period ended June 30, 2008:

Risk-free interest rate	3.21%
Expected life	6 years
Expected volatility	28%
Expected dividend yield	N/A
Weighted average grant date fair value	$5.10

A summary of stock option activity and related information for the six-month period ended June 30, 2008 follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding December 31, 2007		135,041		$	15.21
Options granted		350,811		$	15.00
Options forfeited		(19,955	)	$	15.00
Options exercised		-
Outstanding at June 30, 2008		465,897		$	15.06	8.5 years	$	-
Options exercisable, June 30, 2008		135,041		$	15.21	5.6 years	$	-
Options expected to vest after June 30, 2008		314,901		$	15.00	9.7 years	$	-

All options granted in 2008 allow for early exercise into shares of restricted common stock of SoCal under identical vesting terms as the original options.  Such options are not shown as exercisable in the above table.

At June 30, 2008, there was $1.5 million in unrecognized compensation costs related to the outstanding options that will be recognized over a weighted average period of 5.4 years.  

6. Earnings Per Share

Basic earnings per share for each of the periods presented was computed by dividing net (loss) earnings adjusted for stock dividends paid or declared on non-cumulative perpetual preferred stock by the weighted average number of shares outstanding during each such period.

Basic and diluted earnings per share for the three-month periods ended June 30, 2008 and 2007 are computed as follows (dollars in thousands):

SoCal Three-month period ended June 30, 2008	Net Loss			Weighted Average Number of Shares Outstanding		Per Share Amount
Basic loss per share:
Net loss	$	(695	)
Preferred stock dividend		(785	)
Net loss available to common shareholders	$	(1,480	)		3,330,263	$	(0.44	)

Professional Business Bank Three-month period ended June 30, 2007	Net Loss			Weighted Average Number of Shares Outstanding		Per Share Amount
Net loss available to common shareholders	$	(182	)		1,970,070	$	(0.09)

F-7

Basic and diluted earnings per share for the six-month periods ended June 30, 2008 and 2007 are computed as follows (dollars in thousands): 

SoCal Six-month period ended June 30, 2008	Net Loss			Weighted Average Number of Shares Outstanding		Per Share Amount
Basic loss per share:
Net loss	$	(1,256	)
Preferred stock dividend		(1,541	)
Net loss available to common shareholders	$	(2,797	)		3,104,569	$	(0.90	)

Professional Business Bank Six-month period ended June 30, 2007	Net Loss			Weighted Average Number of Shares Outstanding		Per Share Amount
Net loss available to common shareholders	$	(153	)		1,992,131	$	(0.08)

7. Allowance for Loan Losses

The following table presents the changes in the allowance for loan losses as of the dates indicated (dollars in thousands):

	Three-month period ended June 30,						Six-month period ended June 30,
	2008			2007			2008			2007
Balance at beginning of period	$	6,254		$	2,026		$	4,077		$	1,869
Allowance acquired at acquisition of Spectrum		-			-			1,436			-
Additional provision		1,104			380			2,061			537
Charge-offs		(1,973	)		(2	)		(2,205	)		(2	)
Recoveries		-			-			16			-
Total	$	5,385		$	2,404		$	5,385		$	2,404

F-8

8. Acquisition of Spectrum Bank

Effective January 31, 2008, SoCal acquired all of the common stock of Spectrum, a California state-chartered bank headquartered in Irvine, California with branch offices in Huntington Beach and Montebello, California.  All the outstanding Spectrum shares were exchanged for $20.2 million in cash and $15 million in trust preferred securities.  The acquisition was accounted for in accordance with SFAS No. 141, Business Combinations.  Accordingly, the net assets were recorded at their estimated fair values, and the operating results were included in the financial statements from the date of acquisition.  Goodwill totaled $27.8 million (none of which is deductible for tax purposes) and a core deposit intangible of $722 thousand was recorded and is being amortized over approximately seven years.  Capitalized direct transaction costs were approximately $1 million including $740,000 paid to the Fund.  The allocation of the purchase price to the assets and liabilities acquired will be finalized no later than fourth quarter 2008, as SoCal obtains more information regarding asset valuations, liabilities assumed and revisions of preliminary estimates of fair values made at the date of purchase.  The purchase price has been allocated on a preliminary basis, using information currently available as presented below (dollars in thousands):

Assets acquired:
Cash and due from banks	$	4,283
Federal funds sold		17,080
Interest-bearing deposits in other financial institutions		2,608
Investment securities available for sale		41,475
Loans, net		79,452
Premises and equipment		4,947
Goodwill		27,832
Other intangible assets, net		722
Accrued interest and other assets		9,043
Total assets acquired		187,442
Liabilities assumed:
Total deposits		142,011
Accrued interest and other liabilities		9,196
Total liabilities assumed		151,207
Total consideration paid	$	36,235

9. Junior Subordinated Debentures

In January 2008, SoCal issued $15.5 million of junior subordinated debentures to Belvedere SoCal Statutory Trust I, a Delaware business trust that was formed for the exclusive purpose of issuing trust preferred securities. The Trust purchased debentures with: (1) the proceeds of the sale of its common trust securities to SoCal for $464 thousand, and (2) certain shares of common stock in Spectrum Bank valued at $15 million that the Trust received from certain shareholders of Spectrum Bank in exchange for the Trust’s trust preferred securities. The subordinated debentures and trust preferred securities have generally identical terms, including that they mature in 2038, are redeemable at SoCal’s option at par, and require monthly distributions/interest payments at a rate of 10%.   SoCal has unconditionally guaranteed certain distributions on, and certain payments on liquidation and redemption of, the trust preferred securities.

Interest expense recognized by SoCal for the three- and six-month periods ended June 30, 2008 related to the subordinated debentures was $442 thousand and $644 thousand, respectively.

10.  Note Payable

In March 2008, SoCal borrowed $8 million through a loan secured by the stock of the Subsidiary Banks.  The loan bears interest at three-month LIBOR plus 3.1% (5.87% at June 30, 2008) with quarterly interest payments through September 2009, followed by principal and interest payments through the maturity date of March 2018.  The promissory note and related loan agreements contain certain customary restrictions including a potential limitation on the ability of the Subsidiary Banks to pay dividends to SoCal for purposes other than to allow SoCal to service the loan.  At June 30, 2008, SoCal was not in compliance with the debt service coverage covenant of the loan agreement.  On July 25, 2008 the lender waived compliance with this covenant.

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11. Other Real Estate Owned

Other Real Estate Owned is real estate acquired through, or in lieu of, loan foreclosures that is expected to be sold and is recorded at its fair value less estimated costs to sell (fair value). The amount, if any, by which the recorded amount of the loan exceeds the fair value less estimated costs to sell are charged to the allowance for loan or lease losses, if necessary. After foreclosure, valuations are periodically performed by management with any subsequent write-downs recorded as a valuation allowance and charged against operating expenses. Operating expenses of such properties, net of related income, are included in other expenses and gains and losses on their disposition are included in other income and other expenses.

            SoCal’s investment in other real estate owned, totaled $1.5 million at June 30, 2008. SoCal had no other real estate owned and no investment in real estate acquired in full or partial settlement of loan obligations at December 31, 2007.

12. Pro forma financial information

The June 30, 2008 consolidated financial statements include the accounts of Spectrum since February 1, 2008. The following supplemental proforma information discloses selected financial information for the three- and six-month periods ended June 30, 2008 and 2007 as though the Spectrum merger had been completed as of the beginning of the period. The proforma information for the three- and six-month periods ended June 30, 2007 combines Professional Business Bank, as the predecessor business to SoCal, and Spectrum.  The unaudited proforma income for the three- and six-month periods ended June 30, 2008 includes nonrecurring merger expenses incurred by Spectrum for cancellation of all outstanding options of Spectrum per the terms of the merger agreement, severance payments to Spectrum executives under change of control agreements and cash settlements of deferred compensation programs totaling $4.0 million, net of tax. Dollars are in thousands except per share data.

	Three-month period ended June 30,					Six-month period ended June 30,
	2008			2007		2008			2007
Revenue (net interest income plus non-interest income)	$	4,020		$	4,654	$	8,868		$	9,284
Net (loss) income	$	(1,480	)	$	100	$	(5,065	)	$	503
Basic (loss) earnings per share	$	(0.44	)	$	0.03	$	(0.84	)	$	0.15
Diluted (loss) earnings per share	$	(0.44	)	$	0.03	$	(0.84	)	$	0.15

13.  Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which provides enhanced guidance for using fair value to measure assets and liabilities. The standard applies whenever other standards require or permit assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. SoCal adopted SFAS No. 157 as of January 1, 2008 and the adoption did not have a material impact on the consolidated financial statements or results of operations of SoCal. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

· Level 1	inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
· Level 2	inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
· Level 3	inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy:

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Assets

Securities

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 inputs include securities that have quoted prices in active markets for identical assets. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow. Examples of such instruments, which would generally be classified within Level 2 of the valuation hierarchy, included certain collateralized mortgage and debt obligations and certain high-yield debt securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. SoCal’s current portfolio does not have securities that are valued using Level 3 inputs as of June 30, 2008. When measuring fair value, the valuation techniques available under the market approach, income approach and/or cost approach are used. SoCal’s evaluations are based on market data and SoCal employs combinations of these approaches for its valuation methods depending on the asset class.

Impaired Loans

SFAS No. 157 applies to loans measured for impairment using the practical expedients permitted by SFAS No. 114, Accounting by Creditors for Impairment of a Loan, including impaired loans measured at an observable market price (if available), or at the fair value of the loan’s collateral (if the loan is collateral dependent). Fair value of the loan’s collateral, when the loan is dependent on collateral, is determined by appraisals or independent valuation which is then adjusted for the cost related to liquidation of the collateral. Fair value of loans that are not collateral dependent is calculated based on the present value of future cash flows. For impaired loans that are collateral dependent, either a Level 2 or Level 3 valuation methodology is used. The fair value of loans that are not collateral dependent is measured using a Level 3 methodology.

Other Real Estate Owned

Other real estate owned ("OREO") is measured at fair value less cost to sell which is a Level 2 valuation methodology based on quoted prices for similiar assets or a Level 3 valuation methodology when an income approach is used. SoCal believes that the fair value component in its valuation follows the provisions of SFAS No. 157. Fair value of OREO at June 30, 2008 was determined by independent appraised values less estimated costs to sell.

Assets Measured on a Recurring Basis

Assets measured at fair value on a recurring basis are summarized below (dollars in thousands):

			Fair Value Measurements at June 30, 2008 Using
			Quoted Prices in
			Active Markets for		Significant Other		Significant
			Identical Assets		Observable Inputs		Unobservable Inputs
(in 000’s)	June 30, 2008		(Level 1)		(Level 2)		(Level 3)
Assets:
Available-for-sale investment securities	$	31,958	$	—	$	31,958	$	—

Assets measured at fair value on a non-recurring basis are summarized below (dollars in thousands):

			Fair Value Measurements at June 30, 2008 Using
(in 000's)	June 30, 2008		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans	$	1,475	$	—	$	133	$	1,342
OREO	$	1,537	$	—	$	1,537	$	—

Impaired loans with a carrying amount of $133 thousand were measured based on the fair value of collateral, a Level 2 valuation methodology.  Impaired loans with a carrying amount of $1.3 million were measured based on management’s update to a previously received appraised value, a Level 3 valuation methodology. A valuation allowance of $166 thousand is included in the allowance for loan losses for the impaired loans.

OREO consists of one commercial property and two residential properties valued by independent appraisals, net of estimated selling costs. 

14. Subsequent Event

Effective July 3, 2008, SoCal completed the merger of the Subsidiary Banks.  By combining the two banks, SoCal expects to improve operational efficiency, reduce regulatory compliance costs, and consolidate vendor relationships.  The merger of Spectrum Bank into Professional Business Bank was accounted for as a transfer of assets and liabilities between entities under common control and, accordingly, the assets and liabilities of Spectrum were transferred at their carrying amounts, similar to a pooling of interests.  However, the existing Spectrum branches and certain customer-related activities will continue to be conducted using the Spectrum brand.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Background

 SoCal acquired Professional Business Bank on November 23, 2007 and Spectrum on January 31, 2008.  Prior to November 23, 2007, SoCal had no significant operations.  Accordingly, the discussion and results of operations and financial condition for the three- and six-month periods ended June 30, 2008 are for SoCal. The results of operations and financial condition for the three- and six-month periods ended June 30, 2007 are for Professional Business Bank only. Securities and Exchange Commission rules require the presentation of certain prior period comparative financial statements of the acquired business when the acquiring company succeeds to substantially all of the business and the registrant’s own operations prior to the acquisition appear insignificant relative to the business acquired.

Effective July 3, 2008, SoCal completed the merger of the Subsidiary Banks.  By combining the two banks, SoCal expects to improve operational efficiency, reduce regulatory compliance costs, and consolidate vendor relationships.  The merger of Spectrum Bank into Professional Business Bank was accounted for as a transfer of assets and liabilities between entities under common control and, accordingly, the assets and liabilities of Spectrum were transferred at their carrying amounts, similar to a pooling of interests.  However, the existing Spectrum branches and certain customer-related activities will continue to be conducted using the Spectrum brand.

Forward-Looking Information

The statements contained herein that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on SoCal. These forward looking statements involve risks and uncertainties, including the risks and uncertainties described in our annual report on Form 10-KSB in the discussion under the caption, “Business - Factors That May Affect Future Operating Results,” which was filed with the Securities and Exchange Commission on March 31, 2008. There can be no assurance that future developments affecting SoCal will be the same as those anticipated by management, and actual results may differ from those projected in the forward-looking statements. Statements regarding policies and procedures are not intended, and should not be interpreted to mean, that such policies and procedures will not be amended, modified or repealed at any time in the future.

Critical Accounting Policies

This discussion and analysis is based upon SoCal’s financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires SoCal’s management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosure of contingencies.

Our accounting policies are integral to understanding the results reported.  Our most complex accounting policies require management’s judgment to ascertain the valuation of assets, liabilities, commitments and contingencies.  SoCal has established detailed policies and control procedures that are intended to ensure valuation methods are well controlled and applied consistently from period to period.  In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner.  The following is a brief description of the significant accounting policies involving significant management valuation judgments.

Allowance for Loan Losses.  The allowance for loan losses represents management’s best estimate of losses inherent in the existing loan portfolio. The allowance for loan losses is increased by the provision for loan losses charged to expense and reduced by loans charged off, net of recoveries. The provision for loan losses is determined based on management’s assessment of several factors: reviews and evaluation of specific loans, changes in the nature and volume of the loan portfolio, current economic conditions and the related impact on specific borrowers and industry groups, historical loan loss experiences, the level of classified and nonperforming loans and the results of regulatory examinations.  Refer to “Provision for Loan Losses” on page 9 for a full discussion of Socal’s methodology of assessing the adequacy of the allowance for loan losses.

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Loans are considered impaired if, based on current information and events, it is probable that SoCal will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. The measurement of impaired loans is generally based on the present value of expected future cash flows discounted at the historical effective interest rate stipulated in the loan agreement, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral. In measuring the fair value of the collateral, management uses assumptions and methodologies consistent with those that would be utilized by unrelated third parties.

Changes in the financial condition of individual borrowers, in economic conditions, in historical loss experience and in the condition of the various markets in which collateral may be sold may all affect the required level of the allowance for loan losses and the associated provision for loan losses.

Goodwill and Other Intangibles.  Net assets of entities acquired in purchase transactions are recorded at fair value at the date of acquisition. The historical cost basis of individual assets and liabilities are adjusted to reflect their fair value. Identified intangibles are amortized on a straight-line basis over the period benefited. Goodwill is not amortized for book purposes, although it will be reviewed for potential impairment on an annual basis, or if events or circumstances indicate a potential impairment. The impairment test is performed in two phases. The first step of the goodwill impairment test compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired; however, if the carrying amount of the reporting unit exceeds its fair value, an additional procedure must be performed. That additional procedure compares the implied fair value of the reporting unit’s goodwill (as defined in SFAS No. 142, Goodwill and Other Intangible Assets) with the carrying amount of that goodwill. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value.  Management will begin the annual process of impairment testing by engaging a third party to prepare an independent valuation of SoCal during the third quarter of 2008.

Other intangible assets subject to amortization are evaluated for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. An impairment loss will be recognized if the carrying amount of the intangible asset is not recoverable and exceeds fair value. The carrying amount of the intangible is considered “not recoverable” if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset.

Fair Value. Effective January 1, 2008, SoCal adopted SFAS No. 157, Fair Value Measurements, which among other things, requires enhanced disclosures about financial instruments carried at fair value. SFAS No. 157 establishes a hierarchical disclosure framework associated with the level of observable pricing scenarios utilized in measuring financial instruments at fair value. The degree of judgment utilized in measuring the fair value of financial instruments generally correlates to the level of the observable pricing scenario. Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of observable pricing and a lesser degree of judgment utilized in measuring fair value. Conversely, financial instruments rarely traded or not quoted will generally have little or no observable pricing and a higher degree of judgment utilized in measuring fair value. Observable pricing scenarios are impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established and the characteristics specific to the transaction.

Overview

The following discussion reviews and analyzes the operating results of SoCal for the for the three- and six-month periods ended June 30, 2008 and Professional Business Bank for the three- and six-month periods ended June 30, 2007 and the financial condition of SoCal at June 30, 2008 and December 31, 2007.  It should be read in conjunction with the financial statements and the other financial data presented elsewhere in this quarterly report.

SoCal recorded a net loss of $1.3 million, ($0.90) basic and diluted loss per share, for the six-month period ended June 30, 2008 as compared to Professional Business Bank’s $153 thousand loss, ($0.08) basic and diluted loss per share, for the six-month period ended June 30, 2007. The increased loss was primarily due to a $3.7 million increase in non-interest expenses and a $1.5 million increase in provision for loan losses, offset by a $2.5 million increase in net interest income, a $454 thousand increase in non-interest income and a $1.1 million decrease in income tax expense.

SoCal recorded a net loss of $695 thousand, ($0.44) basic and diluted loss per share, for the three-month period ended June 30, 2008 as compared to Professional Business Bank’s $182 thousand, ($0.09) basic and diluted loss per share, for the three-month period ended June 30, 2007.  The increased loss was primarily due to a $1.6 million increase in non-interest expenses and a $723 thousand increase to the provision for loan losses, offset by a $1 million increase in net interest income and an increase in income tax benefit of $534 thousand.

Total assets increased from $270.1 million at December 31, 2007 to $458.9 million at June 30, 2008, an increase of $188.9 million, or 69.9%, of which $177.7 million, or 94.0% of the increase, related to the acquisition of Spectrum. Net loans grew from $210.3 million at December 31, 2007 to $303.0 million at June 30, 2008, an increase of $92.7 million, or 44.1%, of which $78.5 million, or 84.6% of the increase, related to the acquisition of Spectrum. Deposits grew from $194.0 million at December 31, 2007 to $342.7 million at June 30, 2008, an increase of $148.7 million, or 76.6%, of which $135.6 million, or 91.2% of the increase, related to the acquisition of Spectrum.

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Set forth below are certain key financial performance ratios for the periods indicated:

	For the six-month period ended June 30,
	2008		2007
Return on Average Assets (1)		(0.59%)		(0.16%)
Return on Average Equity (1)		(3.38%)		(1.53%)
(1) Annualized

Net Interest Income

Interest income was $5.9 million and $11.8 million for the three- and six-month periods ended June 30, 2008 as compared to $3.9 million and $7.6 million for the three- and six-month periods ended June 30, 2007.  Interest expense was $2.3 million and $4.1 million for the three- and six-month periods ended June 30, 2008 as compared to $1.3 million and $2.4 million for the three- and six-month periods ended June 30, 2007.  Net interest income was $3.7 million and $7.6 million for the three- and six-month periods ended June 30, 2008 as compared to $2.7 million and $5.1 million for the three- and six-month periods ended June 30, 2007.  The increase in interest income was primarily due to the $182.9 million and $167.0 million increase in average interest-earning assets for the three- and six-month periods ended June 30, 2008 as compared to the same periods in 2007.  The increase in interest expense was due to a $149.5 million and $137.1 million increase in average interest-bearing liabilities.  The decrease in net interest margin from 5.68% for the six-month period ended June 30, 2007 to 4.40% for the six-month period ended June 30, 2008 is primarily due to declines in market interest rates and Spectrum’s lower net interest margin as compared to that of Professional Business Bank.

 The increase in average interest-earning assets and average interest-bearing liabilities as compared to the same period in the prior year is primarily the result of the acquisition of Spectrum.  Average loans increased $142.2 million, or 93.6%, to $294.2 million at June 30, 2008 compared to $152.0 million at June 30, 2007, of which $68.8 million, or 48.4%, related to the acquisition of Spectrum.  Average interest-bearing deposits increased $101.9 million, or 91.5%, to $213.2 million at June 30, 2008 compared to $111.4 million at June 30, 2007, of which $82.2 million, or 91.5%, relates to the acquisition of Spectrum.

The weighted average yield on interest-earning assets decreased as a result of a decline in market interest rates. The prime rate decreased seven times, totaling a reduction of 325 basis points, from June 2007 through June 2008.  Variable rate loans, with rates primarily indexed to the prime rate, comprise approximately 79% of the loan portfolio.  The decline in the prime rate impacted the loan portfolio immediately and to a greater extent than its impact on the interest-bearing liabilities generally due to a lag in deposit repricing as compared to loans.

The following table presents the weighted average yield on each specified category of interest-earning assets, the weighted average rate paid on each specified category of interest-bearing liabilities, and the resulting interest rate spread and net interest margin for the periods indicated.  Loan fees, which are not material, are included in interest earned on loans (dollars in thousands).

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	Three-month period ended June 30,
	Belvedere SoCal								Professional Business Bank
	2008								2007
						Average								Average
				Interest		Yield or						Interest		Yield or
	Average			Earned		Rate			Average			Earned		Rate
	Balance			or Paid		Paid			Balance			or Paid		Paid
Assets
Interest-Earning Assets:
Investment Securities-taxable	$	27,007		$	279		4.15	%	$	14,284		$	176		4.94	%
Investment Securities-nontaxable		9,049			91		4.04	%		-			-		-
Interest-Bearing Deposits in Other
Financial Institutions		1,350			16		4.77	%		3,064			40		5.24	%
Federal Funds Sold		23,374			118		2.03	%		9,671			126		5.23	%
Loans		311,628			5,432		7.01	%		162,523			3,583		8.84	%
Total Interest-Earning Assets		372,408			5,936		6.41	%		189,542			3,925		8.31	%
Noninterest-Earning Assets:
Cash and Due from Banks		9,508								4,966
Premises and Equipment		5,231								464
Goodwill		57,176								-
Other Intangibles		2,905								-
Accrued Interest and Other Assets		15,208								3,291
Allowance for Loan Losses		(6,447	)							(2,202	)
Total Assets	$	455,989							$	196,061
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Money Market, Savings and NOW	$	84,311			271		1.29	%	$	87,001			798		3.68	%
Time Deposits under $100,000		81,253			890		4.41	%		21,361			291		5.46	%
Time Deposits of $100,000 or More		69,985			502		2.88	%		10,877			137		5.05	%
Short Term borrowings		12,370			63		2.05	%		2,621			30		4.59	%
Note Payable		8,000			112		5.63	%		-			-		-
Subordinated Debentures		15,464			442		11.50	%		-			-		-
Total Interest-Bearing Liabilities		271,383			2,280		3.38	%		121,860			1,256		4.13	%
Noninterest-Bearing Liabilities:
Demand Deposits		103,737								52,996
Other Liabilities		4,670								1,100
Shareholders' Equity		76,199								20,105
Total Liabilities and Shareholders' Equity	$	455,989							$	196,061
Net Interest Income				$	3,656							$	2,669
Net Yield on Interest-
Earning Assets (Net Interest Margin)							3.95	%							5.65	%

Yields are computed on a tax equivalent basis resulting in an adjustment of $ 31 thousand to interest earned on municipal bonds for the three-month period ended June 30, 2008.  There were no municipal bonds held during the three-month period ended June 30, 2007.

