EMPLOYMENT AGREEMENT

Exhibit 10.1

This Employment Agreement (this “Agreement”) is made as of June 3, 2007 with an effective date of June 18, 2007 (the “Effective Date”), by and between MISSION COMMUNITY BANK (the “Bank”), having a principal place of business at 000 Xxxxxxx Xxxxxx, Xxx Xxxx Xxxxxx, Xxxxxxxxxx 00000, and XXXXXX XXXX (“Executive”), whose residence address is 000 Xxxxx Xxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000-0000, with reference to the following:

R E C I T A L S

WHEREAS, the Bank is a banking corporation duly organized, validly existing, and in good standing under the laws of the State of California, with power to own property and carry on its business as it is now being conducted;

WHEREAS, the Bank desires to continue to avail itself of the skill, knowledge, and experience of Executive in order to insure the successful management of its business;

WHEREAS, the parties hereto desire to specify the terms of Executive’s employment by the Bank;

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, and intending to be legally bound, it is agreed that from and after the Effective Date, the following terms and conditions shall apply to Executive’s said employment:

A G R E E M E N T

A. TERM OF EMPLOYMENT

1. Term. The Bank hereby employs Executive and Executive hereby accepts employment with the Bank for the period commencing on the Effective Date and terminating December 31, 2009, unless terminated earlier as provided for in this Agreement (the “Term”). Where used herein, “Term” shall refer to the entire period of employment of Executive by Bank hereunder, whether for the period provided above, including any extensions thereof, or whether terminated earlier as hereinafter provided.

B. DUTIES OF EXECUTIVE

1. Duties. Executive shall perform the duties of President of the Bank, subject to the powers by law vested in the Board of Directors of the Bank and in the Bank’s shareholders. Executive shall report to the Chief Executive Officer of the Bank. The duties of Executive may be changed or supplemented by the Bank without a resulting recision of this Agreement. Notwithstanding any such change from the duties originally assigned and specified above, or hereafter assigned, the employment of Executive shall be construed as continuing under this Agreement as modified. Without limiting the foregoing, Executive agrees to hold such positions with Mission Community Bancorp (the “Company”) as the Company may direct without payment of additional compensation. During the Term, Executive shall perform exclusively the services herein contemplated to be performed by Executive faithfully, diligently, and to the best of Executive’s ability, consistent with the highest and best standards of the banking industry and in compliance with all applicable laws

and the Bank’s Articles of Incorporation, Bylaws, and internal written policies. Executive shall also be nominated by the Boards of Directors of the Company and the Bank to serve as a director of the Company and the Bank during the Term.

2. Conflicts of Interest. Except as permitted by the prior written consent of the Board of Directors of the Bank, Executive shall devote Executive’s entire productive time, ability, and attention to the business of the Bank during the Term, and Executive shall not directly or indirectly render any services of a business, commercial, or professional nature, to any other person, firm, or corporation, whether for compensation or otherwise, which are in conflict with the Bank’s interest.

C. COMPENSATION

1. Base Salary. For Executive’s services hereunder, commencing on the Effective Date, the Bank shall pay or cause to be paid as annual base salary to Executive the sum of not less than One Hundred Thirty-Five Thousand Dollars ($135,000) for each year (i.e., 12-month period) of the Term (the “Base Salary”). Said salary shall be payable in equal installments in conformity with Bank’s normal payroll periods. Annual increases, if any, may be made in the sole discretion of the Board of Directors.

2. Bonuses. During the Term, Executive shall be entitled to receive as an incentive, a bonus as determined and payable in accordance with the Bank’s Officers’ Incentive Compensation Program as set forth on Exhibit “A” hereto, as it may be amended from time to time by mutual agreement of the Board of Directors and Executive, together with such other bonus as the Board of Directors shall determine from time to time in its sole and absolute discretion (collectively, the “Incentive Bonus”). The bonus for 2007 shall be prorated to take account of Executive’s partial service for such year.

D. EXECUTIVE BENEFITS

1. Vacation and Sick Pay. Executive shall be entitled to four (4) weeks vacation during each year of the Term; provided, however, that for each year of the Term, Executive is required to and shall take at least two (2) weeks of said vacation (the “Mandatory Vacation”), which shall be taken consecutively. Any vacation time not used in excess of the Mandatory Vacation may be accumulated in accordance with Bank’s Personnel Policy. Executive shall also be entitled to sick pay in accordance with Bank’s Personnel Policy.

