COMPENSATION MODIFICATION AGREEMENT
THIS
AGREEMENT (“Agreement”), made this ____ day of ________, 200_, by and between
____________________________, __________________, its wholly owned subsidiary,
(together, the “Corporation”) and ___________________________, a senior
executive officer of the Corporation (“Executive”).
WHEREAS,
the Corporation has determined that it is in the best interests of the
Corporation and its stockholders to participate in the Treasury TARP CPP program
(“CPP”), under which, the Corporation will issue preferred stock and warrants to
purchase Corporation common stock to the United States Treasury (“UST”) in
return for cash; and
WHEREAS,
in order for the Corporation to participate in the CPP, the Corporation and its
senior executive officers subject to the Compensation Guidelines (“SEOs”) must
comply with Section 111(b) of the Emergency Economic Stabilization Act of 2008
regarding executive compensation and corporate governance and the related UST
interim final regulations (31 CFR Part 30) published in the Federal Register on
October 20, 2008 (the “Compensation Guidelines”); and
WHEREAS,
the Corporation is required to deliver a certificate to the UST at the closing
of the CPP transaction that it has complied with all the Compensation
Guidelines; and
WHEREAS,
the board of directors of the Corporation has authorized and directed the
Compensation Committee to take any and all the actions required under the
Compensation Guidelines in order to enable the Corporation to deliver that
certificate and authorized each member of the Compensation Committee to execute
this Agreement on behalf of the Corporation; and
WHEREAS,
in order to comply with the Compensation Guidelines for so long as UST holds
securities of the Corporation acquired in the CPP, the Corporation, through the
Compensation Committee, is required to review the Corporation’s compensation
plans and policies with senior risk officers in order to identify and
unilaterally eliminate any bonus plans or other incentive compensation
arrangements for SEOs that encourage them to take unnecessary and excessive
risks that threaten the value of the financial institution; and
WHEREAS,
in order to comply with the Compensation Guidelines for so long as UST holds
securities of the Corporation acquired in the CPP, the Corporation, through the
Compensation Committee, must adopt appropriate provisions for the recovery by
the Corporation of any bonus or incentive compensation paid to a senior
executive officer (as defined under the Compensation Guidelines) based on
financial statements or performance metric criteria later determined to be
materially inaccurate; and
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WHEREAS,
in order to comply with the Compensation Guidelines as long for so UST holds
securities of the Corporation acquired in the CPP, the Corporation is prohibited
from making any golden parachute payment (as defined under the Compensation
Guidelines) to any SEO; and
WHEREAS,
the Corporation is required to deliver to the UST in connection with the
consummation of the CPP transaction a waiver from each of its SEOs with respect
to the changes in the Corporation’s compensation plans, polices and practices as
required by the Compensation Guidelines; and
WHEREAS,
the Compensation Committee has asked Executive to execute the waiver in the form
attached; and
WHEREAS,
the Executive believes the requirements imposed under the Compensation
Guidelines in order for the Corporation to obtain government funds by
participating in the CPP are reasonable and in the best interests of the
Corporation and its stockholders and furthers the long term best interests of
the Corporation and its SEOs, including the Executive.
NOW,
THEREFORE, to allow the Corporation to participate in the CPP for the mutual
benefit of the Corporation, its stockholders and Executive, and for other good
and valuable consideration, the Corporation and the Executive hereby agree as
follows:
1. GENERAL MODIFICATION OF
EMPLOYMENT, COMPENSATION AND BENEFIT AGREEMENTS, PLANS AND
POLICIES: Until such time as the UST ceases to own any debt or
equity securities of the Corporation acquired pursuant to the CPP, the
Corporation and Executive agree that, notwithstanding any contract, plan, policy
or agreement to the contrary, all employment, compensation and benefit
agreements, plans and policies with respect to Executive shall be deemed
modified to comply in all respects with Section 111(b) of EESA as implemented by
any guidance or regulation thereunder that has been issued and is in effect as
of the date the Corporation issues preferred stock and warrants to the
UST. The Corporation and Executive further agree that the Corporation
shall not adopt any new benefit plan with respect to Executive that does not
comply with Section 111(b) of EESA as implemented by any guidance or regulation
thereunder that has been issued and is in effect as of the date the Corporation
issues preferred stock and warrants to the Treasury. The Executive
agrees that the Corporation, through its Compensation Committee, has the sole
discretion: (a) to determine whether and to what extent any bonus or incentive
compensation with respect to the Executive encourages the Executive to take
unnecessary and excessive risks that threaten the value of the financial
institution, and (b) to eliminate any such compensation as long as UST holds
securities of the Corporation acquired in the CPP.
2. RECOVERY OF INCENTIVE
COMPENSATION: Until such time as the UST ceases to own any
debt or equity securities of the Corporation acquired pursuant to the CPP, in
the event Executive receives a bonus or any other incentive compensation from
the Corporation based on financial statements or performance metric criteria
later
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determined
by the Corporation’s Compensation Committee, in its sole discretion, to be
materially inaccurate, Executive agrees to repay the Corporation, in cash and
within 30 days of a written demand therefore, the amount of the bonus or
incentive compensation received by Executive in excess of the amount that would
have been paid to Executive had the inaccurate statements or criteria been
accurate.
3. GOLDEN PARACHUTE
PAYMENTS: Until such time as the UST ceases to own any debt or
equity securities of the Corporation acquired pursuant to the CPP, Executive
agrees that: (a) the Executive shall not be entitled to receive any golden
parachute payment (as defined under the Compensation Guidelines) upon
Executive’s severance from employment (as defined under the Compensation
Guidelines) and (b) that all applicable contacts and agreements between
Executive and the Corporation are deemed to be amended in this
regard.
4. WAIVER: Executive
hereby voluntarily waives any claim against the Corporation for any changes to
my compensation, bonus, incentive and other benefit plans, arrangements,
policies and agreements (including golden parachute agreements) that are
required to comply with the Compensation Guidelines and that are made pursuant
to this Agreement. This waiver includes all claims Executive may have
under the laws of the United States or any state related to the requirements
imposed by the Compensation Guidelines, including, without limitation, a claim
for any compensation or other payments Executive would otherwise
receive. Executive agrees to execute the required waiver in the form
attached hereto and deliver said warrant to the Corporation no later than the
close of business on November 18, 2008.
5. COVERED EMPLOYMENT,
COMPENSATION AND BENEFIT AGREEMENTS, PLANS AND
POLICIES: Executive acknowledges that the employment,
compensation and benefit agreements, plans and policies applicable to Executive
that are listed in Annex A hereto are all subject to the modifications and
amendments provided for in this Agreement, to the extent
applicable.
6. MODIFICATION - WAIVERS -
APPLICABLE LAW: No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing, signed by the Executive and on behalf of the Corporation by such
officer as may be specifically designated by the Board of Directors of the
Corporation. No waiver by either party hereto at any time of any breach by the
other party hereto of, or in compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by federal law, to the extent applicable, and otherwise by the laws of the State
of California.
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7. INVALIDITY -
ENFORCEABILITY: The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect. Any
provision in this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating or affecting the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8. HEADINGS: Descriptive
headings contained in this Agreement are for convenience only and shall not
control or affect the meaning or construction of any provision in this
Agreement.
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IN
WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date first above written.
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EXECUTIVE
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By:
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Member
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Signature
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