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	Six-month period ended June 30,
	Belvedere SoCal 2008							Professional Business Bank 2007
						Average							Average
				Interest		Yield or					Interest		Yield or
	Average			Earned		Rate		Average			Earned		Rate
	Balance			or Paid		Paid		Balance			or Paid		Paid
Assets
Interest-Earning Assets:
Investment Securities-taxable	$	25,960		$	534		4.14%	$	14,498		$	339		4.72%
Investment Securities-nontaxable		7,507			152		4.07%		-			-		-
Interest-Bearing Deposits in Other Financial Institutions		1,326			32		4.85%		3,974			124		6.29%
Federal Funds Sold		20,680			242		2.35%		12,217			317		5.23%
Loans		294,203			10,815		7.39%		151,978			6,773		8.99%
Total Interest-Earning
Assets		349,676			11,775		6.77%		182,667			7,553		8.34%
Noninterest-Earning Assets:
Cash and Due from Banks		8,485							5,621
Premises and Equipment		4,452							436
Goodwill		52,452							-
Other Intangibles Assets, net		2,847							-
Accrued Interest and
Other Assets		15,130							3,192
Allowance for Loan Losses		(5,915	)						(2,094	)
Total Assets	$	427,127						$	189,822

Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Money Market, Savings and NOW	$	78,796		547	1.40%	$	79,605		1,496	3.79%
Time Deposits under $100,000		72,077		1,383	3.86%		21,220		574	5.45%
Time Deposits of $100,000 or  More		62,345		1,114	3.59%		10,542		263	5.03%
Short-Term Borrowings		21,024		304	2.91%		3,278		76	4.68%
Note Payable		4,667		137	5.90%		-		-	-
Subordinated Debentures		12,835		644	10.09%		-		-	-
Total Interest-Bearing Liabilities		251,744		4,129	3.18%		114,645		2,409	4.24%
Noninterest-Bearing Liabilities:
Demand Deposits		96,068					54,028
Other Liabilities		4,665					1,008
Shareholders' Equity		74,650					20,141
Total Liabilities and Shareholders' Equity	$	427,127				$	189,822
Net Interest Income			$	7,646				$	5,144
Net Yield on Interest-
Earning Assets (Net Interest Margin)					4.40%					5.68%

Yields are computed on a tax equivalent basis resulting in an adjustment of $52 thousand to interest earned on municipal bonds for the six-month period ended June 30, 2008. There were no municipal bonds held during the six-month period ended June 30, 2007.

7

Rate and Volume Analysis

The following tables show the increase or decrease in interest income, interest expense and net interest income resulting from the changes in rates and volumes for the periods indicated (dollars in thousands):

	Three-Month Period Ended June 30, 2008
	versus
	Three-Month Period Ended June 30, 2007
	Increase (Decrease) Due
	To Change in
	Volume			Rate			Total
Interest-Earning Assets:
Investment Securities-Taxable	$	156		$	(53	)	$	103
Investment Securities-Nontaxable		91			-			91
Interest-Bearing Deposits in Other Financial Institutions		(22	)		(2	)		(24	)
Federal Funds Sold		186			(194	)		( 8	)
Loans		3,261			(1,412	)		1,849
Total Interest Income		3,672			(1,661	)		2,011
Interest-Bearing Liabilities:
Money Market, Savings and NOW		(25	)		(502	)		(527	)
Time Deposits under $100,000		813			(214	)		599
Time Deposits of $100,000 or More		742			(377	)		365
Short Term Borrowings		111			(78	)		33
Subordinated Debentures		112			-			112
Note Payable		442			-			442
Total Interest Expense		2,195			(1,171	)		1,024
Net Interest Income	$	1,477		$	(490	)	$	987

	Six-Month Period Ended June 30, 2008
	versus
	Six-Month Period Ended June 30, 2007
	Increase (Decrease) Due
	To Change in
	Volume			Rate			Total
Interest-Earning Assets:
Investment Securities-Taxable	$	270		$	(75	)	$	195
Investment Securities-Nontaxable		152			-			152
Interest-Bearing Deposits in Other Financial Institutions		(83	)		(9	)		(92	)
Federal Funds Sold		218			(293	)		( 75	)
Loans		6,386			(2,344	)		4,042
Total Interest Income		6,943			(2,721	)		4,222
Interest-Bearing Liabilities:
Money Market, Savings and NOW		(15	)		(934	)		(949	)
Time Deposits under $100,000		1,382			(573	)		809
Time Deposits of $100,000 or More		1,147			(296	)		851
Short Term Borrowings		395			(167	)		228
Subordinated Debentures		644			-			644
Note Payable		137			-			137
Total Interest Expense		3,690			(1,970	)		1,720
Net Interest Income	$	3,253		$	(751	)	$	2,502

8

 Provision for Loan Losses

SoCal made provisions for loan losses of $1.1 million and $2.1 million for the three- and six-month periods ending June 30, 2008 and Professional Business Bank made provisions of $380 thousand and $537 thousand for the three- and six-month periods ended June 30, 2007, respectively.  The increase year over year reflects SoCal’s assessment of the overall adequacy of the allowance for loan losses considering the $1.8 million charge-off of one real estate construction loan along with an increase in nonperforming loans.  

During the second quarter, additional provision was recorded to replenish the allowance for loan losses after a $1.8 million charge-off on one real estate construction participation loan.  The loan was classified as impaired at March 31, 2008 with a $510 thousand specific reserve pending an updated appraisal from the lead bank.  The appraisal received during the second quarter indicated additional reserves were required.  Management recorded a charge-off of the $1.8 million impairment based on the appraised value, reducing the loan balance to $520 thousand at June 30, 2008.  The loan remains on nonaccrual status.

Management believes that the allowance for loan losses is adequate. Quarterly detailed reviews are performed by management to identify the risks inherent in the loan portfolio, assess the overall quality of the loan portfolio and to determine the adequacy of the allowance for loan losses and the related provision for loan losses to be charged to expense. These systematic reviews follow the methodology set forth by the FDIC in its 2006 policy statement on the allowance for loan losses.

Management has adopted a methodology designed by a third-party to prepare the quarterly provision for loan loss calculations.  The methodology estimates the expected loss rates based on a two-factor approach.  The first factor is based on the actual payment default rate in the loan portfolio.  For loan types that have not generated an actual payment default rate, a rate is applied based on industry experience for such loans by type and geographic location.  The second factor is based on the rate of loss as determined by dividing the expected net charge-off of defaulted loans, with defaulted loans being defined as loans that have 30 days or greater payment delinquency plus nonaccrual and gross loans charged-off, by total loans in each group.   This rate reflects industry experience as determined by state and loan type.  Taken together, the two factors produce the expected loss rate.

The calculation is applied to both outstanding loan balances and expected contingent funding of commitments to fund as of the measurement date.   Expected losses on loans identified as specifically impaired will be excluded from the above measurements, as the provision for such loans is based on the present value of expected future cash flows discounted at the historical effective interest rate stipulated in the loan agreement, or based on the fair value of collateral for collateral-dependent loans and is included as a separate component in calculating the required provision for loan losses.

SoCal has also elected to take external, subjective (so-called qualitative) factors into consideration when assessing the adequacy of the allowance for loan losses. These qualitative factors take into account and weight by risk, among other things, the growth and nature of the loan portfolio, concentration of credits, lending policies, economic trends, competition and legal and regulatory requirements. The total qualitative reserve requirement is determined by applying the risk weights of the qualitative factors to the total amount of loans outstanding and is included as the third component in the calculation.

The credit quality of our loans will be influenced by underlying trends in the economic cycle, particularly in Southern California, and other factors, which are beyond management’s control. Accordingly, no assurance can be given that we will not sustain loan losses that in any particular period will be sizable in relation to the allowance. Additionally, subsequent evaluation of the loan portfolio by us and by our regulators, in light of factors then prevailing, may require increases in the allowance through charges to the provision for loan losses.

Non-Interest Income

Non-interest income consists primarily of service charges on deposit accounts. Non-interest income for SoCal was $363 thousand and $690 thousand for the three- and six-month periods ended June 30, 2008.  Non-interest income for Professional Business Bank was $103 thousand and $236 thousand for the three- and six-month periods ended June 30, 2007. Virtually all of the increase is attributable to the acquisition of Spectrum’s deposit base.

9

Non-Interest Expense

	Three-month period ended ended June 30,							Six-month period ended June 30,
	Belvedere SoCal 2008		Professional Business Bank 2007		Percent Change			Belvedere SoCal 2008		Professional Business Bank 2007		Percent Change
Salaries and employee benefits	$	2,152,490	$	1,547,897		39.1	%	$	4,621,273	$	2,850,982		62.1	%
Occupancy and equipment		389,973		172,582		126.0	%		715,075		319,956		123.5	%
Professional fees		515,543		242,054		113.0	%		1,101,640		625,981		76.0	%
Data processing		389,971		162,125		140.5	%		657,630		296,980		121.4	%
Marketing and business promotion		64,432		31,966		101.6	%		113,295		64,344		76.1	%
Office and administrative expenses		251,033		222,900		12.6	%		492,960		385,343		27.9	%
Other expenses		402,617		216,029		86.4	%		829,010		331,670		150.0	%
Total	$	4,166,059	$	2,595,553		60.5	%	$	8,530,883	$	4,875,256		75.0	%

Salary and employee benefits increased $605 thousand, or 39.1%, for the three-month period ended June 30, 2008 compared to the same period in 2007.  Virtually all of the increase related to the addition of 33 full-time and two part-time Spectrum employees.  The $1.8 million, or 62.1%, increase for the six-month period ended June 30, 2008 compared to the same period in 2007 was primarily related to the addition of Spectrum employees, comprising $1.1 million of the increase in costs. The remainder of the increase was the result of increased stock-based compensation costs, salary adjustments and other employee benefits.

Occupancy and equipment expenses increased $217 thousand, or 126.0%, and $395 thousand, or 123.5%, for the three- and six-month periods ended June 30, 2008. The increase was primarily due to the acquisition of Spectrum, which added three branch offices to the existing branches of Professional Business Bank.

Professional fees increased $273 thousand, or 113.0%, and $476 thousand, or 76.0%, for the three- and six-month periods ended June 30, 2008 due to professional fees incurred by Spectrum and legal, accounting and audit fees incurred by the holding company.

Data processing expenses increased $228 thousand, or 140.5%, and $361 thousand, or 121.4%, for the three- and six-month periods ended June 30, 2008 due to system conversion costs and the increased transaction volume subsequent to the acquisition of Spectrum.

Marketing and business promotion expenses increased $32 thousand, or 101.6%, and $49 thousand, or 76.1%, for the three- and six-month periods ended June 30, 2008 due to costs incurred by the holding company related to the processing and publication of public filings and marketing expenses of $24 thousand and $37 thousand for the three- and six-month periods ended June 30, 2008 incurred by Spectrum.

Office and administrative expenses increased $28 thousand, or 12.6%, for the three-month period ended June 30, 2008.  The increase of $108 thousand, or 27.9%, for the six-month period ended June 30, 2008 was primarily due to $112 thousand in administrative costs incurred by Spectrum.

Other expenses increased $187 thousand, or 86.4%, and $497 thousand, or 150.0%, for the three- and six-month periods ended June 30, 2008 due to amortization of  core deposit intangibles and expenses incurred by the holding company and Spectrum.

Income Tax (Benefit) Expense

The income tax benefit for the three- and six-month periods ended June 30, 2008, respectively, totaled $555 thousand, an effective rate of 44.3%, and $999 thousand, an effective tax rate of 44.4%.  The income tax benefit for the three-month period ended June 30, 2007 totaled $21 thousand, an effective rate of 10.1%.  The income tax provision for the six-month period ended June 30, 2007 totaled $121 thousand, an effective rate of 369.9%.  The fluctuating effective rates (compared to a statutory rate of 41.2%) for the three- and six-month periods ended June 30, 2007 were due to nondeductible merger-related costs and stock compensation costs incurred by Professional Business Bank during these periods offset by interest income exclusions for certain loans in designated enterprise zones of California.   No valuation allowance for deferred taxes is considered necessary based on the earnings history of the Subsidiary Banks.

10

The income tax rates used in determining the income tax provision or benefit were 34.000% for federal income tax purposes and 7.115% for state income taxes, net of federal income tax benefit.  Generally, the current tax expense is the result of applying the current tax rate to taxable income.  The deferred portion is intended to account for the fact that (losses) income on which taxes are recognized differs from financial statement pre-tax (loss) income because some items of income and expense are recognized in different years for income tax purposes than in the financial statements.  These recognition anomalies cause “temporary differences”; eventually, all taxes are paid.

Regulatory Capital

At June 30, 2008, Tier 1 capital of Professional Business Bank and Spectrum Bank, which is comprised of shareholders’ equity as modified by certain regulatory adjustments, was $24.1 million and $11.8 million, respectively.

Under regulatory capital adequacy guidelines, capital adequacy is measured as a percentage of risk-adjusted assets in which risk percentages are applied to assets and certain off-balance-sheet items, such as unused loan commitments and standby letters of credit. The guidelines require that a portion of total capital be core, or Tier 1, capital consisting of common shareholders’ equity and non-cumulative perpetual preferred stock, less goodwill and certain deductions. Tier 2 capital consists of other elements, primarily some types of non-perpetual preferred stock, subordinated debt and mandatory convertible debt, plus the allowance for loan losses, subject to certain limitations. Under current regulatory guidelines, the $15 million in trust preferred securities outstanding currently qualify as Tier 1 capital up to 25% of core capital. The guidelines also evaluate the leverage ratio, which is Tier 1 capital divided by average tangible assets.  Beginning with the quarter ended March 31, 2009, amendments to the risk-based capital guidelines will become effective and the amount of trust preferred securities that may be included in Tier 1 capital may not exceed 25% of the sum of all core capital elements, including restricted core capital elements, net of goodwill less any associated deferred tax liability.

The following table sets forth the regulatory standards for well-capitalized and adequately capitalized institutions and the capital ratios for SoCal, Professional Business Bank and Spectrum Bank as of the dates indicated (dollars in thousands):

June 30, 2008:	Actual				For Capital Adequacy Purposes			To Be Well Capitalized
SoCal	Amount		Ratio		Amount		Ratio	Amount		Ratio
Total Capital (to risk-weighted assets)		35,389		9.99%		28,327	>=+ 8%		N/A		N/A
Tier 1 Capital (to risk-weighted assets)		30,956		8.74%		14,164	>=+ 4%		N/A		N/A
Tier 1 Capital (to average assets)		30,956		7.86%		15,748	>=+ 4%		N/A		N/A
Professional Business Bank
Total Capital (to risk-weighted assets)		27,224		10.83%		20,200	>=+ 8%		25,250	>=+ 10%
Tier 1 Capital (to risk-weighted assets)		24,068		9.57%		10,100	>=+ 4%		15,150	>=+ 6%
Tier 1 Capital (to average assets)		24,068		9.76%		9,866	>=+ 4%		12,332	>=+ 5%
Spectrum Bank
Total Capital (to risk-weighted assets)		13,109		12.77%		8,210	>=+ 8%		10,262	>=+ 10%
Tier 1 Capital (to risk-weighted assets)		11,832		11.53%		4,105	>=+ 4%		6,157	>=+ 6%
Tier 1 Capital (to average assets)		11,832		8.05%		5,882	>=+ 4%		7,352	>=+ 5%

Deposits

Deposits grew from $194.0 million at December 31, 2007 to $342.7 million at June 30, 2008, an increase of $148.7 million, or 76.6%, of which $135.6 million, or 91.2% of the increase, related to the acquisition of Spectrum.

Total demand deposits represented 32.5% of total deposits at June 30, 2008 compared to 37.8% at December 31, 2007.  Total interest-bearing checking, money market and savings accounts as a group totaled 24.7% of total deposits at June 30, 2008 compared to 25.5% at December 31, 2007.  Total certificates of deposit represented 42.8% to total deposits at June 30, 2008 compared to 36.7% at December 31, 2007.

At June 30, 2008 and December 31, 2007, the deposit portfolio consisted of $36.2 million and $20.0 million in brokered deposits, respectively, which are defined to include not only deposits received through deposit brokers, but also deposits bearing interest in excess of 75 basis points over market rates.  

The following table sets forth the scheduled maturities of time deposits in denominations of $100,000 or greater at June 30, 2008 (dollars in thousands):

Three Months or less	$	26,739
Over Three Months to One Year		29,353
Over One Year to Three Years		6,149
Over Three Years		5,200
Total	$	67,441

11

Liquidity and Borrowings

Liquidity management for banks requires that funds always be available to pay anticipated deposit withdrawals and maturing financial obligations promptly and fully in accordance with their terms. The balance of the funds required is generally provided by payments on loans, the acquisition of additional deposit liabilities and liquidation of assets.

Liquidity may be enhanced, if necessary, through short-term borrowings. As of June 30, 2008, SoCal had short-term borrowing facilities available totaling approximately $92.5 million. This consisted of $22.5 million in unsecured federal funds lines of credit with correspondent banks and approximately $70 million in a secured line of credit with the Federal Home Loan Bank.

SoCal has from time to time borrowed funds on a short-term basis from the Federal Home Loan Bank and other financial institutions.  Outstanding borrowings totaled $12.6 million and $18.0 million at June 30, 2008 and December 31, 2007, respectively.  The interest rate was 2.08% and 3.80% on these outstanding borrowings at June 30, 2008 and December 31, 2007, respectively.  The average amounts outstanding totaled $17.5 million and $7.8 million and the weighted average interest rates were 3.09% and 4.90% for the six-month period ended June 30, 2008 and the year ended December 31, 2007, respectively.  The maximum outstanding at any month-end during the six-month period ended June 30, 2008 and the year ended December 31, 2007 was $39.0 million and $18.0 million, respectively.

In March 2008, SoCal borrowed $8.0 million through a loan secured by the stock of the Subsidiary Banks.  The loan bears interest at three-month LIBOR plus 3.1% (5.87% at June 30, 2008) with quarterly interest payments through September 2009, followed by principal and interest payments through the maturity date of March 2018.  The promissory note and related loan agreements contain certain customary restrictions, including a potential limitation on the ability of the Subsidiary Banks to pay dividends to SoCal for purposes other than to allow SoCal to service the loan.  At June 30, 2008, SoCal was not in compliance with the debt service coverage covenant of the loan agreement.  On July 25, 2008 the lender waived compliance with this covenant.

In January 2008, SoCal issued $15.5 in junior subordinated debentures to Belvedere SoCal Statutory Trust I, a Delaware business trust that was formed for the exclusive purpose of issuing trust preferred securities. The Trust purchased debentures with: (1) the proceeds of the sale of its common trust securities to SoCal for $464 thousand, and (2) certain shares of common stock in Spectrum Bank valued at $15 million that the Trust received from certain shareholders of Spectrum Bank in exchange for the Trust’s trust preferred securities. The junior subordinated debentures and trust preferred securities have generally identical terms, including that they mature in January 2038 and require monthly interest payments at 10%. The trust preferred securities and corresponding junior subordinated deferrable interest debentures contain provisions limiting our ability to declare and pay dividends on SoCal’s common stock in certain events.

Loan Portfolio

SoCal’s lending strategy is to attract small to mid-sized business borrowers by offering a variety of commercial and real estate loan products and a full range of other banking services coupled with highly personalized service. We offer commercial loans, lines of credit, certain consumer and installment loans, commercial and residential construction loans, as well as specialized products such as SBA and CalCAP loans.

The following table sets forth the components of total net loans outstanding in each category at the date indicated (dollars in thousands):

	June 30, 2008					December 31, 2007
	Amount			Percent of		Amount			Percent of
	Outstanding			Total		Outstanding			Total
Loans
Commercial	$	81,831			26.5%	$	56,791			26.5%
Real Estate - Construction		40,024			13.0%		37,566			17.5%
Real Estate - Other		179,116			58.0%		113,123			52.7%
Consumer		7,743			2.5%		7,127			3.3%
Total Loans		308,714			100.0%		214,607			100.0%
Net Deferred Loan Fees		(362	)				(273	)
Allowance for Loan Losses		(5,385	)				(4,077	)
Net Loans	$	302,967				$	210,257
Commitments
Letters of Credit	$	1,398				$	769
Undisbursed Loans and
Commitments to Grant Loans		66,449					62,459
Total Commitments	$	67,847				$	63,228

12

Nonperforming Assets

Nonaccrual loans are those loans for which SoCal has discontinued accrual of interest because reasonable doubt exists as to the full and timely collection of either principal or interest.  Loans past due 90 days will generally continue to accrue interest when the loan is both well secured and in the process of collection.  Other real estate owned consists of real properties that secured loans on which we have taken title in partial or complete satisfaction of the loan.

When a loan is placed on nonaccrual status, all interest previously accrued but uncollected is reversed against current period operating results.  Income on such loans is then recognized only to the extent that cash is received and, where the ultimate collection of the carrying amount of the loan is probable, after giving consideration to the borrower’s current financial condition, historical repayment performance and other factors.  Accrual of interest is resumed only when (i) principal and interest are brought fully current, and (ii) such loan is either considered, in management’s judgment, to be fully collectible or otherwise well secured and in the process of collection.

The following table sets forth information about non-performing assets at the dates indicated (dollars in thousands):

	June 30, 2008		December 31, 2007
Loans 90 Days Past Due and Still
Accruing Interest	$	548	$	-
Nonaccrual Loans		1,475		920
Total Nonperforming Loans		2,023		920
Other Real Estate Owned		1,537		-
Total Nonperforming Assets	$	3,560	$	920
Nonperforming Loans as a
Percentage of Total Loans		0.66%		0.43%
Allowance for Loan Losses as a Percentage
of Nonperforming Loans		151.26%		443.15%
Nonperforming Assets as a
Percentage of Total Assets		0.78%		0.34%

The increase in nonperforming assets resulted primarily from placing two SBA loans, one real estate construction loan and one commercial loan on nonaccrual, as well as taking two properties in settlement of SBA loan obligations.  The current economic slowdown has negatively affected the ability of borrowers to meet their payment obligations under the terms of the loans.  Management continues to actively evaluate the entire loan portfolio as part of their internal credit review process.

Provision and Changes in Allowance for Loan Losses

The following table summarizes the allocation of the allowance for loan losses by loan type as of the indicated date and the percent of loans in each category to total loans (dollars in thousands):

	June 30, 2008				December 31, 2007
	Amount		Loan Percent		Amount		Loan Percent
Commercial	$	2,325		26.5%	$	1,286		26.5%
Real Estate - Construction		1,637		13.0%		1,163		17.5%
Real Estate - Other		1,213		58.0%		1,468		52.7%
Consumer		210		2.5%		152		3.3%
Unallocated		-		n/a		8		n/a
Total	$	5,385		100.0%	$	4,077		100.0%

13

The following table presents an analysis of changes in the allowance for loan losses during the periods indicated (dollars in thousands):

		Three-month period ended June 30,					Six-month period ended June 30,
		Belvedere SoCal			Professional Business Bank		Belvedere SoCal			Professional Business Bank
		2008			2007		2008			2007
Balance at beginning of period	$	6,254		$	2,026		$	4,077		$	1,869
Allowance acquired at acquisition of Spectrum								1,436
Charge-offs:
Commercial		(110	)		-			(110	)		-
Real Estate - Construction		(1,796	)		-			(1,934	)		-
Real Estate - Other		-			-			-			-
Consumer		(67	)		(2	)		(161	)		(2	)
Total charge-offs		(1,973	)		(2	)		(2,205	)		(2	)
Recoveries:
Commercial		-			-			-			-
Real Estate - Construction		-			-			-			-
Real Estate - Other		-			-			-			-
Consumer		-			-			-			-
Total recoveries		-			-			-			-
Additional provision		1,104			380			2,061			537
Balance at end of period	$	5,385		$	2,404		$	5,385		$	2,404

At June 30, 2008 and December 31, 2007, the allowance for loan losses was 1.75% and 1.90%, respectively, of total loans.

Investment Portfolio

All investment securities are classified as available-for-sale. The following table summarizes the types, amounts, yields and maturities of investment securities held as of the dates indicated (dollars in thousands):

	June 30, 2008						December 31, 2007
					Weighted						Weighted
	Amortized		Market		Average		Amortized		Market		Average
	Cost		Value		Yield		Cost		Value		Yield
Available-for-Sale Securities
U.S. Government Agencies
Within One Year	$	8,524	$	8,543		3.86%	$	2,004	$	2,002		4.24%
One to Five Years		3,205		3,152		5.73%		2,024		2,024		5.42%
Subtotal		11,729		11,695		4.36%		4,028		4,026		4.40%
Government Guaranteed Collateralized Mortgage Obligations
After Five Years to Ten Years		904		895		4.29%		-		-
Subtotal		904		895		4.29%		-		-

14

States and Political Subdivisions
One to Five Years		337		327	3.57%		-		-
After Five Years to Ten Years		1,089		1,056	3.90%		-		-
Over Ten Years		7,623		7,335	4.17%		-		-
Subtotal		9,049		8,718	4.12%		-		-
Mortgage-Backed Securities
Within One Year		1,680		1,689	3.25%		-		-
One to Five Years		2,434		2,444	4.41%		1,230		1,231	4.16%
After Five Years to Ten Years		4,448		4,337	4.87%		558		559	4.98%
Over Ten Years		2,216		2,180	4.98%		2,953		2,970	4.78%
Subtotal		10,778		10,650	4.53%		4,741		4,760	4.84%
Total	$	32,460	$	31,958	4.35%	$	8,769	$	8,786	4.56%

Item 3.Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss in a financial instrument arising from adverse changes in market prices, interest rates, foreign currency exchange rates, commodity prices and equity prices. SoCal's market risk arises primarily from interest rate risk inherent in its lending, investment and deposit taking activities. Management uses various asset/liability strategies to manage the re-pricing characteristics of SoCal's earning assets and funding liabilities to ensure that exposure to interest rate fluctuations is within its guidelines of acceptable risk-taking. Hedging strategies, including the terms and pricing of loans, investments, deposits and borrowings, are used to reduce mismatches in interest rate re-pricing opportunities of portfolio assets and their funding sources.

Interest rate risk is addressed by the Asset Liability Management Committee (“ALCO”) which is comprised of executive officers of SoCal. The ALCO monitors interest rate risk by analyzing the potential impact on the net value of equity and net interest income from potential changes in interest rates, and considers the impact of alternative strategies or changes in balance sheet structure. The ALCO manages SoCal's balance sheet in part to maintain, within acceptable ranges, the potential impact on net value of equity and net interest income despite fluctuations in market interest rates.

Exposure to interest rate risk is reviewed on at least a quarterly basis by the ALCO and the Board of Directors. Interest rate risk exposure is measured using interest rate sensitivity analysis to determine the change in net portfolio value in the event of hypothetical changes in interest rates. If potential changes to the net value of equity and net interest income resulting from hypothetical interest rate changes are not within the limits established by the Board of Directors, management may adjust the asset and liability mix to bring interest rate risk within approved limits.

There have been no significant changes in SoCal's exposure to interest rate risk previously disclosed in SoCal's 10-KSB filed with the Securities and Exchange Commission on March 31, 2008.

Item 4.  Controls and Procedures

Evaluation of Controls and Procedures

With the participation of management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of SoCal's disclosure controls and procedures (as defined in Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) were evaluated as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, SoCal's Chief Executive Officer and Chief Financial Officer have concluded that:

(a)           information required to be disclosed by SoCal in this Quarterly Report on Form 10-Q and the other reports which SoCal files or submits under the Exchange Act would be accumulated and communicated to SoCal's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure;

(b)           information required to be disclosed by SoCal in this Quarterly Report on Form 10-Q and the other reports which SoCal files or submits under the Exchange Act would be recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and

(c)           SoCal's disclosure controls and procedures are effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that material information relating to SoCal and its consolidated subsidiary is made known to them, particularly during the period for which periodic reports, including this Quarterly Report on Form 10-Q, are being prepared.

Changes in Internal Control over Financial Reporting

There were no changes during the period covered by this Quarterly Report on Form 10-Q in SoCal's internal control over financial reporting (as defined in Rule 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

15

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

There have been no material changes in legal proceedings as described in the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2007.

Item 1A.  Risk Factors

There have been no material changes in the discussion pertaining to risk factors found in “Business – Factors that may Affect our Performance” that was provided in the December 31, 2007 Form 10-KSB.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

SoCal, on January 31, 2008, also completed its sale of  $22 million of its common stock at a price of $16.75 per share to Belvedere Capital Fund II L.P. (the “Fund”) for cash to fund the cash portion of the Spectrum acquisition.  The sale of common stock to the Fund was exempt from registration under the Securities Act of 1933 pursuant to section 4(2) as it did not involve any public offering.  The purchase price per share was calculated as the average closing bid price of SoCal’s common stock on the OTC Bulletin Board over the five trading days preceding the closing of the transaction.  The price was within the range of fair prices as determined by a financial advisor hired by SoCal.  After the sale of the shares, the Fund now owns approximately 73% of SoCal’s common stock on a fully diluted basis.  The stock purchase agreement also provided for a transaction fee of $740,000 payable by SoCal to the Fund in consideration for the services provided by the Fund to SoCal in connection with the Spectrum Bank acquisition.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Submission of Matters to a Vote of Security Holders

SoCal held its Annual Meeting of Shareholders on June 23, 2008.  The following matters were presented and voted on at the meeting:

1.      Election of Directors.  The following, all of which were the incumbent directors of the Company, were elected to serve until the next annual meeting of shareholders.  The directors elected were:

	Votes	Votes
	For	Withheld
William Baribault	2,900,437	28,936
Alison Davis	2,899,351	30,022
Justin Evans	2,900,437	28,936
Alan Lane	2,900,437	28,936
Larry Tashjian	2,900,437	28,936

2.      Election of Independent Accounting Firm.  The election of Perry-Smith, LLP as SoCal’s independent registered public accounting firm for the year ending December 31, 2008 was ratified with 2,900,233 shares voting for, 14,138 shares voting against, 15,002 shares abstaining.

Item 5.  Other Information

None.

Item 6.  Exhibits

31.1	Rule 15d-14(a) Certification by Chief Executive Officer
31.2	Rule 15d-14(a) Certification by Chief Financial Officer
32.1	Section 1350 Certifications
10.1	Baribault Employment Agreement
10.2	Baribault Time-Vest Option Agreement
10.3	Baribault Performance-Vest Option Agreement
10.4	Baribault Modified Time-Vest Option Agreement

______________________

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

BELVEDERE SOCAL
By:	/s/    WILLIAM BARIBAULT
	William Baribault President and Chief Executive Officer (Principal Executive Officer)
Dated: August 14, 2008
BELVEDERE SOCAL
By:	/s/    MICHAEL McCALL
	Michael McCall Chief Financial Officer (Principal Financial Officer)
Dated: August 14, 2008

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EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, William Baribault, President and Chief Executive Officer (Principal Executive Officer) of Belvedere SoCal, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2008 of Belvedere SoCal;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent function):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 14, 2008

/s/    WILLIAM BARIBAULT        

William Baribault

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Michael McCall, Chief Financial Officer (Principal Financial Officer) of Belvedere SoCal, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2008 of Belvedere SoCal;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent function):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 14, 2008

/s/    MICHAEL McCALL

Michael McCall

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to the requirement set forth in 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Corporate Fraud Accountability Act of 2002, William Baribault and Michael McCall each hereby certify as follows:

1. They are the duly appointed Chief Executive Officer and Chief Financial Officer, respectively, of Belvedere SoCal, a California Corporation (the “Company”).

2. Based on their knowledge, the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, and to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934 and the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

IN WITNESS WHEREOF, the undersigned have set their hands hereto as of this 14th day of August, 2008.

/s/    WILLIAM BARIBAULT        

William Baribault

President and Chief Executive Officer

(Principal Executive Officer)

/s/    MICHAEL McCALL        

Michael McCall

Chief Financial Officer

(Principal Financial Officer)

EX-10.1

Exhibit 10.1

 EMPLOYMENT AGREEMENT

THIS AGREEMENT is dated as of August 14, 2008 (the “Execution Date”), between Belvedere SoCal (“SoCal”), Professional Business Bank ("PBB"), and William Baribault (“Executive”) for the purposes set forth in this agreement (the “Agreement”).

WHEREAS, SoCal is a California corporation and bank holding company registered under the Bank Holding Company Act of 1956, as amended, subject to the supervision and regulation of the Board of Governors of the Federal Reserve System (“FRB”);

WHEREAS, SoCal is the parent holding company of PBB, a California chartered banking corporation and wholly-owned subsidiary of SoCal, subject to the supervision and regulation of the California Department of Financial Institutions (“DFI”) and Federal Deposit Insurance Corporation (“FDIC”);

WHEREAS, it is the intention of the parties to enter into an employment agreement for the purposes of securing Executive’s services as the President and Chief Executive Officer of SoCal and PBB (together, the “Company").

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, SoCal, PBB and Executive agree as follows:

1.           TERM.  Subject to the provisions for earlier termination hereinafter provided, Executive’s employment hereunder shall be for a term that commenced on February 28, 2008 (the “Effective Date”) and ending on the fifth anniversary of the Effective Date (the “Term”).  Executive acknowledges that all amounts that have become due and payable under this Agreement prior to the Execution Date have been paid or provided to Executive by the Company.

2.           POSITION, DUTIES AND RESPONSIBILITIES.  During the Term, the Company will employ Executive, and Executive agrees to be employed as the President and Chief Executive Officer of SoCal and the President and Chief Executive Officer of PBB.  In such employment capacity, Executive will have such duties and responsibilities as are normally associated with such position and will report to SoCal’s Executive Chairman of the Board (currently Alan J. Lane) or his designee.  During the Term, and except as set forth on Schedule 1, Executive shall devote his entire business time, attention and energies to the business and affairs of the Company, to the performance of Executive’s duties under this Agreement and to the promotion of the Company's interests.  Notwithstanding the foregoing, subject to Section 11 below, nothing in this Agreement shall be construed to limit Executive’s ability to provide services to or participate in non-profit, charitable or civic organizations or to manage personal investments, including personal investment vehicles, to the extent that such activities do not materially interfere with Executive’s performance of his duties hereunder.  Executive acknowledges that Executive’s services as President and Chief Executive Officer of the Company shall constitute Executive’s principal business activity.  During the Term, the geographic location where Executive's primary office will be located will be in the Company’s principal offices located at 199 South Los Robles Avenue, Suite 130, Pasadena, CA 91101, but Executive may also work from any location Executive chooses.  Notwithstanding the foregoing, the Company may from time to time require Executive to travel temporarily to other locations on the Company’s business.  At the Company’s request, Executive will serve the Company and/or its subsidiaries and affiliates in other capacities in addition to the foregoing.  In the event that Executive serves in any one or more of such additional capacities, Executive’s compensation will not be increased beyond that specified in this Agreement.  In addition, in the event Executive’s service in one or more of such additional capacities is terminated, Executive’s compensation, as specified in this Agreement, will not be diminished or reduced in any manner as a result of such termination for so long as Executive otherwise remains employed under the terms of this Agreement.

3.           BASE COMPENSATION.  During the Term, the Company will pay Executive a base salary of $300,000 per year, less payroll deductions and all required withholdings, payable in accordance with the Company’s normal payroll practices and prorated for any partial pay period of employment.  Executive’s base salary shall be subject, in the sole discretion of the Board of Directors of SoCal (the “Board”), to (i) increase only based on the Board's annual review and (ii) increase pursuant to the Company’s policies as in effect from time to time, and, pursuant to the growth of the Company (such base salary, as may be increased pursuant to this Section 3, the “Base Compensation”).

4.           ANNUAL BONUS.  In addition to the Base Compensation, during the Term, Executive will be eligible to participate in the Company’s incentive bonus plan applicable to senior executives of the Company.  The amount of Executive’s annual bonus will be based on the attainment of performance criteria established and evaluated by the Company in accordance with the terms of such bonus plan as in effect from time to time, provided that, subject to the terms of such bonus plan, Executive’s target annual bonus shall be one hundred percent (100%) of Base Compensation per year, pro-rated in accordance with Sections 4(a) or 4(b) below, as applicable, for any partial year of service in which an annual bonus is earned.  Each annual bonus shall, to the extent payable in accordance with the terms of the incentive bonus plan, be paid no later than March 15th of the year following the year in which such annual bonus is earned.  Each annual bonus shall be paid in cash or, at the election of Executive made at least thirty (30) days prior to the payment date (or such other date as may be determined by the Board), in whole or in part in a number of fully vested shares of SoCal common stock equal to the dollar amount of the bonus payable divided by the Fair Market Value (as defined in the SoCal 2007 Equity Incentive Plan (the “Plan”)) of a share of SoCal common stock on the date preceding the date on which the bonus is paid.  In the event that Executive elects to receive an annual bonus in shares, SoCal shall issue such shares to Executive under the Plan and such shares shall be subject to the terms and conditions of the Plan (including, without limitation, the limits set forth in Section 3 and Section 6(c) of the Plan) and an award agreement in a form prescribed by the Company.

The term "annual" as used in this Agreement shall be deemed to be with reference to each calendar year during the Term. Further, to the extent that this Agreement is in effect for less than any full calendar year, and unless otherwise expressly provided herein, the following calculations shall apply:

a.           For the first year of the Term (calendar year 2008), any benefit amount calculated on an annual basis for such year shall be determined by multiplying the full amount which Executive was eligible to be paid for such year by a fraction, the numerator of which is the number of days in the calendar year remaining after the Effective Date and the denominator of which equals 365; and

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b.           With respect to calendar year 2013 (if Executive remains employed by the Company under this Agreement through the fifth anniversary of the Effective Date), any benefit amount calculated on an annual basis for such year shall be determined by multiplying the full amount which Executive was eligible to be paid for such year by a fraction, the numerator of which is the number of days in the calendar year up until the effective date of Executive's termination and the denominator of which equals 365.

5.           STOCK OPTIONS.

a.           Initial Option.  The Company, on February 27, 2008 (the “Initial Grant Date”), granted to Executive a nonqualified stock option to purchase 99,774 shares of SoCal common stock, which number is equal to 3.00% of the total number of shares of SoCal common stock outstanding as of the Initial Grant Date (the “Initial Option”), in the following proportions: 50% Performance-Vested Options, 17% Time-Vested Options, and 33% Modified Time-Vested Options, each substantially in the applicable form stock option agreement attached hereto as Exhibits A, B and C (together, the “Option Agreements”).

b.           Subsequent Acquisition Make-Whole Option.  In addition, provided that Executive is then employed by the Company, in the event that (i) the Company consummates an acquisition transaction in which the holders of SoCal common stock immediately prior to such transaction continue, immediately after such transaction, to control more than 50% of the total outstanding shares of SoCal common stock (or equity securities of the surviving entity if SoCal is not the surviving entity (any such equity securities, “New Equity”)), and (ii) the total number of shares of SoCal common stock (or New Equity) outstanding immediately after the consummation of such acquisition transaction exceeds the total number of shares of SoCal common stock outstanding immediately prior to the consummation of such transaction, as determined in the sole and absolute discretion of the Company (any such excess, the “Transaction Share Increase”), then SoCal (or the surviving entity) shall, on the thirtieth calendar day (or, if not a trading day, the next succeeding trading day) following the consummation of such acquisition, grant to Executive a nonqualified option to purchase a number of shares of SoCal common stock (or New Equity) equal to 3.00% of the Transaction Share Increase (the “Subsequent Acquisition Make-Whole Option” and, together with the Initial Option, the “Options”).

c.           Option Terms.  Each Option has been or shall be granted at an exercise price per share equal to the Fair Market Value of a share of SoCal common stock on the applicable date of grant.  The terms and conditions of the Options, including without limitation any applicable vesting and forfeiture conditions, have been or shall be set forth in appropriate  Option Agreements.  The Options shall, subject to the provisions of this Section 5, be governed in all respects by the terms of the Plan and the applicable Option Agreement.

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6.           BENEFITS AND VACATION.  During the Term, (i) Executive and his dependents shall be reimbursed by the Company throughout the term for all medical and dental insurance premiums incurred by him for him and his Spouse consistent with any plans, practices, policies and programs maintained or sponsored by the Company from time to time which are applicable to other senior executives of the Company, (ii) Executive shall be eligible to participate in all incentive, savings and retirement plans, practices, policies and programs maintained or sponsored by the Company from time to time which are applicable to other senior executives of the Company, including without limitation, a Company 401(k) plan, subject to the terms and conditions thereof, and (iii) Executive shall be eligible for standard benefits, such as paid time off and holidays, to the extent applicable generally to other senior executives of the Company, provided that, during the Term, Executive shall be entitled to no less than twenty (20) vacation days per year (i.e., four weeks of vacation), pro-rated for any partial year of service, in all cases, subject to the terms and conditions of the applicable Company plans or policies.  In addition, without limiting the generality of the foregoing, the Company shall make available to Executive any life and long-term disability insurance policies which it may provide for other senior executives of the Company on the same terms and conditions as are made available to such other senior executives or, at Executive's election, an amount equal to the premiums payable by the Company for such policies as an expense reimbursement.

7.           EXPENSES.  During the Term, Executive shall be entitled to receive prompt reimbursement of all reasonable business expenses incurred by Executive in accordance with Company expense reimbursement policy applicable to its senior executives, as in effect from time to time (plus such additional expense amounts as Executive, in his reasonable discretion and subject to Company approval, deems necessary and appropriate to carry out his duties as Chief Executive Officer and President of each of the Companies) including expenses of up to $1,300 per month, pro-rated for any partial month of service, associated with the purchase or lease, operation and maintenance, of an automobile.  To the extent that any such expenses are deemed to constitute compensation to Executive, including without limitation any auto reimbursement expenses or insurance reimbursements pursuant to Section 6 above, such expenses shall be reimbursed by December 31 of the year following the year in which the expense was incurred.  The amount of any such expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year and Executive’s right to reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

8.           TERMINATION OF EMPLOYMENT.

a.           Termination Without Cause. The Company may terminate Executive’s employment without Cause (as defined below) at any time during the Term upon thirty (30) days’ written notice provided to Executive in accordance with Section 10 below, or in the Company’s sole discretion, payment of Executive’s Base Salary for such period in lieu of notice.  If Executive's termination of employment is without Cause and is also a “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the “Code”), and Treasury Regulation Section 1.409A-1(h)) (“Separation from Service”), the Company shall promptly or, in the case of obligations described in clause (iv) below, as such obligations become due, pay or provide to Executive, (i) Executive’s earned but unpaid Base Compensation accrued through the date of such Separation from Service (the “Termination Date”), (ii) accrued but unpaid vacation time through the Termination Date, (iii) reimbursement of any business expenses incurred by Executive prior to the Termination Date that are reimbursable under Section 7 above, (iv) any vested benefits and other amounts due to Executive under any plan, program or policy of the Company, and (v) any payment in lieu of notice of termination under this Section 8(a) (together, the “Accrued Obligations”).  In addition, subject to Section 8(f) below and Executive’s execution and non-revocation of a binding release in accordance with Section 8(g) below, in the event Executive experiences a Separation from Service due to a termination by the Company without Cause, the Company shall pay or provide to Executive (the “Severance”):

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(1)           a lump-sum cash payment equal to the sum of (A) Executive’s Base Compensation at the rate in effect as of the Termination Date, plus (B) a pro rata portion of Executive’s target annual bonus for the calendar year in which the Termination Date occurs, determined by multiplying the target annual bonus by a fraction, the numerator of which equals the lesser of (i) the number of days elapsed in the calendar year of termination through the Termination Date and (ii) the number of days elapsed from the Effective Date through the Termination Date and the denominator of which equals 365, provided, however, that if a termination described in this Section 8(a) occurs within twenty-four months after the consummation of an Acquisition (as defined below), then the payment pursuant to this Section 8(a)(1) shall instead equal 200% of the sum of (A) Executive’s Base Compensation at the rate in effect as of the Termination Date (disregarding any purported reduction of such Base Compensation), plus (B) the annual bonus amount paid to Executive during the twelve (12) months immediately preceding the Termination Date, or if an annual bonus was not paid to Executive during such period, Executive’s target annual bonus for the calendar year in which the Termination Date occurs,and

(2)           at the Company’s expense, continuation of group healthcare coverage for Executive and his legal dependents until the earlier of twelve months from the Termination Date or such time as Executive becomes eligible to receive medical benefits under another group health plan, provided that Executive properly elects continuation healthcare coverage under Section 4980B of the Code and the regulations thereunder; following such continuation period, any further continuation of such coverage under applicable law shall be at Executive’s sole expense.

Subject to Sections 8(f) and 8(g) below, the Severance amounts described in Section 8(a)(1) above shall be paid to Executive no later than 15 calendar days following the Termination Date, which payment schedule is intended to satisfy the short-deferral exemption under Treasury Regulation Section 1.409A-1(b)(4).  For the avoidance of doubt, in no event shall the Severance, if payable, be subject to offset in respect of any claims by the Company.

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b.           Resignation.  Executive may terminate his employment at any time upon thirty (30) days’ written notice provided to Company in accordance with Section 10 below, provided, that the Company may, in its sole discretion, waive such notice period without payment in lieu thereof, and Executive shall be entitled to receive the Accrued Obligations promptly or, in the case of benefits described in Section 8(a)(iv) above, as such obligations become due.

c.           Death; Disability.  If Executive dies during the Term or his employment is terminated due to his total and permanent disability (within the meaning of Section 22(e)(3) of the Code) (“Disability”), Executive or his estate, as applicable, shall be entitled to receive the Accrued Obligations promptly or, in the case of benefits described in Section 8(a)(iv) above, as such obligations become due.

d.           Resignation for Good Reason. As used herein, “Good Reason” shall mean the occurrence of any of the following, without Executive’s express written consent: (i) a material reduction of Executive’s duties or responsibilities; (ii) a material reduction by Company of Executive’s Base Compensation as in effect immediately prior to such reduction; (iii) the relocation of Executive’s principal work location to a facility or a location that constitutes a material change in the geographic location at which Executive provides services (within the meaning of Section 409A, as defined below); or (iv) a material breach by the Company of Sections 3, 4, 5, 6 or 7 of this Agreement; provided, that no resignation for Good Reason shall be effective unless and until (A) Executive has first provided the Company with written notice specifically identifying the acts or omissions constituting the grounds for “Good Reason” within thirty (30) days after Executive has or should reasonably be expected to have had knowledge of the occurrence thereof, (B) the Company has not cured such acts or omissions within thirty (30) days of its actual receipt of such notice, and (C) the effective date of Executive’s termination for Good Reason occurs no later than ninety (90) days after the initial existence of the facts or circumstances constituting Good Reason.

If Executive's termination of employment is for "Good Reason" and is also a Separation from Service, then Company shall have the same obligations as are set forth in Section 8.a. above under the circumstance when a termination without Cause is also a Separation from Service.

e.           Cause.  The Company may terminate Executive’s employment for Cause by providing notice to Executive in accordance with Section 10 below.  If the Company terminates Executive’s employment for Cause, Executive shall be entitled to receive the Accrued Obligations promptly or, in the case of benefits described in Section 8(a)(iv) above, as such obligations become due.

f.            Potential Six-Month Delay.  Notwithstanding anything to the contrary in this Agreement, compensation and benefits that become payable in connection with a termination of employment (if any), including without limitation any Severance payments, shall be paid to Executive during the 6-month period following his Separation from Service only to the extent that the Company reasonably determines that paying such amounts at the time or times indicated in this Agreement will not cause Executive to incur additional taxes under Code Section 409A (together with Department of Treasury regulations issued thereunder, “Section 409A”).  If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such 6-month period (or such earlier date upon which such amount can be paid under Section 409A without being subject to such additional taxes, including as a result of Executive’s death), the Company shall pay to Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to Executive during such 6-month period.

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g.           Release.  Executive’s right to receive the Severance payments and benefits set forth in this Section 8 is conditioned on and subject to the execution and non-revocation by Executive and the Company of a mutual, general release of claims in a form reasonably acceptable to both parties, provided, however, that the Release shall not apply to (i) claims by Executive against the Company in his capacity as an optionholder or shareholder of the Company, or (ii) claims by the Company against Executive for acts of fraud, embezzlement, breach of fiduciary duty or other criminal acts.

h.           Termination of Offices and Directorships.  Upon termination of Executive’s employment for any reason, Executive shall be deemed to have resigned from all offices and directorships, if any, then held with the Company or any affiliate, and shall take all actions reasonably requested by the Company to effectuate the foregoing, provided, however, that if Executive’s employment terminates other than due to his voluntary resignation, a termination by the Company for Cause or due to his death or Disability, this Section 8(h) shall not apply to Executive’s service as a member of the Board, which service shall be governed by the terms and conditions applicable to such service prior to the Effective Date, and the Company shall consider in good faith the continuation of Executive’s service on the Board.  To the extent permissible under applicable law, including without limitation, applicable fiduciary duties, if Executive’s service on the Board is terminated in connection with his termination of employment, other than due to a termination by the Company for Cause or Executive’s death or Disability, the Company shall, contemporaneously with such termination, cause Executive to serve (or to continue to serve) on the Company’s Advisory Board in accordance with the SoCal Interim Bank Advisory Board Charter, as in effect from time to time.

i.           Definitions.  For purposes of this Agreement:

(1)           “Acquisition” means (i) any consolidation or merger of the Company with or into any other corporation or other entity or person in which the stockholders of the Company prior to such consolidation or merger own, directly or indirectly, less than fifty percent (50%) of the continuing or surviving entity’s voting power immediately after such consolidation or merger, excluding any consolidation or merger effected exclusively to change the domicile of the Company; or (ii) a sale or other disposition of all or substantially all of the stock or assets of the Company.

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(2)           “Cause” shall mean (A) Executive willfully fails to perform the duties which Executive is required to perform hereunder, (B) Executive willfully engages in illegal activity which materially adversely affects the Company’s reputation in the community or which evidences Executive’s lack of fitness or ability to perform his duties as reasonably determined by the Board in good faith, (C) Executive willfully engages in the falsification of reports or makes material, intentional misrepresentations or omissions of information supplied to PBB, SoCal or to regulatory agencies, (D) Executive willfully commits any act which would cause termination of coverage under PBB’s Bankers’ Blanket Bond, (E) Executive willfully breaches a fiduciary duty, exhibits dishonesty or deliberately or repeatedly disregards material policies or procedures of the Company, (F) Executive willfully breaches this Agreement in any material respect, (G) Executive willfully engages in conduct or acts of moral turpitude that are materially injurious to the Company or any of its subsidiaries and affiliates, (H) Executive is suspended or temporarily or permanently removed or prohibited from participating in the conduct of the business of the Company by the FDIC, DFI, FRB or any other banking authority, or (I) PBB is in default under the provisions of 12 U.S.C. Section 1813(x)(1).  Notwithstanding the foregoing, Executive’s employment with the Company shall not be deemed to have been terminated for Cause unless the Company provides written notice to Executive in accordance with Section 10 below of its intention to terminate his employment for Cause, setting forth the specific facts or circumstances constituting Cause and, in the case of facts or circumstances that are capable of cure, Executive has either failed to cure, or has failed to take reasonable steps toward curing, such facts or circumstances within fifteen days of such notice (or, in the case that reasonable steps have been taken within fifteen days of such notice, has failed to cure within forty-five days of such notice).  In addition, notwithstanding any other provision of this Agreement, the Company shall have no right to terminate Executive's employment for “Cause” to the extent that the facts and/or circumstances relating to such termination arise, in whole or in part, from the operation of the Company, or any conduct by, or related to, the Company, or any parent, subsidiary or other affiliate of the Company, in any case, occurring prior to the Effective Date.

9.           INTERNAL REVENUE CODE SECTION 280G.

a.           Gross-Up Payment.  Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment (as defined below) would be subject to the Excise Tax (as defined below), then Executive shall be entitled to receive an additional payment (the “Excise Tax Gross-Up Payment”) in an amount equal to 50% of the Excise Tax.  For purposes of determining the amount of any Excise Tax Gross-Up Payment, Executive shall be considered to pay federal income tax at Executive’s actual marginal rate of federal income taxation in the calendar year in which the Excise Tax Gross-Up Payment is to be made and state and local income taxes at Executive’s actual marginal rate of taxation in the state and locality of Executive’s residence on the date on which the Excise Tax Gross-Up Payment is calculated for purposes of this Section 9, net of Executive’s actual reduction in federal income taxes which could be obtained from deduction of such state and local taxes, and taking into consideration the phase-out of Executive’s itemized deductions under federal income tax law.

b.           Determinations.  Subject to the provisions of Section 9(c) below, all determinations required to be made under this Section 9, including whether and when an Excise Tax Gross-Up Payment is required, the amount of such Excise Tax Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by such nationally recognized accounting firm as may be selected by the Company (the “Accounting Firm”); provided, that the Accounting Firm’s determination shall be made based upon “substantial authority” within the meaning of Section 6662 of the Code.  The Accounting Firm shall provide detailed supporting calculations both to the Company and Executive within fifteen business days of the receipt of notice from Executive that there has been a Payment or such earlier time as is requested by the Company.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  Any Excise Tax Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Company to Executive within fifteen days of the receipt of the Accounting Firm’s determination.  Any determination by the Accounting Firm shall be binding upon the Company and Executive, unless the Company obtains an opinion of outside legal counsel, based upon at least “substantial authority” within the meaning of Section 6662 of the Code, reaching a different determination, in which event such legal opinion shall be binding upon the Company and Executive.  Notwithstanding anything herein to the contrary, in no event shall any Excise Tax Gross-Up Payment to be paid by the Company under this Section 9 be made later than the end of Executive’s taxable year next following Executive’s taxable year in which Executive remits the related taxes.  Any costs and expenses incurred by the Company on behalf of Executive under this Section 9 due to any tax contest, audit or litigation will be paid by the Company promptly, and in no event later than the end of Executive’s taxable year following Executive’s taxable year in which the taxes that are the subject of the tax contest, audit or litigation are remitted to the taxing authority, or where as a result of such tax contest, audit or litigation no taxes are remitted, the end of Executive’s taxable year following Executive’s taxable year in which the audit is completed or there is a final and non-appealable settlement or other resolution of the contest or litigation.

c.           Notification; Contest.  Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require payment by the Company of the Excise Tax Gross-Up Payment.  Such notification shall be given as soon as practicable, but no later than 15 business days after Executive is informed in writing of such claim.  Executive shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid.  Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due).  If the Company notifies Executive in writing prior to the expiration of such period that the Company desires to contest such claim, Executive shall:

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(i)  give the Company any information reasonably requested by the Company relating to such claim,

(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(iii) cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) permit the Company to participate in any proceedings relating to such claim;

provided, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest.  Without limitation on the foregoing provisions of this Section 9(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount.

d.           Refund.  If, after the receipt by Executive of an Excise Tax Gross-Up Payment, Executive becomes entitled to receive any refund with respect to the Excise Tax to which such Excise Tax Gross-Up Payment relates, Executive shall promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto).

e.          Excise Tax Withholding.  Notwithstanding any other provision of this Section 9, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of Executive, all or any portion of any Excise Tax Gross-Up Payment, and Executive hereby consents to such withholding.

f.           Deduction Loss.  For the avoidance of doubt, the the Company (and its successor) shall be solely responsible for any loss of deductibility arising in connection with Code Section 280G with respect to any Payments.

g.          Definitions.  The following terms shall have the following meanings for purposes of this Section 9:

(i)          “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

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(ii)         “Parachute Value” of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2) of the Code, as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

(iii)        “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or payable pursuant to this Agreement or otherwise, but shall exclude any Excise Tax Gross-Up Payment.

(iv)        “Safe Harbor Amount” shall mean 2.99 times Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Code.

10.           NOTICE.  Any notice or other communication required or permitted under this Agreement shall be effective only if it is in writing and delivered personally or sent by fax, email (followed by confirmation in writing) or registered or certified mail, postage prepaid, addressed as follows (or if it is sent through any other method agreed upon by the parties):

If to the Company:

Belvedere SoCal

199 South Los Robles Ave.

Suite 110

Pasadena, CA 91101

Attention: Alan Lane

Facsimile: (626) 395-7000

E-mail: alane@probizbank.com

If to Executive: to Executive’s most current home address on file with the Company’s Human Resources Department, or to such other address as any party hereto may designate by notice to the other in accordance with this Section 10, and shall be deemed to have been given upon receipt.

11.           COVENANTS.

a.           Noncompetition, Nonsolicitation and Nondisclosure by Executive.

(1)           Executive hereby agrees that he shall not, during the Term, directly or indirectly, whether as an employee, employer, consultant, agent, principal, stockholder, officer, director, or in any other individual or representative capacity, engage or participate in any competitive banking or financial services business.

(2)           Executive hereby agrees that he shall not, during the Term and for the nine (9)-month period immediately following termination of Executive’s employment hereunder (the “Restricted Period”), solicit, encourage or assist, directly, indirectly or in any manner whatsoever, any employees of the Company or its affiliates or subsidiaries (including any former employees who voluntarily terminated employment with the Company within a twelve (12)-month period prior to Executive’s termination of employment with the Company) to resign or to apply for or accept employment with any other competitive banking or financial services business within the counties in California in which the Company has located its offices.  In addition, Executive hereby agrees that he shall not, at any time, use any Proprietary Information (as defined below) to solicit, encourage or assist, directly, indirectly or in any manner whatsoever, any customer, person or entity that has a business relationship with the Company or, during the twelve (12)-month period prior to Executive’s termination of employment with the Company, was engaged in a business relationship with the Company, to terminate such business relationship and engage in a business relationship with any other competitive banking or financial services business within the counties in California in which the Company

has located its offices.

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b.           Disclosure of Information.  Executive shall not, at any time, without the prior written consent of the Board or except as required by law to comply with legal process including, without limitation, by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process, disclose to anyone any financial information, trade or business secrets, customer lists, computer software or other information concerning the business or operations of the Company or its affiliates or subsidiaries (the “Proprietary Information”); provided, that Proprietary Information shall not include information (i) in or which enters the public domain (other than by breach of Executive’s obligations hereunder), (ii) acquired by Executive other than in connection with his employment, or (iii) that is disclosed to Executive by a third party who Executive reasonably believes is not obligated to the Company to keep such information confidential.  Executive further recognizes and acknowledges that any financial information concerning any customers of the Company or its affiliates or subsidiaries is strictly confidential and is a valuable, special and unique asset of the Company’s business which also constitutes Proprietary Information.  Executive shall not, at any time, without such consent or except as required by law, disclose to anyone said financial information or any part thereof, for any reason or purpose whatsoever.  In the event Executive is required by law to disclose such information described in this Section 11(b), Executive will provide the Company with prompt notice of such request so that it may consider seeking a protective order.  If, in the absence of a protective order or the receipt of a waiver hereunder, Executive is nonetheless, in the opinion of counsel, compelled to disclose any of such information to any tribunal or any other party, then Executive may disclose (on an “as needed” basis only) such information to such tribunal or other party without liability hereunder.  Notwithstanding the foregoing, Executive may disclose such information concerning the business or operations of the Company and its affiliates and subsidiaries as reasonably necessary in the proper performance of Executive’s duties and responsibilities hereunder or as may be required by the FRB, DFI, FDIC or other regulatory agency having jurisdiction over the operations of the Company in connection with an examination of the Company or other proceeding conducted by such regulatory agency.

c.           Non-Disparagement.  During the Term and for a period of twelve (12) months following termination of this Agreement and Executive’s employment hereunder, (i) Executive agrees that he shall not publicly or privately disparage, defame or criticize the Company, its shareholders, its affiliates, subsidiaries, officers or directors, and (ii) the Company, and each of them, agrees that (i) none of its officers or directors shall publicly or privately disparage, defame or criticize Executive, and (ii) it will take reasonable steps, as determined in the sole discretion of the Company, to discourage its employees from publicly or privately disparaging, defaming or criticizing Executive.

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d.           Written, Printed or Electronic Material.  All written, printed and electronic material, notebooks and records including, without limitation, computer disks used by Executive in performing duties for the Company, other than Executive’s personal address lists, telephone lists, notes and diaries, are and shall remain the sole property of the Company.  Upon termination of Executive’s employment or earlier request by the Company, Executive shall promptly return all such materials (including all copies, extracts and summaries thereof) to the Company.

e.           Breach of Covenants.  Each party acknowledges that a breach by such party of any of the covenants or restrictions contained in this Section 11 will cause irreparable damage to other party, the exact amount of which will be difficult to ascertain, and that the remedies at law for any such breach will be inadequate.  Accordingly, each party agrees that if such party breaches or attempts to breach any such covenants or restrictions, the other party shall be entitled to temporary or permanent injunctive relief with respect to any such breach or attempted breach (in addition to any other remedies, at law or in equity, as may be available to such other party), without posting bond or other security.

12.           INDEMNIFICATION.  The Company and Executive acknowledge that they have entered into that certain Indemnification Agreement dated February 27, 2008 ("Indemnification Agreement") which shall govern all matters relating to indemnification of Executive by the Company.

13.           REPRESENTATIONS.  Executive hereby represents and warrants to the Company that (a) Executive is entering into this Agreement voluntarily and that the performance of his obligations hereunder will not violate any agreement between Executive and any other person, firm, organization or other entity, and (b) Executive is not bound by the terms of any agreement with any previous employer or other party to refrain from competing, directly or indirectly, with the business of such previous employer or other party that would be violated by his entering into this Agreement and/or providing services to the Company pursuant to the terms of this Agreement.

14.           CODE SECTION 409A.  To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A.  Notwithstanding any provision of this Agreement to the contrary, if at any time Executive and the Company mutually determine that any payments or benefits payable hereunder may be subject to Section 409A, the parties shall work together to adopt such amendments to this Agreement or take any other actions that the parties determine are necessary or appropriate to (i) exempt such payments and benefits from Section 409A and/or preserve the intended tax treatment of such payments or benefits, or (ii) comply with the requirements of Section 409A and thereby avoid the application of penalty taxes under Section 409A.

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15.           WITHHOLDING.  The Company may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

16.           ENTIRE AGREEMENT.  As of the Effective Date, this Agreement, together with any Option Agreement(s) and the Indemnification Agreement, constitutes the final, complete and exclusive agreement between Executive and the Company with respect to the subject matter hereof and replaces and supersedes any and all other agreements, offers or promises, whether oral or written, made to Executive by the Company or any representative thereof.  Executive agrees that any such agreement, offer or promise is hereby terminated and will be of no further force or effect, and that upon his execution of this Agreement, Executive will have no right or interest in or with respect to any such agreement, offer or promise.

17.           AMENDMENT.  The terms of this Agreement may not be amended or modified other than by a written instrument executed by the parties hereto or their respective successors.

18.           ACKNOWLEDGEMENT.  Executive hereby acknowledges (a) that Executive has consulted with or has had the opportunity to consult with independent counsel of his own choice concerning this Agreement, and has been advised to do so by the Company, and (b) that Executive has read and understands this Agreement, is fully aware of its legal effect, and has entered into it freely based on his own judgment.

19.           GOVERNING LAW.  This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to conflicts of laws principles thereof.

20.           NO WAIVER.  Failure by either party hereto to insist upon strict compliance with any provision of this Agreement or to assert any right such party may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

21.           ASSIGNMENT.  This Agreement is binding on and for the benefit of the parties hereto and their respective successors, heirs, executors, administrators and other legal representatives.  Neither this Agreement nor any right or obligation hereunder may be assigned by Executive.

22.           SEVERABILITY.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

23.           CONSTRUCTION.  The parties hereto acknowledge and agree that each party has reviewed and negotiated the terms and provisions of this Agreement and has had the opportunity to contribute to its revision.  Accordingly, the rule of construction to the effect that ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement.  Rather, the terms of this Agreement shall be construed fairly as to all parties hereto and not in favor or against any party by the rule of construction abovementioned.

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24.           COUNTERPARTS.  This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

25.           CAPTIONS.  The captions of this Agreement are not part of the provisions hereof, rather they are included for convenience only and shall have no force or effect.

[SIGNATURE PAGE FOLLOWS]

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

EXECUTIVE:

WILLIAM H. BARIBAULT

SOCAL:

BELVEDERE SOCAL

By:

Name: 

Title: 

PROFESSIONAL BUSINESS BANK

By: 

Name: 

Title: 

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BELVEDERE SOCAL

2007 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

Time Vested Option, Early Exercise Permitted

Pursuant to its 2007 Equity Incentive Plan, as amended from time to time (the “Plan”), Belvedere SoCal (the “Company”), hereby grants to the Optionee listed below (“Optionee”), an option to purchase the number of shares of the Company’s Common Stock set forth below (the “Option”), subject to the terms and conditions of the Plan and this Stock Option Agreement (this “Option Agreement”). Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement.

I. NOTICE OF STOCK OPTION GRANT

Optionee:	William Baribault
Date of Option Agreement:	August 14, 2008
Date of Grant:	February 27, 2008
Vesting Commencement Date:	November 23, 2007
Exercise Price per Share:	$15.00
Total Number of Shares Granted:	16,962
Total Exercise Price:	$254,430
Term/Expiration Date:	2/27/2018

Type of Option:	Non-Qualified Stock Option
Exercise Schedule:	¨  Same as Vesting Schedule  ý  Early Exercise Permitted

Vesting Schedule:

This Option is exercisable immediately, in whole or in part, at such times as are established by the Administrator, conditioned upon Optionee entering into a Restricted Stock Purchase Agreement with respect to any unvested Shares.  This Option or, if exercised prior to vesting, the Shares subject to this Option, shall vest, become exercisable and/or be released from the Company’s Repurchase Option, as set forth in the Restricted Stock Purchase Agreement attached hereto as Exhibit B-1, according to the following schedule:

Subject to the Optionee’s continued employment with the Company, the Option or Shares, as applicable, shall vest in full on the fifth anniversary of the Vesting Commencement Date specified above (the “Vesting Date”), provided, however, that in the event that either an Acquisition or a Qualifying Public Offering occurs prior to the Vesting Date, then the exercisability and vesting of the Option or Shares, as applicable, shall be accelerated and the Option or Shares, as applicable, shall vest in full on the date on which the Acquisition or Qualifying Public Offering occurs and, provided, further, that if the Optionee’s employment with the Company terminates by reason of a termination of employment by the Company without Cause, by the Optionee for Good Reason or due to the Optionee’s death or Disability (each as defined in that certain employment agreement between the Company and Optionee of even date herewith), in any case, prior to the vesting of the Option or the Shares, as applicable, then the Option or the Shares, as applicable, shall thereupon vest with respect to that number of Shares determined by multiplying the number of unvested Shares subject to the Option or unvested Shares, as applicable, by a fraction, (i) the numerator of which equals the number of full months elapsed from the Date of Grant through the date of termination, and (ii) the denominator of which equals sixty (60).

For purposes of this Agreement:

“Qualifying Public Offering” shall mean a sale (or the last in a series of sales) of Common Stock to the general public pursuant to one or more underwritten public offerings for cash in which either (i) holders of the Company’s Common Stock as of this Agreement’s Date of Grant have, in the aggregate such underwritten public offerings, sold more than fifty percent (50%) of the shares of Common Stock held by such holders, or (ii) (A) new primary shares of Common Stock comprising more than twenty-five percent (25%) of the Company’s total outstanding shares of Common Stock as of this Agreement’s Date of Grant are offered and (B) the average daily trading volume following such offering is greater than .5% of the Common Stock’s public float for twenty (20) consecutive trading days (the “Volume Condition”).  In the case of clause (ii) of the immediately preceding sentence, a Qualifying Public Offering shall be deemed to have occurred if and when the Volume Condition is satisfied.

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Summary of Vesting1

Date/Event	Percentage of Option or Shares Vested
Prior to fifth anniversary of Vesting Commencement Date (no Acquisition or Qualifying Public Offering)	0%
Acquisition or Qualifying Public Offering prior to fifth anniversary of Vesting Commencement Date	100%
Fifth anniversary of Vesting Commencement Date	100%
Termination by Company without Cause, by the Optionee fo Good Reason or due to the Optionee’s Disability	Pro rata as set forth above

Termination Period: Except in the event of a termination for Cause, this Option may be exercised, to the extent vested as of the date that Optionee’s employment with the Company terminates, for three (3) months after such termination of employment, or such longer period as may be applicable upon the death or Disability of Optionee as provided herein (or, if not provided herein, then as provided in the Plan), but in no event later than the Term/Expiration Date as set forth above.

II. AGREEMENT

1.           Grant of Option.  The Company hereby grants to the Optionee an Option to purchase the number of shares of Common Stock (the “Shares”) set forth in the Notice of Grant as defined above, at the exercise price per share set forth in the Notice of Grant (the “Exercise Price”).  Notwithstanding anything to the contrary anywhere else in this Option Agreement, this grant of an Option is subject to the terms and provisions of the Plan, which is incorporated herein by reference.  Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Plan.

2.           Exercise of Option.  This Option is exercisable as follows:

(a)           Right to Exercise.

(i)           This Option shall be exercisable cumulatively according to the vesting schedule set out in the Notice of Grant.  Alternatively, at the election of the Optionee, this Option may be exercised in whole or in part at such times as are established by the Administrator as to Shares which have not yet vested.  For purposes of this Option Agreement, this Option, or, if exercised prior to vesting, Shares subject to this Option, shall vest based on Optionee’s continued employment with the Company.  Vested Shares shall not be subject to the Company’s Repurchase Option (as set forth in the Restricted Stock Purchase Agreement).

1 This summary is qualified in its entirety by the Vesting Schedule above.  In the event of any conflict, the Vesting Schedule will control.

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(ii)          As a condition to exercising this Option for unvested Shares, the Optionee shall execute the Restricted Stock Purchase Agreement.

(iii)         This Option may not be exercised for a fraction of a Share.

(iv)         In the event of Optionee’s death, Disability or other termination of the Optionee’s employment with the Company, the exercisability of the Option shall be governed by Sections 7, 8 and 9 hereof.

(v)          In no event may this Option be exercised after the Term/Expiration Date of this Option as set forth in the Notice of Grant.

(b)           Method of Exercise.  This Option shall be exercisable by written notice to the Company (in the form attached as Exhibit A) (the “Exercise Notice”).  The Exercise Notice shall state the number of Shares for which the Option is being exercised, and such other representations and agreements with respect to such Shares of Common Stock as may be required by the Company pursuant to the provisions of the Plan.  The Exercise Notice shall be signed by Optionee and, together with an executed copy of the Restricted Stock Purchase Agreement, if applicable, shall be delivered in person or by certified mail to the Secretary of the Company.  The Exercise Notice and Restricted Stock Purchase Agreement shall be accompanied by payment of the Exercise Price, including payment of any applicable withholding tax.

No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise comply with all relevant provisions of all Applicable Laws and the requirements of any stock exchange upon which the Shares may then be listed.  Assuming such compliance, for income tax purposes, the Shares shall be considered transferred to Optionee on the date on which the Option is exercised with respect to such Shares.

3.            Optionee’s Representations.  If the Shares purchasable pursuant to the exercise of this Option have not been registered under the Securities Act at the time this Option is exercised or have ceased to be so registered, or if the Administrator otherwise requires, Optionee shall, concurrently with the exercise of all or any portion of this Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit  C.

4.            Lock-Up Period.  Optionee hereby agrees that, if so requested by the Company or any representative of the underwriters (the “Managing Underwriter”) in connection with any registration of the offering of any securities of the Company under the Securities Act, Optionee shall not sell or otherwise transfer any Shares or other securities of the Company during the 180-day period (or such longer period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company) (the “Market Standoff Period”) following the effective date of a registration statement of the Company filed under the Securities Act.  The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period and these restrictions shall be binding on any transferee of such Shares.  Notwithstanding the foregoing, the 180-day period may be extended for up to such number of additional days as is deemed necessary by the Company or the Managing Underwriter.

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5.            Method of Payment.  Payment of the Exercise Price shall be by any  of the following methods, or a combination thereof, at the election of the Optionee:

(a)          cash;

(b)          check;

(c)          with the consent of the Administrator, a full recourse promissory note bearing interest (at no less than such rate as is a market rate of interest and which then precludes the imputation of interest under the Code), payable upon such terms as may be prescribed by the Administrator and structured to comply with Applicable Laws;

(d)          with the consent of the Administrator, surrender of other Shares of Common Stock of the Company which have a Fair Market Value on the date of surrender equal to the Exercise Price of the Shares as to which the Option is being exercised;

(e)          with the consent of the Administrator, surrendered Shares issuable upon the exercise of the Option having a Fair Market Value on the date of exercise equal to the aggregate Exercise Price of the Option or exercised portion thereof;

(f)           with the consent of the Administrator, property of any kind which constitutes good and valuable consideration;

(g)           with the consent of the Administrator, delivery of a notice that the Optionee has placed a market sell order with a broker with respect to Shares then issuable upon exercise of the Option and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate Exercise Price; provided, that payment of such proceeds is then made to the Company upon settlement of such sale; or

(h)           with the consent of the Administrator, any combination of the foregoing methods of payment.

6.           Restrictions on Exercise.  This Option may not be exercised until the Plan has been approved by the stockholders of the Company.  If the issuance of Shares upon such exercise or if the method of payment for such Shares would constitute a violation of any Applicable Law, then the Option may not be exercised.  The Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation before allowing the Option to be exercised.

7.           Termination of Relationship.  If Optionee’s employment with the Company terminates (other than by reason of a termination by the Company for Cause or Optionee’s death or Disability), the Option, to the extent vested as of the date of such termination of employment shall remain exercisable for the Termination Period set out in the Notice of Grant (but in no event later than the Term/Expiration Date as set forth in the Notice of Grant).  To the extent that the Option is not vested on the date on which Optionee’s employment with the Company terminates, or if Optionee does not exercise this Option within the time specified herein, the Option shall terminate.

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8.           Termination for Cause.  If Optionee’s employment with the Company terminates by reason of a termination by the Company for Cause, the Option shall terminate as of the start of business on the date of Optionee’s termination, regardless of whether the Option is then vested and/or exercisable with respect to any Shares.

9.           Disability of Optionee.  If Optionee’s employment with the Company terminates as a result of his or her Disability, the Option, to the extent vested as of the date of such termination, shall remain exercisable for twelve (12) months following such date (and in no event later than the Term/Expiration Date set forth in the Notice of Grant).  To the extent that the Option is not vested at the date on which Optionee’s employment with the Company terminates or if Optionee does not exercise such Option within the time specified herein, the Option shall terminate.

10.         Death of Optionee.  If Optionee’s employment with the Company terminates as a result of his or her death, the Option, to the extent vested as of the date of death, shall remain exercisable for twelve (12) months following the date of death (and in no event later than the Term/Expiration Date set forth in the Notice of Grant) by Optionee’s estate or by a person who acquires the right to exercise the Option by bequest or inheritance.  To the extent that the Option is not vested on the date of Optionee’s death or if the Option is not exercised within the time specified herein, the Option shall terminate.

11.         Non-Transferability of Option.  This Option may not be transferred in any manner except by will or by the laws of descent or distribution.  It may be exercised during the lifetime of Optionee only by Optionee.  The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

12.         Term of Option.  This Option may be exercised only within the term set out in the Notice of Grant.

13.         Restrictions on Shares.  Optionee hereby agrees that Shares purchased upon the exercise of the Option shall be subject to such terms and conditions as the Administrator shall determine in its sole discretion, including, without limitation, restrictions on the transferability of Shares, the right of the Company to repurchase Shares, and a right of first refusal in favor of the Company with respect to permitted transfers of Shares.  Such terms and conditions may, in the Administrator’s sole discretion, be contained in the Exercise Notice with respect to the Option or in such other agreement as the Administrator shall determine and which the Optionee hereby agrees to enter into at the request of the Company.

(Signature Page Follows)

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This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which shall constitute one document.

BELVEDERE SOCAL

By:  /s/Alan J. Lane                                                         

Name:  Alan J. Lane                                                         

Title:    Executive Chairman                                            

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF THE OPTION AND ANY UNVESTED SHARES ISSUED UNDER OR IN CONNECTION WITH THIS AGREEMENT  IS EARNED ONLY BY CONTINUING EMPLOYMENT WITH THE COMPANY AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER).  OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY’S 2007 EQUITY INCENTIVE PLAN, AS AMENDED FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT STATUS BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE AND WITH OR WITHOUT PRIOR NOTICE.

Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof.  Optionee hereby accepts this Option subject to all of the terms and provisions hereof.  Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option.  Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option.  Optionee further agrees to notify the Company upon any change in the residence address indicated below.

Dated:
	OPTIONEE
	Residence Address:

7

EXHIBIT A

BELVEDERE SOCAL

2007 EQUITY INCENTIVE PLAN

EXERCISE NOTICE

Belvedere SoCal

[Address]

Attention: Stock Administration

1.             Exercise of Option.  Effective as of today, ___________, _____, the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to purchase _________ shares of the Common Stock (the “Shares”) of Belvedere SoCal (the “Company”), under and pursuant to the Belvedere SoCal 2007 Equity Incentive Plan, as amended from time to time (the “Plan”) and the Stock Option Agreement dated _________________________ (the “Option Agreement”).  Capitalized terms used herein without definition shall have the meanings given in the Option Agreement.

Date of Grant:
Vesting Commencement Date:
Number of Shares as to which Option is Exercised:
Exercise Price per Share:		$
Total Exercise Price:		$
Certificate to be issued in name of:
Cash Payment delivered herewith:	¨	$
Other form of consideration delivered herewith:	¨	Form of Consideration: $

Type of Option: [Non-Qualified Stock Option]

2.             Representations of Optionee.  Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement.  Optionee agrees to abide by and be bound by their terms and conditions.  Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities.  Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act.

3.             Rights as Stockholder.  Until the stock certificate evidencing Shares purchased pursuant to the exercise of the Option is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to Shares subject to the Option, notwithstanding the exercise of the Option.  The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised.  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 14 of the Plan.

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Optionee shall enjoy rights as a stockholder until such time as Optionee disposes of the Shares.  Upon such exercise, Optionee shall have no further rights as a holder of the Shares so purchased except the right to receive payment for the Shares so purchased in accordance with the provisions of this Agreement, and Optionee shall forthwith cause the certificate(s) evidencing the Shares so purchased to be surrendered to the Company for transfer or cancellation.

4.             Transfer Restrictions.  Any transfer or sale of the Shares is subject to restrictions on transfer imposed by any applicable state and federal securities laws.  Any Transfer or attempted Transfer of any of the Shares not in accordance with the terms of this Agreement, shall be void and the Company may enforce the terms of this Agreement by stop transfer instructions or similar actions by the Company and its agents or designees.

5.             Tax Consultation.  Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares.  Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

6.             Conformity to Securities Laws.  Optionee acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of all Applicable Laws (including, but not limited to the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, including without limitation the applicable exemptive conditions of Rule 16b-3 under the Exchange Act) and to such approvals by any listing, regulatory or other governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Shares are issued, only in such a manner as to conform to such laws, rules and regulations.  To the extent permitted by applicable law, the Plan, this Agreement and the Shares shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

7.             Successors and Assigns.  The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.

8.             Interpretation.  Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or by the Company forthwith to the Administrator, which shall review such dispute at its next regular meeting.  The resolution of such a dispute by the Administrator shall be final and binding on the Company and on Optionee.

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9.             Governing Law; Severability.  This Agreement shall be governed by and construed in accordance with the laws of the State of California excluding that body of law pertaining to conflicts of law.  Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.

10.           Notices.  Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the other party at its address as shown below beneath its signature, or to such other address as such party may designate in writing from time to time to the other party.

11.           Further Instruments.  The Optionee hereby agrees to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement, including, without limitation, the Investment Representation Statement in the form attached to the Option Agreement as Exhibit C.

12.           Delivery of Payment.  The Optionee herewith delivers to the Company the full Exercise Price for the Shares, as well as any applicable withholding tax.

13.           Entire Agreement.  The Plan and Option Agreement are incorporated herein by reference.  This Agreement, the Plan, the Option Agreement, the Investment Representation Statement and the Restricted Stock Purchase Agreement, if applicable, together with any additional documents containing Holder representations as may be required by the Administrator, constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof.

Accepted by:	Submitted by:
BELVEDERE SOCAL	OPTIONEE
By:
	Optionee
Name:
Title:	Address:

10

EXHIBIT B-1

BELVEDERE SOCAL

2007 EQUITY INCENTIVE PLAN

RESTRICTED STOCK PURCHASE AGREEMENT

THIS RESTRICTED STOCK PURCHASE AGREEMENT (this “Agreement”) is made between ______________ (the “Purchaser”) andBelvedere SoCal (the “Company”), as of __________________, ______.

RECITALS

(1)           Pursuant to the exercise of the Option granted to Purchaser under the Company’s 2007 Equity Incentive Plan (the “Plan”) and pursuant to the Stock Option Agreement (the “Option Agree­ment”) dated _________________, by and between the Company and Purchaser with respect to such grant, which Option Agreement is hereby incorporated by reference, Purchaser has elected to purchase _________ of those shares which have not become vested under the vesting schedule set forth in the Option Agreement (“Unvested Shares”).  The Unvested Shares and the shares subject to the Option Agreement which have become vested are sometimes collectively referred to herein as the “Shares”. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Option Agreement or the Plan.

(2)           As required by the Option Agreement, as a condition to Purchaser’s election to exercise the option, Purchaser must execute this Agreement, which sets forth the rights and obligations of the parties with respect to Shares acquired upon exercise of the Option.

1.           Repurchase Option.

(a)           If Purchaser’s employment with the Company terminates for any reason, including without limitation, for cause, without cause, or due to death or Disabi­lity, the Company or its assignee shall have the right and option to purchase from Purchaser, or Purchaser’s personal representative, as the case may be, all of Purchaser’s Unvested Shares as of the date of such termination at a price equal to the lower of the exercise price paid by Purchaser for such Shares in connection with the exercise of the Option or the Fair Market Value of such shares on the date Purchaser ceases to be employed by the Company (the “Repurchase Option”).

(b)           The Company may exercise its Repurchase Option by deliver­ing, personally or by regis­tered mail, to Purchaser (or his or her transferee or legal represen­tative, as the case may be), within ninety (90) days of the date on which Purchaser’s employment with the Company terminates, a notice in writing indicating the Company’s inten­tion to exercise the Repurchase Option and setting forth a date for closing not later than thirty (30) days from the mailing of such notice. The closing shall take place at the Company’s office.  At the closing, the holder of the certifi­cates for the Unvested Shares being trans­ferred shall deliver the stock cer­tificate or certificates evidencing the Unvested Shares, and the Company shall deliver the purchase price therefor.

11

(c)           At its option, the Company may elect to make payment for the Unvested Shares at a bank selected by the Company.  The Company shall avail itself of this option by a notice in writing to Pur­chaser stat­ing the name and address of the bank, date of closing, and waiving the closing at the Company’s office.

(d)           If the Company does not elect to exercise the Repurchase Option conferred above by giving the requisite notice within ninety (90) days following the date on which Purchaser’s employment with the Company terminates, the Repurchase Option shall terminate.

(e)           One hundred percent (100%) of the Unvested Shares shall initially be subject to the Repurchase Option.  The Unvested Shares shall be released from the Repurchase Option in accordance with the Vesting Schedule set forth in the Notice of Grant until all Shares are released from the Repurchase Option.  Fractional Shares shall be rounded to the nearest whole share.

2.           Transferability of the Shares; Escrow.

(a)           Purchaser hereby authorizes and directs the secretary of the Company, or such other person designated by the Company from time to time, to transfer the Unvested Shares as to which the Repurchase Option has been exercised from Purchaser to the Company.

(b)           To insure the availability for delivery of Purchaser’s Unvested Shares upon repurchase by the Company pursuant to the Repurchase Option under Section 1, Purchaser hereby appoints the secretary, or any other person designated by the Company from time to time as escrow agent, as its attorney-in-fact to sell, assign and transfer unto the Company, such Unvested Shares, if any, repurchased by the Company pursuant to the Repurchase Option and shall, upon execution of this Agreement, deliver and deposit with the secretary of the Company, or such other person designated by the Company from time to time, the share certificate(s) representing the Unvested Shares, together with the stock assignment duly endorsed in blank, attached hereto as Exhibit B-2.  The Unvested Shares and stock assignment shall be held by the secretary in escrow, pursuant to the Joint Escrow Instructions of the Company and Purchaser attached as Exhibit B-3 hereto, until the Company exercises its Repurchase Option as provided in Section 1, until such Unvested Shares are vested, or until such time as this Agreement no longer is in effect.  As a further condition to the Company’s obligations under this Agreement, the spouse of Purchaser, if any, shall execute and deliver to the Company the Consent of Spouse attached hereto as Exhibit B-4.  Upon vesting of the Unvested Shares, the escrow agent shall promptly deliver to Purchaser the certificate or certificates representing such Shares in the escrow agent’s possession belonging to Purchaser, and the escrow agent shall be discharged of all further obligations hereunder; provided, however, that the escrow agent shall nevertheless retain such certificate or certificates as escrow agent if so required pursuant to other restrictions imposed pursuant to this Agreement.

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(c)           The Company, or its designee, shall not be liable for any act it may do or omit to do with respect to holding the Shares in escrow and while acting in good faith and in the exercise of its judgment.

(d)           Transfer or sale of the Shares is subject to restrictions on transfer imposed by any applicable state and federal securities laws.  Any transferee shall hold such Shares subject to all of the provisions hereof and the Exercise Notice executed by Purchaser with respect to any Unvested Shares purchased by Purchaser and shall acknowledge the same by signing a copy of this Agreement.  Any transfer or attempted transfer of any of the Shares not in accordance with the terms of this Agreement shall be void and the Company may enforce the terms of this Agreement by stop transfer instructions or similar actions by the Company and its agents or designees.

3.           Ownership, Voting Rights, Duties.  This Agreement shall not affect in any way the ownership, voting rights or other rights or duties of Purchaser, except as specifically provided herein.

4.           Legend.  Any certificates representing Unvested Shares pursuant to this Agreement shall, until all restrictions lapse, bear the following legend or legend substantially similar thereto:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO FORFEITURE, REACQUISITION AND/OR CERTAIN RESTRICTIONS ON TRANSFERABILITY UNDER THE TERMS OF THAT CERTAIN RESTRICTED STOCK PURCHASE AGREEMENT BY AND BETWEEN BELVEDERE SOCAL AND THE REGISTERED OWNER OF SUCH SECURITIES, AND SUCH SECURITIES MAY NOT BE, DIRECTLY OR INDIRECTLY, OFFERED, TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNDER ANY CIRCUMSTANCES, EXCEPT PURSUANT TO THE PROVISIONS OF SUCH AGREEMENT.”

5.           Holding Period.  Notwithstanding any provision of this Agreement to the contrary, in the event that the purchase of the Unvested Shares is not exempt under Section 16 of the Exchange Act on the date of purchase, the Unvested Shares may not be sold, assigned or otherwise transferred or exchanged until at least six months and one day have elapsed from the date of purchase.

6.           Adjustment.  All references to the number of Shares and the purchase price of the Shares in this Agreement shall be appropriately adjusted in accordance with Section 14 of the Plan to reflect any event described in Section 14 of the Plan occurring after the date of this Agreement.

7.           Notices.  Notices required hereunder shall be given in person or by registered mail to the address of Purchaser shown on the records of the Company, and to the Company at its principal executive office.

8.           Survival of Terms.  This Agreement shall apply to and bind Purchaser and the Company and their respective permitted as­signees and transferees, heirs, legatees, executors, administrators and legal successors.

13

9.           Section 83(b) Election for Unvested Shares Purchased Pursuant to a Non-Qualified Stock Option.  Purchaser hereby acknowledges that he or she has been informed that, with respect to the exercise of a Non-Qualified Stock Option for Unvested Shares, unless an election is filed by Purchaser with the Internal Revenue Service and, if necessary, the proper state taxing authorities, within thirty (30) days after the purchase of the Shares, electing pursuant to Section 83(b) of the Code (and similar state tax provisions if applicable) to be taxed currently on any difference between the purchase price of the Shares and their Fair Market Value on the date of purchase, there will generally be a recognition of taxable income to the Purchaser, measured by the excess, if any, of the fair market value of the Shares, at the time the Company’s Repurchase Option lapses over the purchase price paid for the Shares.  Purchaser represents that Purchaser has consulted any tax consultant(s) Purchaser deems advisable in connection with the purchase of the Shares or the filing of the Election under Section 83(b) and similar tax provisions.

PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF PURCHASER REQUESTS THE COMPANY OR ITS REPRESEN­TATIVE TO MAKE THIS FILING ON PURCHASER’S BEHALF.

10.           Representations.  Purchaser has reviewed with his or her own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agree­ment.  Purchaser is relying solely on such advisors and not on any state­ments or represen­tations of the Company or any of its agents.  Purchaser understands that Purchaser (and not the Company) shall be responsible for his or her own tax liability that may arise as a result of this investment or the transactions contem­plated by this Agreement.

11.           Governing Law; Severability.  This Agreement shall be governed by and construed in accordance with the laws of the State of California excluding that body of law pertaining to conflicts of law.  Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.

(Signature Page Follows)

14

Purchaser represents that he or she has read this Agreement and is familiar with its terms and provisions.  Purchaser hereby agrees to accept as binding, conclusive and final all decisions or inter­preta­tions of the Board upon any questions arising under this Agreement.

IN WITNESS WHEREOF, this Agreement is deemed made as of the date first set forth above.

BELVEDERE SOCAL

By: 

Name:

Title: 

PURCHASER

By: 

Name: 

Address: 

15

EXHIBIT B-2

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED I, ______________, hereby sell, assign and transfer unto (__________) shares of the Common Stock of Belvedere SoCal registered in my name on the books of said corporation represented by Certificate No. _____ herewith and do hereby irrevocably constitute and appoint to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.

This Assignment Separate from Certificate may be used only in accordance with the Restricted Stock Purchase Agreement between Belvedere SoCal and the undersigned dated ______________, _____.

Dated: _______________, ________
	Signature:

INSTRUCTIONS:  Please do not fill in any blanks other than the signature line.  The purpose of this assignment is to enable the Company to exercise the Repurchase Option, as set forth in the Restricted Stock Purchase Agreement, without requiring additional signatures on the part of Purchaser.

16

EXHIBIT B-3

JOINT ESCROW INSTRUCTIONS

 , ____

Secretary

Belvedere SoCal

[________________]

[________________]

As Escrow Agent for both Belvedere SoCal (together with any assignee of Belvedere SoCal, the “Company”) and the undersigned purchaser of stock of the Company (the “Purchaser”), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Restricted Stock Purchase Agreement (“Agreement”) between the Company and the undersigned, in accordance with the following instructions:

1.           In the event the Company exercises the Company’s Repurchase Option set forth in the Agreement, the Company shall give to Purchaser and you a written notice specifying the number of shares of stock to be purchased, the purchase price, and the time for a closing hereunder at the principal office of the Company or, at the election of the Company, at a Bank of the Company’s choosing.  Purchaser and the Company hereby irrevocably authorize and direct you to close the transac­tion contemplated by such notice in accordance with the terms of said notice.

2.           At the closing, you are directed (a) to date the stock assignments necessary for the transfer in question, (b) to fill in the number of shares being transferred, and (c) to deliver the same, together with the certificate evidencing the shares of stock to be transferred, to the Company or its assignee, against the simultaneous delivery to you of the purchase price (by cash, a check, or a combination thereof) for the number of shares of stock being purchased pursuant to the exercise of the Company’s Repurchase Option.

3.           Purchaser irrevocably authorizes the Company to deposit with you any certificates evidencing shares of stock to be held by you hereunder and any additions and substitutions to said shares as defined in the Agreement.  Purchaser does hereby irrevocably constitute and appoint you as Purchaser’s attorney-in-fact and agent for the term of this escrow to execute, with respect to such securities, all documents necessary or appropriate to make such securities negotiable and to complete any transaction herein contemplated, including but not limited to the filing with any applicable state blue sky authority of any required applications for consent to, or notice of transfer of, the securities.  Subject to the provisions of this paragraph 3, Purchaser shall exercise all rights and privileges of a stockholder of the Company while the stock is held by you.

4.           Upon written request of Purchaser, but no more than once per calendar year, unless the Company’s Repurchase Option has been exercised, you will deliver to Purchaser a certificate or certificates representing the number of shares of stock as are not then subject to the Company’s Repurchase Option.  Within one hundred twenty (120) days after Purchaser’s employment with the Company terminates, you will deliver to Purchaser a certificate or certificates representing the aggregate number of shares held or issued pursuant to the Agreement and not purchased by the Company or its assignees pursuant to exercise of the Company’s Repurchase Option.

17

5.           If, at the time of termination of this escrow, you should have in your possession any documents, securities, or other prop­erty belonging to Purchaser, you shall deliver all of the same to Purchaser and shall be discharged of all further obligations hereunder.

6.           Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto.

7.           You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties.  You shall not be person­ally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith, and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith.

8.           You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court.  In case you obey or comply with any such order, judgment or decree, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

9.           You shall not be liable in any respect on account of the identity, authorities or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder.

10.         You shall not be liable for the expiration of any rights under any applicable state, federal or local statute of limita­tions or similar statute or regulation with respect to these Joint Escrow Instructions or any documents deposited with you.

11.         You shall be entitled to employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor.

12.         Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be an officer or agent of the Company or if you shall resign by written notice to each party.  In the event of any such termination, the Company shall appoint a successor Escrow Agent.

18

13.         If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments.

14.         It is understood and agreed that, should any dispute arise with respect to the delivery and/or ownership or right of posses­sion of the securities held by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings.

15.         Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties thereunto entitled at such addresses as a party may designate by written notice to each of the other parties hereto.

16.         By signing these Joint Escrow Instructions, you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Agreement.

17.         This instrument shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns.

18.         These Joint Escrow Instructions shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding that body of law pertaining to conflicts of law.

(Signature Page Follows)

19

IN WITNESS WHEREOF, these Joint Escrow Instructions shall be effective as of the date first set forth above.

BELVEDERE SOCAL

By: 

Name: 

Title: 

 PURCHASER:

By: 

Name: 

Address: 

ESCROW AGENT:

By: 

Name: 

Title: 

20

EXHIBIT B-4

CONSENT OF SPOUSE

I, ____________________, spouse of _____________, have read and approve the Restricted Stock Purchase Agreement dated ___________, _____, between my spouse and Belvedere SoCal.  In consideration of granting of the right to my spouse to purchase shares of Belvedere SoCal set forth in the Restricted Stock Purchase Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Restricted Stock Purchase Agreement insofar as I may have any rights in said Restricted Stock Purchase Agreement or any shares issued pursuant thereto under the community property laws or similar laws relating to marital prop­erty in effect in the state of our residence as of the date of the signing of the foregoing Restricted Stock Purchase Agreement.

Dated: _______________, ______
	Signature of Spouse

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EXHIBIT C2

INVESTMENT REPRESENTATION STATEMENT

OPTIONEE	:	[NAME]
COMPANY	:	Belvedere SoCal
SECURITY	:	Common Stock
AMOUNT	:	___________________
DATE	:	___________________

In connection with the purchase of the above-listed shares of Common Stock (the “Securities”) of Belvedere SoCal. (the “Company”), the undersigned (the “Optionee”) represents to the Company the following:

(a)           Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities.  Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

(b)           Optionee acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment intent as expressed herein.  Optionee understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available.  Optionee further acknowledges and understands that the Company is under no obligation to register the Securities.  Optionee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company and any other legend required under applicable state securities laws.

(c)           Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions.  Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to Optionee, the exercise will be exempt from registration under the Securities Act.  In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including, in the case of an affiliate, (i) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934), (ii)  the availability of certain public information about the Company, (iii) the amount of Securities being sold during any three (3) month period not exceeding the limitations specified in Rule 144(e), and (iv) the timely filing of a Form 144, if applicable.

2 This statement may not be necessary if shares have ceased to be registered under the Securities Act at the time of exercise.

22

In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold beginning ninety (90) days after the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than six months  after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144 and the availability of certain public information about the Company (subject to certain exceptions); and, in the case of a sale of the Securities by an affiliate,  the satisfaction of the conditions set forth in sections (i), (ii), (iii) and (iv) of the paragraph immediately above.

(d)           Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.  Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.

(e)           Optionee understands and acknowledges that the Company will rely upon the accuracy and truth of the foregoing representations and Optionee hereby consents to such reliance.

	Signature of Optionee:
Date: ______________________

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BELVEDERE SOCAL

2007 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

Performance Vested Option, Early Exercise Permitted

Pursuant to its 2007 Equity Incentive Plan, as amended from time to time (the “Plan”), Belvedere SoCal (the “Company”), hereby grants to the Optionee listed below (“Optionee”), an option to purchase the number of shares of the Company’s Common Stock set forth below (the “Option”), subject to the terms and conditions of the Plan and this Stock Option Agreement (this “Option Agreement”). Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement.

I. NOTICE OF STOCK OPTION GRANT

Optionee:	William Baribault
Date of Option Agreement:	August 14, 2008
Date of Grant:	February 27, 2008
Vesting Commencement Date:	November 23, 2007
Exercise Price per Share:	$15.00
Total Number of Shares Granted:	49,887
Total Exercise Price:	$748,305.00
Term/Expiration Date:	2/27/2018
Qualifying Acquisition Price Per Share	$44.00
Trading Target Price Per Share	$44.00

Type of Option:	Non-Qualified Stock Option
Exercise Schedule:	¨  Same as Vesting Schedule  ý  Early Exercise Permitted

Vesting Schedule:

This Option is exercisable immediately, in whole or in part, at such times as are established by the Administrator, conditioned upon Optionee entering into a Restricted Stock Purchase Agreement with respect to any unvested Shares.  This Option or, if exercised prior to vesting, the Shares subject to this Option, shall vest, become exercisable and/or be released from the Company’s Repurchase Option, as set forth in the Restricted Stock Purchase Agreement attached hereto as Exhibit B-1, according to the following schedule:

Subject to the Optionee’s continued employment with the Company, the Option or Shares, as applicable, shall vest in full on the seventh anniversary of the Vesting Commencement Date specified above (the “Vesting Date”), provided, however, that in the event that either a Qualifying Acquisition occurs or the Trading Price Target is achieved prior to the Vesting Date, then the exercisability and vesting of the Option or Shares, as applicable, shall be accelerated and the Option or Shares, as applicable, shall vest in full on the date on which the Qualifying Acquisition occurs or the Trading Price Target is achieved, provided, further, that if the Optionee ceases to be employed by the Company by reason of a termination of employment by the Company without Cause, by Optionee for Good Reason or due to the Optionee’s death or Disability (each as defined in that certain employment agreement between the Company and Optionee of even date herewith), in any case,  prior to the vesting of the Option or the Shares, as applicable, then the Option or the Shares, as applicable shall thereupon vest with respect to that number of Shares determined by multiplying the number of unvested Shares subject to the Option or unvested Shares, as applicable, by a fraction, (i) the numerator of which equals the number of full months elapsed from the Date of Grant through the date of termination, and (ii) the denominator of which equals eighty-four (84).

For purposes of this Agreement:

“Qualifying Public Offering” shall mean a sale (or the last in a series of sales) of Common Stock to the general public pursuant to one or more underwritten public offerings for cash in which either (i) holders of the Company’s Common Stock as of this Agreement’s Date of Grant have, in the aggregate of such underwritten public offerings, sold more than fifty percent (50%) of the shares of Common Stock held by such holders, or (ii) (A) new primary shares of Common Stock comprising more than twenty-five percent (25%) of the Company’s total outstanding shares of Common Stock as of this Agreement’s Date of Grant are offered and (B) the average daily trading volume following such offering is greater than .5% of the Common Stock’s public float for twenty (20) consecutive trading days (the “Volume Condition”).  In the case of clause (ii) of the immediately preceding sentence, a Qualifying Public Offering shall be deemed to have occurred if and when the Volume Condition is satisfied.

“Qualifying Acquisition” shall mean an Acquisition in which the price per share of Common Stock paid by the acquiror in such Acquisition transaction, as determined by the Board, is greater than or equal to the Qualifying Acquisition Price Per Share, as specified above.

“Trading Price Target” shall be deemed to have been achieved if and when, following a Qualifying Public Offering, the closing trading price of a share of Common Stock on the Principal Exchange is greater than or equal to the Trading Price Target Per Share, as specified above, for each trading day during a period of twenty (20) consecutive trading days.

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Summary of Vesting1

Date/Event	Percentage of Option or Shares Vested
Prior to seventh anniversary of Vesting Commencement Date (no Qualifying Acquisition nor achievement of the Trading Price Target Per Share)	0%
Qualifying Acquisition or achievement of the Trading Price Target Per Share prior to seventh anniversary of Vesting Commencement Date	100%
Seventh anniversary of Vesting Commencement Date	100%
Termination by Company without Cause, by Optionee for Good Reason or due to Optionee’s death or Disability	Pro rata as set forth above

Termination Period: Except in the event of a termination for Cause, this Option may be exercised, to the extent vested as of the date that Optionee’s employment with the Company terminates, for three (3) months after such termination of employment, or such longer period as may be applicable upon the death or Disability of Optionee as provided herein (or, if not provided herein, then as provided in the Plan), but in no event later than the Term/Expiration Date as set forth above.

II. AGREEMENT

1.           Grant of Option.  The Company hereby grants to the Optionee an Option to purchase the number of shares of Common Stock (the “Shares”) set forth in the Notice of Grant as defined above, at the exercise price per share set forth in the Notice of Grant (the “Exercise Price”).  Notwithstanding anything to the contrary anywhere else in this Option Agreement, this grant of an Option is subject to the terms and provisions of the Plan, which is incorporated herein by reference.   Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Plan.

2.           Exercise of Option.  This Option is exercisable as follows:

(a)           Right to Exercise.

1 This summary is qualified in its entirety by the Vesting Schedule above.  In the event of any conflict, the Vesting Schedule will control.

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(i)            This Option shall be exercisable cumulatively according to the vesting schedule set out in the Notice of Grant.  Alternatively, at the election of the Optionee, this Option may be exercised in whole or in part at such times as are established by the Administrator as to Shares which have not yet vested.  For purposes of this Option Agreement, this Option, or, if exercised prior to vesting, Shares subject to this Option, shall vest based on Optionee’s continued employment with the Company.  Vested Shares shall not be subject to the Company’s Repurchase Option (as set forth in the Restricted Stock Purchase Agreement).

(ii)           As a condition to exercising this Option for unvested Shares, the Optionee shall execute the Restricted Stock Purchase Agreement.

(iii)          This Option may not be exercised for a fraction of a Share.

(iv)          In the event of Optionee’s death, Disability or other termination of the Optionee’s employment with the Company, the exercisability of the Option shall be governed by Sections 7, 8 and 9 hereof.

(v)           In no event may this Option be exercised after the Term/Expiration Date of this Option as set forth in the Notice of Grant.

(b)           Method of Exercise.  This Option shall be exercisable by written notice to the Company (in the form attached as Exhibit A) (the “Exercise Notice”).  The Exercise Notice shall state the number of Shares for which the Option is being exercised, and such other representations and agreements with respect to such Shares of Common Stock as may be required by the Company pursuant to the provisions of the Plan.  The Exercise Notice shall be signed by Optionee and, together with an executed copy of the Restricted Stock Purchase Agreement, if applicable, shall be delivered in person or by certified mail to the Secretary of the Company.  The Exercise Notice and Restricted Stock Purchase Agreement shall be accompanied by payment of the Exercise Price, including payment of any applicable withholding tax.

No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise comply with all relevant provisions of all Applicable Laws and the requirements of any stock exchange upon which the Shares may then be listed.  Assuming such compliance, for income tax purposes, the Shares shall be considered transferred to Optionee on the date on which the Option is exercised with respect to such Shares.

3.             Optionee’s Representations.  If the Shares purchasable pursuant to the exercise of this Option have not been registered under the Securities Act at the time this Option is exercised or have ceased to be so registered, or if the Administrator otherwise requires, Optionee shall, concurrently with the exercise of all or any portion of this Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit  C.

4.             Lock-Up Period.  Optionee hereby agrees that, if so requested by the Company or any representative of the underwriters (the “Managing Underwriter”) in connection with any registration of the offering of any securities of the Company under the Securities Act, Optionee shall not sell or otherwise transfer any Shares or other securities of the Company during the 180-day period (or such longer period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company) (the “Market Standoff Period”) following the effective date of a registration statement of the Company filed under the Securities Act.  The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period and these restrictions shall be binding on any transferee of such Shares.  Notwithstanding the foregoing, the 180-day period may be extended for up to such number of additional days as is deemed necessary by the Company or the Managing Underwriter.

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5.             Method of Payment.  Payment of the Exercise Price shall be by any  of the following methods, or a combination thereof, at the election of the Optionee:

(a)           cash;

(b)           check;

(c)           with the consent of the Administrator, a full recourse promissory note bearing interest (at no less than such rate as is a market rate of interest and which then precludes the imputation of interest under the Code), payable upon such terms as may be prescribed by the Administrator and structured to comply with Applicable Laws;

(d)           with the consent of the Administrator, surrender of other Shares of Common Stock of the Company which have a Fair Market Value on the date of surrender equal to the Exercise Price of the Shares as to which the Option is being exercised;

(e)           with the consent of the Administrator, surrendered Shares issuable upon the exercise of the Option having a Fair Market Value on the date of exercise equal to the aggregate Exercise Price of the Option or exercised portion thereof;

(f)           with the consent of the Administrator, property of any kind which constitutes good and valuable consideration;

(g)           with the consent of the Administrator, delivery of a notice that the Optionee has placed a market sell order with a broker with respect to Shares then issuable upon exercise of the Option and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate Exercise Price; provided, that payment of such proceeds is then made to the Company upon settlement of such sale; or

(h)           with the consent of the Administrator, any combination of the foregoing methods of payment.

6.             Restrictions on Exercise.  This Option may not be exercised until the Plan has been approved by the stockholders of the Company.  If the issuance of Shares upon such exercise or if the method of payment for such Shares would constitute a violation of any Applicable Law, then the Option may not be exercised.  The Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation before allowing the Option to be exercised.

7.             Termination of Relationship.  If Optionee’s employment with the Company terminates (other than by reason of a termination by the Company for Cause or Optionee’s death or Disability), the Option, to the extent vested as of the date of such termination of employment shall remain exercisable for the Termination Period set out in the Notice of Grant (but in no event later than the Term/Expiration Date as set forth in the Notice of Grant).  To the extent that the Option is not vested on the date on which Optionee’s employment with the Company terminates, or if Optionee does not exercise this Option within the time specified herein, the Option shall terminate.

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8.             Termination for Cause.  If Optionee’s employment with the Company terminates by reason of a termination by the Company for Cause, the Option shall terminate as of the start of business on the date of Optionee’s termination, regardless of whether the Option is then vested and/or exercisable with respect to any Shares.

9.             Disability of Optionee.  If Optionee’s employment with the Company terminates as a result of his or her Disability, the Option, to the extent vested as of the date of such termination, shall remain exercisable for twelve (12) months following such date (and in no event later than the Term/Expiration Date set forth in the Notice of Grant).  To the extent that the Option is not vested at the date on which Optionee’s employment with the Company terminates or if Optionee does not exercise such Option within the time specified herein, the Option shall terminate.

10.           Death of Optionee.  If Optionee’s employment with the Company terminates as a result of his or her death, the Option, to the extent vested as of the date of death, shall remain exercisable for twelve (12) months following the date of death (and in no event later than the Term/Expiration Date set forth in the Notice of Grant) by Optionee’s estate or by a person who acquires the right to exercise the Option by bequest or inheritance.  To the extent that the Option is not vested on the date of Optionee’s death or if the Option is not exercised within the time specified herein, the Option shall terminate.

11.           Non-Transferability of Option.  This Option may not be transferred in any manner except by will or by the laws of descent or distribution.  It may be exercised during the lifetime of Optionee only by Optionee.  The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

12.           Term of Option.  This Option may be exercised only within the term set out in the Notice of Grant.

13.           Restrictions on Shares.  Optionee hereby agrees that Shares purchased upon the exercise of the Option shall be subject to such terms and conditions as the Administrator shall determine in its sole discretion, including, without limitation, restrictions on the transferability of Shares, the right of the Company to repurchase Shares, and a right of first refusal in favor of the Company with respect to permitted transfers of Shares.  Such terms and conditions may, in the Administrator’s sole discretion, be contained in the Exercise Notice with respect to the Option or in such other agreement as the Administrator shall determine and which the Optionee hereby agrees to enter into at the request of the Company.

(Signature Page Follows)

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This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which shall constitute one document.

BELVEDERE SOCAL

By: /s/Alan J. Lane                                                        

Name: Alan J. Lane                                                        

Title: Executive Chairman                                             

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF THE OPTION AND ANY UNVESTED SHARES ISSUED UNDER OR IN CONNECTION WITH THIS AGREEMENT  IS EARNED ONLY BY CONTINUING EMPLOYMENT WITH THE COMPANY AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER).  OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY’S 2007 EQUITY INCENTIVE PLAN, AS AMENDED FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT STATUS BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE AND WITH OR WITHOUT PRIOR NOTICE.

Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof.  Optionee hereby accepts this Option subject to all of the terms and provisions hereof.  Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option.  Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option.  Optionee further agrees to notify the Company upon any change in the residence address indicated below.

Dated:
	OPTIONEE
	Residence Address:

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EXHIBIT A

BELVEDERE SOCAL

2007 EQUITY INCENTIVE PLAN

EXERCISE NOTICE

Belvedere SoCal

[Address]

Attention: Stock Administration

1.           Exercise of Option.  Effective as of today, ___________, _____, the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to purchase _________ shares of the Common Stock (the “Shares”) of Belvedere SoCal (the “Company”), under and pursuant to the Belvedere SoCal 2007 Equity Incentive Plan, as amended from time to time (the “Plan”) and the Stock Option Agreement dated _________________________ (the “Option Agreement”).  Capitalized terms used herein without definition shall have the meanings given in the Option Agreement.

Date of Grant:
Vesting Commencement Date:
Number of Shares as to which Option is Exercised:
Exercise Price per Share:		$
Total Exercise Price:		$
Certificate to be issued in name of:
Cash Payment delivered herewith:	¨	$
Other form of consideration delivered herewith:	¨	Form of Consideration: $
Qualifying Acquisition Price Per Share
Trading Target Price Per Share

Type of Option: [Non-Qualified Stock Option]

2.           Representations of Optionee.  Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement.  Optionee agrees to abide by and be bound by their terms and conditions.  Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities.  Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act.

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3.           Rights as Stockholder.  Until the stock certificate evidencing Shares purchased pursuant to the exercise of the Option is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to Shares subject to the Option, notwithstanding the exercise of the Option.  The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised.  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 14 of the Plan.

  Optionee shall enjoy rights as a stockholder until such time as Optionee disposes of the Shares.  Upon such exercise, Optionee shall have no further rights as a holder of the Shares so purchased except the right to receive payment for the Shares so purchased in accordance with the provisions of this Agreement, and Optionee shall forthwith cause the certificate(s) evidencing the Shares so purchased to be surrendered to the Company for transfer or cancellation.

4.           Transfer Restrictions.  Any transfer or sale of the Shares is subject to restrictions on transfer imposed by any applicable state and federal securities laws.  Any Transfer or attempted Transfer of any of the Shares not in accordance with the terms of this Agreement, shall be void and the Company may enforce the terms of this Agreement by stop transfer instructions or similar actions by the Company and its agents or designees.

5.           Tax Consultation.  Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares.  Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

6.           Conformity to Securities Laws.  Optionee acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of all Applicable Laws (including, but not limited to the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, including without limitation the applicable exemptive conditions of Rule 16b-3 under the Exchange Act) and to such approvals by any listing, regulatory or other governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Shares are issued, only in such a manner as to conform to such laws, rules and regulations.  To the extent permitted by applicable law, the Plan, this Agreement and the Shares shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

7.           Successors and Assigns.  The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.

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8.           Interpretation.  Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or by the Company forthwith to the Administrator, which shall review such dispute at its next regular meeting.  The resolution of such a dispute by the Administrator shall be final and binding on the Company and on Optionee.

9.           Governing Law; Severability.  This Agreement shall be governed by and construed in accordance with the laws of the State of California excluding that body of law pertaining to conflicts of law.  Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.

10.         Notices.  Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the other party at its address as shown below beneath its signature, or to such other address as such party may designate in writing from time to time to the other party.

11.         Further Instruments.  The Optionee hereby agrees to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement, including, without limitation, the Investment Representation Statement in the form attached to the Option Agreement as Exhibit C.

12.         Delivery of Payment.  The Optionee herewith delivers to the Company the full Exercise Price for the Shares, as well as any applicable withholding tax.

13.         Entire Agreement.  The Plan and Option Agreement are incorporated herein by reference.  This Agreement, the Plan, the Option Agreement, the Investment Representation Statement and the Restricted Stock Purchase Agreement, if applicable, together with any additional documents containing Holder representations as may be required by the Administrator, constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof.

Accepted by:	Submitted by:
BELVEDERE SOCAL	OPTIONEE
By:
	Optionee
Name:
Title:	Address:

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EXHIBIT B-1

BELVEDERE SOCAL

2007 EQUITY INCENTIVE PLAN

RESTRICTED STOCK PURCHASE AGREEMENT

THIS RESTRICTED STOCK PURCHASE AGREEMENT (this “Agreement”) is made between ______________ (the “Purchaser”) andBelvedere SoCal (the “Company”), as of __________________, ______.

RECITALS

(1)           Pursuant to the exercise of the Option granted to Purchaser under the Company’s 2007 Equity Incentive Plan (the “Plan”) and pursuant to the Stock Option Agreement (the “Option Agree­ment”) dated _________________, by and between the Company and Purchaser with respect to such grant, which Option Agreement is hereby incorporated by reference, Purchaser has elected to purchase _________ of those shares which have not become vested under the vesting schedule set forth in the Option Agreement (“Unvested Shares”).  The Unvested Shares and the shares subject to the Option Agreement which have become vested are sometimes collectively referred to herein as the “Shares”. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Option Agreement or the Plan.

(2)           As required by the Option Agreement, as a condition to Purchaser’s election to exercise the option, Purchaser must execute this Agreement, which sets forth the rights and obligations of the parties with respect to Shares acquired upon exercise of the Option.

1.              Repurchase Option.

(a)           If Purchaser’s employment with the Company terminates for any reason, including without limitation, for cause, without cause, or due to death or Disabi­lity, the Company or its assignee shall have the right and option to purchase from Purchaser, or Purchaser’s personal representative, as the case may be, all of Purchaser’s Unvested Shares as of the date of such termination at a price equal to the lower of the exercise price paid by Purchaser for such Shares in connection with the exercise of the Option or the Fair Market Value of such shares on the date Purchaser ceases to be employed by the Company (the “Repurchase Option”).

(b)           The Company may exercise its Repurchase Option by deliver­ing, personally or by regis­tered mail, to Purchaser (or his or her transferee or legal represen­tative, as the case may be), within ninety (90) days of the date on which Purchaser’s employment with the Company terminates, a notice in writing indicating the Company’s inten­tion to exercise the Repurchase Option and setting forth a date for closing not later than thirty (30) days from the mailing of such notice. The closing shall take place at the Company’s office.  At the closing, the holder of the certifi­cates for the Unvested Shares being trans­ferred shall deliver the stock cer­tificate or certificates evidencing the Unvested Shares, and the Company shall deliver the purchase price therefor.

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(c)           At its option, the Company may elect to make payment for the Unvested Shares at a bank selected by the Company.  The Company shall avail itself of this option by a notice in writing to Pur­chaser stat­ing the name and address of the bank, date of closing, and waiving the closing at the Company’s office.

(d)           If the Company does not elect to exercise the Repurchase Option conferred above by giving the requisite notice within ninety (90) days following the date on which Purchaser’s employment with the Company terminates, the Repurchase Option shall terminate.

(e)           One hundred percent (100%) of the Unvested Shares shall initially be subject to the Repurchase Option.  The Unvested Shares shall be released from the Repurchase Option in accordance with the Vesting Schedule set forth in the Notice of Grant until all Shares are released from the Repurchase Option.  Fractional Shares shall be rounded to the nearest whole share.

2.           Transferability of the Shares; Escrow.

(a)           Purchaser hereby authorizes and directs the secretary of the Company, or such other person designated by the Company from time to time, to transfer the Unvested Shares as to which the Repurchase Option has been exercised from Purchaser to the Company.

(b)           To insure the availability for delivery of Purchaser’s Unvested Shares upon repurchase by the Company pursuant to the Repurchase Option under Section 1, Purchaser hereby appoints the secretary, or any other person designated by the Company from time to time as escrow agent, as its attorney-in-fact to sell, assign and transfer unto the Company, such Unvested Shares, if any, repurchased by the Company pursuant to the Repurchase Option and shall, upon execution of this Agreement, deliver and deposit with the secretary of the Company, or such other person designated by the Company from time to time, the share certificate(s) representing the Unvested Shares, together with the stock assignment duly endorsed in blank, attached hereto as Exhibit B-2.  The Unvested Shares and stock assignment shall be held by the secretary in escrow, pursuant to the Joint Escrow Instructions of the Company and Purchaser attached as Exhibit B-3 hereto, until the Company exercises its Repurchase Option as provided in Section 1, until such Unvested Shares are vested, or until such time as this Agreement no longer is in effect.  As a further condition to the Company’s obligations under this Agreement, the spouse of Purchaser, if any, shall execute and deliver to the Company the Consent of Spouse attached hereto as Exhibit B-4.  Upon vesting of the Unvested Shares, the escrow agent shall promptly deliver to Purchaser the certificate or certificates representing such Shares in the escrow agent’s possession belonging to Purchaser, and the escrow agent shall be discharged of all further obligations hereunder; provided, however, that the escrow agent shall nevertheless retain such certificate or certificates as escrow agent if so required pursuant to other restrictions imposed pursuant to this Agreement.

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(c)           The Company, or its designee, shall not be liable for any act it may do or omit to do with respect to holding the Shares in escrow and while acting in good faith and in the exercise of its judgment.

(d)           Transfer or sale of the Shares is subject to restrictions on transfer imposed by any applicable state and federal securities laws.  Any transferee shall hold such Shares subject to all of the provisions hereof and the Exercise Notice executed by Purchaser with respect to any Unvested Shares purchased by Purchaser and shall acknowledge the same by signing a copy of this Agreement.  Any transfer or attempted transfer of any of the Shares not in accordance with the terms of this Agreement shall be void and the Company may enforce the terms of this Agreement by stop transfer instructions or similar actions by the Company and its agents or designees.

3.           Ownership, Voting Rights, Duties.  This Agreement shall not affect in any way the ownership, voting rights or other rights or duties of Purchaser, except as specifically provided herein.

4.           Legend.  Any certificates representing Unvested Shares pursuant to this Agreement shall, until all restrictions lapse, bear the following legend or legend substantially similar thereto:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO FORFEITURE, REACQUISITION AND/OR CERTAIN RESTRICTIONS ON TRANSFERABILITY UNDER THE TERMS OF THAT CERTAIN RESTRICTED STOCK PURCHASE AGREEMENT BY AND BETWEEN BELVEDERE SOCAL AND THE REGISTERED OWNER OF SUCH SECURITIES, AND SUCH SECURITIES MAY NOT BE, DIRECTLY OR INDIRECTLY, OFFERED, TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNDER ANY CIRCUMSTANCES, EXCEPT PURSUANT TO THE PROVISIONS OF SUCH AGREEMENT.”

5.           Holding Period.  Notwithstanding any provision of this Agreement to the contrary, in the event that the purchase of the Unvested Shares is not exempt under Section 16 of the Exchange Act on the date of purchase, the Unvested Shares may not be sold, assigned or otherwise transferred or exchanged until at least six months and one day have elapsed from the date of purchase.

6.           Adjustment.  All references to the number of Shares and the purchase price of the Shares in this Agreement shall be appropriately adjusted in accordance with Section 14 of the Plan to reflect any event described in Section 14 of the Plan occurring after the date of this Agreement.

7.           Notices.  Notices required hereunder shall be given in person or by registered mail to the address of Purchaser shown on the records of the Company, and to the Company at its principal executive office.

8.           Survival of Terms.  This Agreement shall apply to and bind Purchaser and the Company and their respective permitted as­signees and transferees, heirs, legatees, executors, administrators and legal successors.

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9.           Section 83(b) Election for Unvested Shares Purchased Pursuant to a Non-Qualified Stock Option.  Purchaser hereby acknowledges that he or she has been informed that, with respect to the exercise of a Non-Qualified Stock Option for Unvested Shares, unless an election is filed by Purchaser with the Internal Revenue Service and, if necessary, the proper state taxing authorities, within thirty (30) days after the purchase of the Shares, electing pursuant to Section 83(b) of the Code (and similar state tax provisions if applicable) to be taxed currently on any difference between the purchase price of the Shares and their Fair Market Value on the date of purchase, there will generally be a recognition of taxable income to the Purchaser, measured by the excess, if any, of the fair market value of the Shares, at the time the Company’s Repurchase Option lapses over the purchase price paid for the Shares.  Purchaser represents that Purchaser has consulted any tax consultant(s) Purchaser deems advisable in connection with the purchase of the Shares or the filing of the Election under Section 83(b) and similar tax provisions.

PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF PURCHASER REQUESTS THE COMPANY OR ITS REPRESEN­TATIVE TO MAKE THIS FILING ON PURCHASER’S BEHALF.

10.         Representations.  Purchaser has reviewed with his or her own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agree­ment.  Purchaser is relying solely on such advisors and not on any state­ments or represen­tations of the Company or any of its agents.  Purchaser understands that Purchaser (and not the Company) shall be responsible for his or her own tax liability that may arise as a result of this investment or the transactions contem­plated by this Agreement.

11.         Governing Law; Severability.  This Agreement shall be governed by and construed in accordance with the laws of the State of California excluding that body of law pertaining to conflicts of law.  Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.

(Signature Page Follows)

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Purchaser represents that he or she has read this Agreement and is familiar with its terms and provisions.  Purchaser hereby agrees to accept as binding, conclusive and final all decisions or inter­preta­tions of the Board upon any questions arising under this Agreement.

IN WITNESS WHEREOF, this Agreement is deemed made as of the date first set forth above.

BELVEDERE SOCAL

By: 

Name: 

Title: 

PURCHASER

By: 

Name: 

Address: 

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EXHIBIT B-2

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED I, ______________, hereby sell, assign and transfer unto (__________) shares of the Common Stock of Belvedere SoCal registered in my name on the books of said corporation represented by Certificate No. _____ herewith and do hereby irrevocably constitute and appoint to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.

This Assignment Separate from Certificate may be used only in accordance with the Restricted Stock Purchase Agreement between Belvedere SoCal and the undersigned dated ______________, _____.

Dated: _______________, ________
	Signature:

INSTRUCTIONS:  Please do not fill in any blanks other than the signature line.  The purpose of this assignment is to enable the Company to exercise the Repurchase Option, as set forth in the Restricted Stock Purchase Agreement, without requiring additional signatures on the part of Purchaser.

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EXHIBIT B-3

JOINT ESCROW INSTRUCTIONS

 , ____

Secretary

Belvedere SoCal

[________________]

[________________]

As Escrow Agent for both Belvedere SoCal (together with any assignee of Belvedere SoCal, the “Company”) and the undersigned purchaser of stock of the Company (the “Purchaser”), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Restricted Stock Purchase Agreement (“Agreement”) between the Company and the undersigned, in accordance with the following instructions:

1.           In the event the Company exercises the Company’s Repurchase Option set forth in the Agreement, the Company shall give to Purchaser and you a written notice specifying the number of shares of stock to be purchased, the purchase price, and the time for a closing hereunder at the principal office of the Company or, at the election of the Company, at a Bank of the Company’s choosing.  Purchaser and the Company hereby irrevocably authorize and direct you to close the transac­tion contemplated by such notice in accordance with the terms of said notice.

2.           At the closing, you are directed (a) to date the stock assignments necessary for the transfer in question, (b) to fill in the number of shares being transferred, and (c) to deliver the same, together with the certificate evidencing the shares of stock to be transferred, to the Company or its assignee, against the simultaneous delivery to you of the purchase price (by cash, a check, or a combination thereof) for the number of shares of stock being purchased pursuant to the exercise of the Company’s Repurchase Option.

3.           Purchaser irrevocably authorizes the Company to deposit with you any certificates evidencing shares of stock to be held by you hereunder and any additions and substitutions to said shares as defined in the Agreement.  Purchaser does hereby irrevocably constitute and appoint you as Purchaser’s attorney-in-fact and agent for the term of this escrow to execute, with respect to such securities, all documents necessary or appropriate to make such securities negotiable and to complete any transaction herein contemplated, including but not limited to the filing with any applicable state blue sky authority of any required applications for consent to, or notice of transfer of, the securities.  Subject to the provisions of this paragraph 3, Purchaser shall exercise all rights and privileges of a stockholder of the Company while the stock is held by you.

4.           Upon written request of Purchaser, but no more than once per calendar year, unless the Company’s Repurchase Option has been exercised, you will deliver to Purchaser a certificate or certificates representing the number of shares of stock as are not then subject to the Company’s Repurchase Option.  Within one hundred twenty (120) days after Purchaser’s employment with the Company terminates, you will deliver to Purchaser a certificate or certificates representing the aggregate number of shares held or issued pursuant to the Agreement and not purchased by the Company or its assignees pursuant to exercise of the Company’s Repurchase Option.

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5.           If, at the time of termination of this escrow, you should have in your possession any documents, securities, or other prop­erty belonging to Purchaser, you shall deliver all of the same to Purchaser and shall be discharged of all further obligations hereunder.

6.           Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto.

7.           You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties.  You shall not be person­ally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith, and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith.

8.           You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court.  In case you obey or comply with any such order, judgment or decree, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

9.           You shall not be liable in any respect on account of the identity, authorities or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder.

10.         You shall not be liable for the expiration of any rights under any applicable state, federal or local statute of limita­tions or similar statute or regulation with respect to these Joint Escrow Instructions or any documents deposited with you.

11.         You shall be entitled to employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor.

12.         Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be an officer or agent of the Company or if you shall resign by written notice to each party.  In the event of any such termination, the Company shall appoint a successor Escrow Agent.

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13.         If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments.

14.         It is understood and agreed that, should any dispute arise with respect to the delivery and/or ownership or right of posses­sion of the securities held by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings.

15.         Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties thereunto entitled at such addresses as a party may designate by written notice to each of the other parties hereto.

16.         By signing these Joint Escrow Instructions, you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Agreement.

17.         This instrument shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns.

18.         These Joint Escrow Instructions shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding that body of law pertaining to conflicts of law.

(Signature Page Follows)

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IN WITNESS WHEREOF, these Joint Escrow Instructions shall be effective as of the date first set forth above.

BELVEDERE SOCAL

By: 

Name: 

Title: 

PURCHASER:

By: 

Name: 

Address: 

ESCROW AGENT:

By: 

Name: 

Title: 

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EXHIBIT B-4

CONSENT OF SPOUSE

I, ____________________, spouse of _____________, have read and approve the Restricted Stock Purchase Agreement dated ___________, _____, between my spouse and Belvedere SoCal.  In consideration of granting of the right to my spouse to purchase shares of Belvedere SoCal set forth in the Restricted Stock Purchase Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Restricted Stock Purchase Agreement insofar as I may have any rights in said Restricted Stock Purchase Agreement or any shares issued pursuant thereto under the community property laws or similar laws relating to marital prop­erty in effect in the state of our residence as of the date of the signing of the foregoing Restricted Stock Purchase Agreement.

Dated: _______________, ______
	Signature of Spouse

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EXHIBIT C2

INVESTMENT REPRESENTATION STATEMENT

OPTIONEE	:	[NAME]
COMPANY	:	Belvedere SoCal
SECURITY	:	Common Stock
AMOUNT	:	___________________
DATE	:	___________________

In connection with the purchase of the above-listed shares of Common Stock (the “Securities”) of Belvedere SoCal. (the “Company”), the undersigned (the “Optionee”) represents to the Company the following:

(a)           Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities.  Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

(b)           Optionee acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment intent as expressed herein.  Optionee understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available.  Optionee further acknowledges and understands that the Company is under no obligation to register the Securities.  Optionee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company and any other legend required under applicable state securities laws.

(c)           Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions.  Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to Optionee, the exercise will be exempt from registration under the Securities Act.  In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including, in the case of an affiliate, (i) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934), (ii)  the availability of certain public information about the Company, (iii) the amount of Securities being sold during any three (3) month period not exceeding the limitations specified in Rule 144(e), and (iv) the timely filing of a Form 144, if applicable.

2 This statement may not be necessary if shares have ceased to be registered under the Securities Act at the time of exercise.

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In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold beginning ninety (90) days after the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than six months  after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144 and the availability of certain public information about the Company (subject to certain exceptions); and, in the case of a sale of the Securities by an affiliate,  the satisfaction of the conditions set forth in sections (i), (ii), (iii) and (iv) of the paragraph immediately above.

(d)           Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.  Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.

(e)           Optionee understands and acknowledges that the Company will rely upon the accuracy and truth of the foregoing representations and Optionee hereby consents to such reliance.

	Signature of Optionee:
Date:

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BELVEDERE SOCAL

2007 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

Modified Time Vested Option, Early Exercise Permitted

Pursuant to its 2007 Equity Incentive Plan, as amended from time to time (the “Plan”), Belvedere SoCal (the “Company”), hereby grants to the Optionee listed below (“Optionee”), an option to purchase the number of shares of the Company’s Common Stock set forth below (the “Option”), subject to the terms and conditions of the Plan and this Stock Option Agreement (this “Option Agreement”). Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement.

I.   NOTICE OF STOCK OPTION GRANT

Optionee:	William Baribault
Date of Option Agreement:	August 14, 2008
Date of Grant:	February 27, 2008
Vesting Commencement Date:	November 23, 2007
Exercise Price per Share:	$15.00
Total Number of Shares Granted:	32,925
Total Exercise Price:	$493,875
Term/Expiration Date:	2/27/2018

Type of Option: Non-Qualified Stock Option

Exercise Schedule: ¨  Same as Vesting Schedule  ý  Early Exercise Permitted

Vesting Schedule: This Option is exercisable immediately, in whole or in part, at such times as are established by the Administrator, conditioned upon Optionee entering into a Restricted Stock Purchase Agreement with respect to any unvested Shares.  This Option or, if exercised prior to vesting, the Shares subject to this Option (in either case, the “Award”), shall vest in full, become exercisable and/or be released from the Company’s Repurchase Option, as set forth in the Restricted Stock Purchase Agreement attached hereto as Exhibit B-1, as applicable (in any case, “Vest”), on the first anniversary of the Vesting Commencement Date, provided, however, that if Optionee’s employment with the Company is terminated by the Company without Cause, by Optionee for Good Reason or due to Optionee’s death or Disability (each as defined in that certain employment agreement by and between the Company and Optionee, of even date herewith), in any case, prior to the first anniversary of the Vesting Commencement Date, then this Award shall Vest immediately prior to such termination, provided, further, that in the event that either an Acquisition or a Qualifying Public Offering occurs prior to the first anniversary of the Vesting Commencement Date, then this Award shall Vest in full on the date on which the Acquisition or Qualifying Public Offering occurs.   For purposes of this Agreement:   “Qualifying Public Offering” shall mean a sale (or the last in a series of sales) of Common Stock to the general public pursuant to one or more underwritten public offerings for cash in which either (i) holders of the Company’s Common Stock as of this Agreement’s Date of Grant have, in the aggregate such underwritten public offerings, sold more than fifty percent (50%) of the shares of Common Stock held by such holders, or (ii) (A) new primary shares of Common Stock comprising more than twenty-five percent (25%) of the Company’s total outstanding shares of Common Stock as of this Agreement’s Date of Grant are offered and (B) the average daily trading volume following such offering is greater than .5% of the Common Stock’s public float for twenty (20) consecutive trading days (the “Volume Condition”).  In the case of clause (ii) of the immediately preceding sentence, a Qualifying Public Offering shall be deemed to have occurred if and when the Volume Condition is satisfied.

 Termination Period: Except in the event of a termination for Cause, this Option may be exercised, to the extent vested as of the date that Optionee ceases to be a Service Provider (in all capacities, including ceasing to serve on the Company’s Advisory Board), for three (3) months after Optionee so ceases to be a Service Provider, or such longer period as may be applicable upon the death or Disability of Optionee as provided herein (or, if not provided herein, then as provided in the Plan), but in no event later than the Term/Expiration Date as set forth above.

II.   AGREEMENT

1.           Grant of Option.  The Company hereby grants to the Optionee an Option to purchase the number of shares of Common Stock (the “Shares”) set forth in the Notice of Grant as defined above, at the exercise price per share set forth in the Notice of Grant (the “Exercise Price”).  Notwithstanding anything to the contrary anywhere else in this Option Agreement, this grant of an Option is subject to the terms and provisions of the Plan, which is incorporated herein by reference.   Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Plan.

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2.           Exercise of Option.  This Option is exercisable as follows:

(a)           Right to Exercise.

(i)           This Option shall be exercisable cumulatively according to the vesting schedule set out in the Notice of Grant.  Alternatively, at the election of the Optionee, this Option may be exercised in whole or in part at such times as are established by the Administrator as to Shares which have not yet vested.  For purposes of this Option Agreement, this Option, or, if exercised prior to vesting, Shares subject to this Option, shall vest based on Optionee’s continued status as a Service Provider (including without limitation, Optionee’s continued service on the Company’s Advisory Board).  Vested Shares shall not be subject to the Company’s Repurchase Option (as set forth in the Restricted Stock Purchase Agreement).

(ii)           As a condition to exercising this Option for unvested Shares, the Optionee shall execute the Restricted Stock Purchase Agreement.

(iii)           This Option may not be exercised for a fraction of a Share.

(iv)           In the event of Optionee’s death, Disability or other termination of the Optionee’s status as a Service Provider (in all capacities, including ceasing to serve on the Company’s Advisory Board), the exercisability of the Option shall be governed by Sections 7, 8 and 9 hereof.

(v)           In no event may this Option be exercised after the Term/Expiration Date of this Option as set forth in the Notice of Grant.

(b)           Method of Exercise.  This Option shall be exercisable by written notice to the Company (in the form attached as Exhibit A) (the “Exercise Notice”).  The Exercise Notice shall state the number of Shares for which the Option is being exercised, and such other representations and agreements with respect to such Shares of Common Stock as may be required by the Company pursuant to the provisions of the Plan.  The Exercise Notice shall be signed by Optionee and, together with an executed copy of the Restricted Stock Purchase Agreement, if applicable, shall be delivered in person or by certified mail to the Secretary of the Company.  The Exercise Notice and Restricted Stock Purchase Agreement shall be accompanied by payment of the Exercise Price, including payment of any applicable withholding tax.

No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise comply with all relevant provisions of all Applicable Laws and the requirements of any stock exchange upon which the Shares may then be listed.  Assuming such compliance, for income tax purposes, the Shares shall be considered transferred to Optionee on the date on which the Option is exercised with respect to such Shares.

3.           Optionee’s Representations.  If the Shares purchasable pursuant to the exercise of this Option have not been registered under the Securities Act at the time this Option is exercised or have ceased to be so registered, or if the Administrator otherwise requires, Optionee shall, concurrently with the exercise of all or any portion of this Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit  C.

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4.           Lock-Up Period.  Optionee hereby agrees that, if so requested by the Company or any representative of the underwriters (the “Managing Underwriter”) in connection with any registration of the offering of any securities of the Company under the Securities Act, Optionee shall not sell or otherwise transfer any Shares or other securities of the Company during the 180-day period (or such longer period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company) (the “Market Standoff Period”) following the effective date of a registration statement of the Company filed under the Securities Act.  The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period and these restrictions shall be binding on any transferee of such Shares.  Notwithstanding the foregoing, the 180-day period may be extended for up to such number of additional days as is deemed necessary by the Company or the Managing Underwriter.

5.           Method of Payment.  Payment of the Exercise Price shall be by any  of the following methods, or a combination thereof, at the election of the Optionee:

(a)           cash;

(b)           check;

(c)           with the consent of the Administrator, a full recourse promissory note bearing interest (at no less than such rate as is a market rate of interest and which then precludes the imputation of interest under the Code), payable upon such terms as may be prescribed by the Administrator and structured to comply with Applicable Laws;

(d)           with the consent of the Administrator, surrender of other Shares of Common Stock of the Company which have a Fair Market Value on the date of surrender equal to the Exercise Price of the Shares as to which the Option is being exercised;

(e)           with the consent of the Administrator, surrendered Shares issuable upon the exercise of the Option having a Fair Market Value on the date of exercise equal to the aggregate Exercise Price of the Option or exercised portion thereof;

(f)           with the consent of the Administrator, property of any kind which constitutes good and valuable consideration;

(g)           with the consent of the Administrator, delivery of a notice that the Optionee has placed a market sell order with a broker with respect to Shares then issuable upon exercise of the Option and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate Exercise Price; provided, that payment of such proceeds is then made to the Company upon settlement of such sale; or

(h)           with the consent of the Administrator, any combination of the foregoing methods of payment.

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6.           Restrictions on Exercise.  This Option may not be exercised until the Plan has been approved by the stockholders of the Company.  If the issuance of Shares upon such exercise or if the method of payment for such Shares would constitute a violation of any Applicable Law, then the Option may not be exercised.  The Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation before allowing the Option to be exercised.

7.           Termination of Relationship.  If Optionee ceases to be a Service Provider (in all capacities, including ceasing to serve on the Company’s Advisory Board), other than by reason of a termination by the Company for Cause or Optionee’s death or Disability, the Option, to the extent vested as of the date on which Optionee so ceases to be a Service Provider shall remain exercisable for the Termination Period set out in the Notice of Grant (but in no event later than the Term/Expiration Date as set forth in the Notice of Grant).  To the extent that the Option is not vested on the date on which Optionee ceases to be a Service Provider, or if Optionee does not exercise this Option within the time specified herein, the Option shall terminate.

8.           Termination for Cause.  If Optionee ceases to be a Service Provider (in all capacities, including ceasing to serve on the Company’s Advisory Board) by reason of a termination by the Company for Cause, the Option shall terminate as of the start of business on the date of Optionee’s termination, regardless of whether the Option is then vested and/or exercisable with respect to any Shares.

9.           Disability of Optionee.  If Optionee ceases to be a Service Provider (in all capacities, including ceasing to serve on the Company’s Advisory Board) as a result of his Disability, the Option, to the extent vested as of the date on which Optionee so ceases to be a Service Provider, shall remain exercisable for twelve (12) months following such date (and in no event later than the Term/Expiration Date set forth in the Notice of Grant).  To the extent that the Option is not vested at the date on which Optionee ceases to be a Service Provider or if Optionee does not exercise such Option within the time specified herein, the Option shall terminate.

10.           Death of Optionee.  If Optionee ceases to be a Service Provider (in all capacities, including ceasing to serve on the Company’s Advisory Board) as a result of his or her death, the Option, to the extent vested as of the date of death, shall remain exercisable for twelve (12) months following the date of death (and in no event later than the Term/Expiration Date set forth in the Notice of Grant) by Optionee’s estate or by a person who acquires the right to exercise the Option by bequest or inheritance.  To the extent that the Option is not vested on the date of Optionee’s death or if the Option is not exercised within the time specified herein, the Option shall terminate.

11.          Non-Transferability of Option.  This Option may not be transferred in any manner except by will or by the laws of descent or distribution.  It may be exercised during the lifetime of Optionee only by Optionee.  The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

12.           Term of Option.  This Option may be exercised only within the term set out in the Notice of Grant.

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13.           Restrictions on Shares.  Optionee hereby agrees that Shares purchased upon the exercise of the Option shall be subject to such terms and conditions as the Administrator shall determine in its sole discretion, including, without limitation, restrictions on the transferability of Shares, the right of the Company to repurchase Shares, and a right of first refusal in favor of the Company with respect to permitted transfers of Shares.  Such terms and conditions may, in the Administrator’s sole discretion, be contained in the Exercise Notice with respect to the Option or in such other agreement as the Administrator shall determine and which the Optionee hereby agrees to enter into at the request of the Company.

 (Signature Page Follows)

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This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which shall constitute one document.

BELVEDERE SOCAL
By:	/s/ Alan J. Lane
Name:	Alan J. Lane
Title:	Executive Chairman

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF THE OPTION AND ANY UNVESTED SHARES ISSUED UNDER OR IN CONNECTION WITH THIS AGREEMENT  IS EARNED ONLY BY CONTINUING SERVICE PROVIDER STATUS AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER).  OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY’S 2007 EQUITY INCENTIVE PLAN, AS AMENDED FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF SERVICE PROVIDER STATUS BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S SERVICE PROVIDER STATUS AT ANY TIME, WITH OR WITHOUT CAUSE AND WITH OR WITHOUT PRIOR NOTICE.

Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof.  Optionee hereby accepts this Option subject to all of the terms and provisions hereof.  Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option.  Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option.  Optionee further agrees to notify the Company upon any change in the residence address indicated below.

Dated:
	OPTIONEE
	Residence Address:

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EXHIBIT A

BELVEDERE SOCAL

2007 EQUITY INCENTIVE PLAN

EXERCISE NOTICE

Belvedere SoCal

[Address]

Attention: Stock Administration

1.           Exercise of Option.  Effective as of today, ___________, _____, the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to purchase _________ shares of the Common Stock (the “Shares”) of Belvedere SoCal (the “Company”), under and pursuant to the Belvedere SoCal 2007 Equity Incentive Plan, as amended from time to time (the “Plan”) and the Stock Option Agreement dated _________________________ (the “Option Agreement”).  Capitalized terms used herein without definition shall have the meanings given in the Option Agreement.

Date of Grant:
Vesting Commencement Date:
Number of Shares as to which Option is Exercised:
Exercise Price per Share:		$
Total Exercise Price:		$
Certificate to be issued in name of:
Cash Payment delivered herewith:	¨	$
Other form of consideration delivered herewith:	¨	Form of Consideration:
		$

Type of Option:                  [Non-Qualified Stock Option]

2.           Representations of Optionee.  Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement.  Optionee agrees to abide by and be bound by their terms and conditions.  Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities.  Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act.

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3.           Rights as Stockholder.  Until the stock certificate evidencing Shares purchased pursuant to the exercise of the Option is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to Shares subject to the Option, notwithstanding the exercise of the Option.  The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised.  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 14 of the Plan.

Optionee shall enjoy rights as a stockholder until such time as Optionee disposes of the Shares.  Upon such exercise, Optionee shall have no further rights as a holder of the Shares so purchased except the right to receive payment for the Shares so purchased in accordance with the provisions of this Agreement, and Optionee shall forthwith cause the certificate(s) evidencing the Shares so purchased to be surrendered to the Company for transfer or cancellation.

4.           Transfer Restrictions.  Any transfer or sale of the Shares is subject to restrictions on transfer imposed by any applicable state and federal securities laws.  Any Transfer or attempted Transfer of any of the Shares not in accordance with the terms of this Agreement, shall be void and the Company may enforce the terms of this Agreement by stop transfer instructions or similar actions by the Company and its agents or designees.

5.           Tax Consultation.  Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares.  Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

6.           Conformity to Securities Laws.  Optionee acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of all Applicable Laws (including, but not limited to the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, including without limitation the applicable exemptive conditions of Rule 16b-3 under the Exchange Act) and to such approvals by any listing, regulatory or other governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Shares are issued, only in such a manner as to conform to such laws, rules and regulations.  To the extent permitted by applicable law, the Plan, this Agreement and the Shares shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

7.           Successors and Assigns.  The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.

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8.           Interpretation.  Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or by the Company forthwith to the Administrator, which shall review such dispute at its next regular meeting.  The resolution of such a dispute by the Administrator shall be final and binding on the Company and on Optionee.

9.           Governing Law; Severability.  This Agreement shall be governed by and construed in accordance with the laws of the State of California excluding that body of law pertaining to conflicts of law.  Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.

10.           Notices.  Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the other party at its address as shown below beneath its signature, or to such other address as such party may designate in writing from time to time to the other party.

11.           Further Instruments.  The Optionee hereby agrees to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement, including, without limitation, the Investment Representation Statement in the form attached to the Option Agreement as Exhibit C.

12.           Delivery of Payment.  The Optionee herewith delivers to the Company the full Exercise Price for the Shares, as well as any applicable withholding tax.

13.           Entire Agreement.  The Plan and Option Agreement are incorporated herein by reference.  This Agreement, the Plan, the Option Agreement, the Investment Representation Statement and the Restricted Stock Purchase Agreement, if applicable, together with any additional documents containing Holder representations as may be required by the Administrator, constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof.

Accepted by:	Submitted by:
BELVEDERE SOCAL	OPTIONEE
By:
	Optionee
Name:
	Address:
Title:

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EXHIBIT B-1

BELVEDERE SOCAL

2007 EQUITY INCENTIVE PLAN

RESTRICTED STOCK PURCHASE AGREEMENT

THIS RESTRICTED STOCK PURCHASE AGREEMENT (this “Agreement”) is made between ______________ (the “Purchaser”) andBelvedere SoCal (the “Company”), as of __________________, ______.

RECITALS

(1)          Pursuant to the exercise of the Option granted to Purchaser under the Company’s 2007 Equity Incentive Plan (the “Plan”) and pursuant to the Stock Option Agreement (the “Option Agree­ment”) dated _________________, by and between the Company and Purchaser with respect to such grant, which Option Agreement is hereby incorporated by reference, Purchaser has elected to purchase _________ of those shares which have not become vested under the vesting schedule set forth in the Option Agreement (“Unvested Shares”).  The Unvested Shares and the shares subject to the Option Agreement which have become vested are sometimes collectively referred to herein as the “Shares”. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Option Agreement or the Plan.

(2)           As required by the Option Agreement, as a condition to Purchaser’s election to exercise the option, Purchaser must execute this Agreement, which sets forth the rights and obligations of the parties with respect to Shares acquired upon exercise of the Option.

1.           Repurchase Option.

(a)           If Purchaser ceases to be a Service Provider for any reason (in all capacities, including ceasing to serve on the Company’s Advisory Board), including without limitation, for cause, without cause, or due to death or Disabi­lity, the Company or its assignee shall have the right and option to purchase from Purchaser, or Purchaser’s personal representative, as the case may be, all of Purchaser’s Unvested Shares as of the date on which Purchaser so ceases to be a Service Provider at a price equal to the lower of the exercise price paid by Purchaser for such Shares in connection with the exercise of the Option or the Fair Market Value of such shares on the date Purchaser so ceases to be a Service Provider (the “Repurchase Option”).

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(b)           The Company may exercise its Repurchase Option by deliver­ing, personally or by regis­tered mail, to Purchaser (or his or her transferee or legal represen­tative, as the case may be), within ninety (90) days of the date on which Purchaser ceases to be a Service Provider, a notice in writing indicating the Company’s inten­tion to exercise the Repurchase Option and setting forth a date for closing not later than thirty (30) days from the mailing of such notice. The closing shall take place at the Company’s office.  At the closing, the holder of the certifi­cates for the Unvested Shares being trans­ferred shall deliver the stock cer­tificate or certificates evidencing the Unvested Shares, and the Company shall deliver the purchase price therefor.

(c)           At its option, the Company may elect to make payment for the Unvested Shares at a bank selected by the Company.  The Company shall avail itself of this option by a notice in writing to Pur­chaser stat­ing the name and address of the bank, date of closing, and waiving the closing at the Company’s office.

(d)           If the Company does not elect to exercise the Repurchase Option conferred above by giving the requisite notice within ninety (90) days following the date on which Purchaser ceases to be a Service Provider, the Repurchase Option shall terminate.

(e)           One hundred percent (100%) of the Unvested Shares shall initially be subject to the Repurchase Option.  The Unvested Shares shall be released from the Repurchase Option in accordance with the Vesting Schedule set forth in the Notice of Grant until all Shares are released from the Repurchase Option.  Fractional Shares shall be rounded to the nearest whole share.

2.           Transferability of the Shares; Escrow.

(a)           Purchaser hereby authorizes and directs the secretary of the Company, or such other person designated by the Company from time to time, to transfer the Unvested Shares as to which the Repurchase Option has been exercised from Purchaser to the Company.

(b)           To insure the availability for delivery of Purchaser’s Unvested Shares upon repurchase by the Company pursuant to the Repurchase Option under Section 1, Purchaser hereby appoints the secretary, or any other person designated by the Company from time to time as escrow agent, as its attorney-in-fact to sell, assign and transfer unto the Company, such Unvested Shares, if any, repurchased by the Company pursuant to the Repurchase Option and shall, upon execution of this Agreement, deliver and deposit with the secretary of the Company, or such other person designated by the Company from time to time, the share certificate(s) representing the Unvested Shares, together with the stock assignment duly endorsed in blank, attached hereto as Exhibit B-2.  The Unvested Shares and stock assignment shall be held by the secretary in escrow, pursuant to the Joint Escrow Instructions of the Company and Purchaser attached as Exhibit B-3 hereto, until the Company exercises its Repurchase Option as provided in Section 1, until such Unvested Shares are vested, or until such time as this Agreement no longer is in effect.  As a further condition to the Company’s obligations under this Agreement, the spouse of Purchaser, if any, shall execute and deliver to the Company the Consent of Spouse attached hereto as Exhibit B-4.  Upon vesting of the Unvested Shares, the escrow agent shall promptly deliver to Purchaser the certificate or certificates representing such Shares in the escrow agent’s possession belonging to Purchaser, and the escrow agent shall be discharged of all further obligations hereunder; provided, however, that the escrow agent shall nevertheless retain such certificate or certificates as escrow agent if so required pursuant to other restrictions imposed pursuant to this Agreement.

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(c)           The Company, or its designee, shall not be liable for any act it may do or omit to do with respect to holding the Shares in escrow and while acting in good faith and in the exercise of its judgment.

(d)           Transfer or sale of the Shares is subject to restrictions on transfer imposed by any applicable state and federal securities laws.  Any transferee shall hold such Shares subject to all of the provisions hereof and the Exercise Notice executed by Purchaser with respect to any Unvested Shares purchased by Purchaser and shall acknowledge the same by signing a copy of this Agreement.  Any transfer or attempted transfer of any of the Shares not in accordance with the terms of this Agreement shall be void and the Company may enforce the terms of this Agreement by stop transfer instructions or similar actions by the Company and its agents or designees.

3.           Ownership, Voting Rights, Duties.  This Agreement shall not affect in any way the ownership, voting rights or other rights or duties of Purchaser, except as specifically provided herein.

4.           Legend.  Any certificates representing Unvested Shares pursuant to this Agreement shall, until all restrictions lapse, bear the following legend or legend substantially similar thereto:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO FORFEITURE, REACQUISITION AND/OR CERTAIN RESTRICTIONS ON TRANSFERABILITY UNDER THE TERMS OF THAT CERTAIN RESTRICTED STOCK PURCHASE AGREEMENT BY AND BETWEEN BELVEDERE SOCAL AND THE REGISTERED OWNER OF SUCH SECURITIES, AND SUCH SECURITIES MAY NOT BE, DIRECTLY OR INDIRECTLY, OFFERED, TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNDER ANY CIRCUMSTANCES, EXCEPT PURSUANT TO THE PROVISIONS OF SUCH AGREEMENT.”

5.           Holding Period.  Notwithstanding any provision of this Agreement to the contrary, in the event that the purchase of the Unvested Shares is not exempt under Section 16 of the Exchange Act on the date of purchase, the Unvested Shares may not be sold, assigned or otherwise transferred or exchanged until at least six months and one day have elapsed from the date of purchase.

6.           Adjustment.  All references to the number of Shares and the purchase price of the Shares in this Agreement shall be appropriately adjusted in accordance with Section 14 of the Plan to reflect any event described in Section 14 of the Plan occurring after the date of this Agreement.

7.           Notices.  Notices required hereunder shall be given in person or by registered mail to the address of Purchaser shown on the records of the Company, and to the Company at its principal executive office.

8.           Survival of Terms.  This Agreement shall apply to and bind Purchaser and the Company and their respective permitted as­signees and transferees, heirs, legatees, executors, administrators and legal successors.

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9.           Section 83(b) Election for Unvested Shares Purchased Pursuant to a Non-Qualified Stock Option.  Purchaser hereby acknowledges that he or she has been informed that, with respect to the exercise of a Non-Qualified Stock Option for Unvested Shares, unless an election is filed by Purchaser with the Internal Revenue Service and, if necessary, the proper state taxing authorities, within thirty (30) days after the purchase of the Shares, electing pursuant to Section 83(b) of the Code (and similar state tax provisions if applicable) to be taxed currently on any difference between the purchase price of the Shares and their Fair Market Value on the date of purchase, there will generally be a recognition of taxable income to the Purchaser, measured by the excess, if any, of the fair market value of the Shares, at the time the Company’s Repurchase Option lapses over the purchase price paid for the Shares.  Purchaser represents that Purchaser has consulted any tax consultant(s) Purchaser deems advisable in connection with the purchase of the Shares or the filing of the Election under Section 83(b) and similar tax provisions.

PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON PURCHASER’S BEHALF.

10.           Representations.  Purchaser has reviewed with his or her own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agree­ment.  Purchaser is relying solely on such advisors and not on any state­ments or represen­tations of the Company or any of its agents.  Purchaser understands that Purchaser (and not the Company) shall be responsible for his or her own tax liability that may arise as a result of this investment or the transactions contem­plated by this Agreement.

11.           Governing Law; Severability.  This Agreement shall be governed by and construed in accordance with the laws of the State of California excluding that body of law pertaining to conflicts of law.  Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.

(Signature Page Follows)

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Purchaser represents that he or she has read this Agreement and is familiar with its terms and provisions.  Purchaser hereby agrees to accept as binding, conclusive and final all decisions or inter­preta­tions of the Board upon any questions arising under this Agreement.

IN WITNESS WHEREOF, this Agreement is deemed made as of the date first set forth above.

BELVEDERE SOCAL

By:

Name:

Title:

PURCHASER

By:

Name:

Address:

15

EXHIBIT B-2

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED I, ______________, hereby sell, assign and transfer unto (__________) shares of the Common Stock of Belvedere SoCal registered in my name on the books of said corporation represented by Certificate No. _____ herewith and do hereby irrevocably constitute and appoint to transfer the said stock on the books of the within named corporation with full power of substitution in the premises.

This Assignment Separate from Certificate may be used only in accordance with the Restricted Stock Purchase Agreement between Belvedere SoCal and the undersigned dated ______________, _____.

Dated: _______________, ________

Signature:______________________________

INSTRUCTIONS:  Please do not fill in any blanks other than the signature line.  The purpose of this assignment is to enable the Company to exercise the Repurchase Option, as set forth in the Restricted Stock Purchase Agreement, without requiring additional signatures on the part of Purchaser.

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EXHIBIT B-3

JOINT ESCROW INSTRUCTIONS

 , ____

Secretary

Belvedere SoCal

[________________]

[________________]

As Escrow Agent for both Belvedere SoCal (together with any assignee of Belvedere SoCal, the “Company”) and the undersigned purchaser of stock of the Company (the “Purchaser”), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Restricted Stock Purchase Agreement (“Agreement”) between the Company and the undersigned, in accordance with the following instructions:

1.           In the event the Company exercises the Company’s Repurchase Option set forth in the Agreement, the Company shall give to Purchaser and you a written notice specifying the number of shares of stock to be purchased, the purchase price, and the time for a closing hereunder at the principal office of the Company or, at the election of the Company, at a Bank of the Company’s choosing.  Purchaser and the Company hereby irrevocably authorize and direct you to close the transac­tion contemplated by such notice in accordance with the terms of said notice.

2.           At the closing, you are directed (a) to date the stock assignments necessary for the transfer in question, (b) to fill in the number of shares being transferred, and (c) to deliver the same, together with the certificate evidencing the shares of stock to be transferred, to the Company or its assignee, against the simultaneous delivery to you of the purchase price (by cash, a check, or a combination thereof) for the number of shares of stock being purchased pursuant to the exercise of the Company’s Repurchase Option.

3.           Purchaser irrevocably authorizes the Company to deposit with you any certificates evidencing shares of stock to be held by you hereunder and any additions and substitutions to said shares as defined in the Agreement.  Purchaser does hereby irrevocably constitute and appoint you as Purchaser’s attorney-in-fact and agent for the term of this escrow to execute, with respect to such securities, all documents necessary or appropriate to make such securities negotiable and to complete any transaction herein contemplated, including but not limited to the filing with any applicable state blue sky authority of any required applications for consent to, or notice of transfer of, the securities.  Subject to the provisions of this paragraph 3, Purchaser shall exercise all rights and privileges of a stockholder of the Company while the stock is held by you.

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4.           Upon written request of Purchaser, but no more than once per calendar year, unless the Company’s Repurchase Option has been exercised, you will deliver to Purchaser a certificate or certificates representing the number of shares of stock as are not then subject to the Company’s Repurchase Option.  Within one hundred twenty (120) days after Purchaser ceases to be a Service Provider (in all capacities, including ceasing to serve on the Company’s Advisory Board), you will deliver to Purchaser a certificate or certificates representing the aggregate number of shares held or issued pursuant to the Agreement and not purchased by the Company or its assignees pursuant to exercise of the Company’s Repurchase Option.

5.           If, at the time of termination of this escrow, you should have in your possession any documents, securities, or other prop­erty belonging to Purchaser, you shall deliver all of the same to Purchaser and shall be discharged of all further obligations hereunder.

6.           Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto.

7.           You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties.  You shall not be person­ally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith, and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith.

8.           You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court.  In case you obey or comply with any such order, judgment or decree, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

9.           You shall not be liable in any respect on account of the identity, authorities or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder.

10.         You shall not be liable for the expiration of any rights under any applicable state, federal or local statute of limita­tions or similar statute or regulation with respect to these Joint Escrow Instructions or any documents deposited with you.

11.         You shall be entitled to employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor.

12.         Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be an officer or agent of the Company or if you shall resign by written notice to each party.  In the event of any such termination, the Company shall appoint a successor Escrow Agent.

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13.         If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments.

14.         It is understood and agreed that, should any dispute arise with respect to the delivery and/or ownership or right of posses­sion of the securities held by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings.

15.         Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties thereunto entitled at such addresses as a party may designate by written notice to each of the other parties hereto.

16.         By signing these Joint Escrow Instructions, you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Agreement.

17.         This instrument shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns.

18.         These Joint Escrow Instructions shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding that body of law pertaining to conflicts of law.

(Signature Page Follows)

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IN WITNESS WHEREOF, these Joint Escrow Instructions shall be effective as of the date first set forth above.

BELVEDERE SOCAL

By:

Name:

Title:

PURCHASER

By:

Name:

Address:

ESCROW AGENT

By:

Name:

Title:

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EXHIBIT B-4

CONSENT OF SPOUSE

I, ____________________, spouse of _____________, have read and approve the Restricted Stock Purchase Agreement dated ___________, _____, between my spouse and Belvedere SoCal.  In consideration of granting of the right to my spouse to purchase shares of Belvedere SoCal set forth in the Restricted Stock Purchase Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Restricted Stock Purchase Agreement insofar as I may have any rights in said Restricted Stock Purchase Agreement or any shares issued pursuant thereto under the community property laws or similar laws relating to marital prop­erty in effect in the state of our residence as of the date of the signing of the foregoing Restricted Stock Purchase Agreement.

Dated: _______________, ______

Signature of Spouse

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EXHIBIT C1

INVESTMENT REPRESENTATION STATEMENT

OPTIONEE	:	[NAME]
COMPANY	:	Belvedere SoCal
SECURITY	:	Common Stock
AMOUNT	:
DATE	:

In connection with the purchase of the above-listed shares of Common Stock (the “Securities”) of Belvedere SoCal. (the “Company”), the undersigned (the “Optionee”) represents to the Company the following:

(a)Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities.  Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

(b)Optionee acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment intent as expressed herein.  Optionee understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available.  Optionee further acknowledges and understands that the Company is under no obligation to register the Securities.  Optionee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company and any other legend required under applicable state securities laws.

___________________________

1 This statement may not be necessary if shares have ceased to be registered under the Securities Act at the time of exercise.

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(c)Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions.  Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to Optionee, the exercise will be exempt from registration under the Securities Act.  In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including, in the case of an affiliate, (i) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934), (ii)  the availability of certain public information about the Company, (iii) the amount of Securities being sold during any three (3) month period not exceeding the limitations specified in Rule 144(e), and (iv) the timely filing of a Form 144, if applicable.

In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold beginning ninety (90) days after the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than six months  after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144 and the availability of certain public information about the Company (subject to certain exceptions); and, in the case of a sale of the Securities by an affiliate,  the satisfaction of the conditions set forth in sections (i), (ii), (iii) and (iv) of the paragraph immediately above.

(d)Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.  Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.

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(e)Optionee understands and acknowledges that the Company will rely upon the accuracy and truth of the foregoing representations and Optionee hereby consents to such reliance.

Signature of Optionee:

Date: ______________________

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