2. Automobile Allowance. During the Term, the Bank shall provide Executive with a $750.00 per month automobile allowance. Provided the Bank pays the foregoing automobile allowance, the Bank shall have no other duty, responsibility or liability on account of Executive’s automobile and at all times during the Term, Executive shall maintain such insurance on the automobile including, without limitation, liability for personal injury and property damage as the Bank shall from time to time reasonably require to protect Bank against any loss which may arise from Executive’s use of the automobile while working for the Bank.

3. Group Medical and Life Insurance Benefits. The Bank shall provide for Executive, at Bank’s expense, participation in the Bank’s existing medical, dental, vision, accident, health and life insurance benefits in accordance with benefits provided to Bank

employees generally, but at a level commensurate with other officers of the Bank (collectively, the “Insurance Coverage”). Said Insurance Coverage shall be in existence as of the Effective Date hereof and shall continue throughout the Term. The Bank’s liability to Executive for any breach of this Paragraph D.3 shall be limited to the amount of premiums required hereunder to be payable by the Bank to obtain or maintain, as applicable, the coverages contemplated herein.

4. Stock Options. By separate stock option agreement Executive shall also be given the option to purchase a number of shares of the Company common stock equal to the lesser of (a) 25,000 shares or (b) 5.0% of the number of shares issued in the first public offering of Company shares occurring after the Effective Date and prior to December 31, 2007, which option shall be granted as of the date of the final closing of such offering. The exercise price per share shall be equal to the greater of the fair market value per share of the common stock of the Company on the date of grant or the offering price in such offering. In the event the offering is not completed, no options will be issued. The term of the option shall be ten years and shall vest in five (5) annual installments of 20% per year over a period of five (5) years, with the first such installment to vest one year after the Effective Date and with subsequent installments vesting on the second, third, fourth and fifth anniversaries of the Effective Date. The option shall be a non-qualified option for purposes of the Internal Revenue Code of 1986. The shares to be issued upon the exercise of the option will be restricted securities, will not be required to be registered under the Securities Act of 1933, and may not be sold by Executive except pursuant to an effective registration statement or applicable exemption therefrom. The stock option agreement shall set forth additional terms for such option.

5. Additional Benefits. Executive shall be entitled to participate in all programs, rights and benefits for which Executive is otherwise entitled under any 401(k) plan, bonus plan, incentive plan, participation plan, extra compensation plan, pension plan, profit sharing plan, savings plan, life, medical, dental, other health care, disability or other insurance plan or policy or other plan or benefit Bank may provide for senior executives or for employees of Bank generally, from time to time, in effect during the Term.

6. Club Membership. The Bank shall pay or reimburse Executive for all dues associated with a country club membership of Executive at a club approved by the Board’s Compensation Committee, and shall also reimburse Executive for all business expenses associated with club use in accordance with Bank’s reimbursement policies.

E. REIMBURSEMENT FOR BUSINESS EXPENSES

1. Business Expenses. Executive shall be entitled to reimbursement by the Bank for any ordinary and necessary business expenses incurred by Executive in the performance of Executive’s duties and in acting for the Bank during the Term, which types of expenditures shall be determined by the Board of Directors, provided that:

(a) Each such expenditure is of a nature qualifying it as a proper deduction on the federal and state income tax returns of the Bank as a business expense and not as a deductible compensation to Executive; and

(b) Executive furnishes to the Bank adequate records and other documentary evidence required by federal and state statutes and regulations issued by the

appropriate taxing authorities for the substantiation of such expenditures as deductible business expenses of the Bank and not as deductible compensation to Executive.

2. Reimbursement. Executive agrees that, if at any time payment made to Executive by Bank for business expense reimbursement shall be disallowed in whole or in part as deductible business expense by the appropriate taxing authorities, the amount so disallowed shall be treated as taxable compensation to Executive.

F. TERMINATION

1. Termination for Cause. The Bank may terminate Executive’s employment at any time by action of the Board of Directors for “cause” if:

(a) Executive fails to perform or habitually neglects the duties which Executive is required to perform hereunder;

(b) if Executive engages in illegal activity which materially adversely affects the Bank’s reputation in the community or which evidences the lack of Executive’s fitness or ability to perform Executive’s duties as reasonably determined by the Board of Directors, in good faith;

(c) Executive commits any act which would cause termination of coverage under the Bank’s Bankers’ Blanket Bond as to Executive or as to the Bank as a whole;

(d) any regulatory authority having supervisory authority over Bank exercises its cease and desist powers to remove Executive from office or advises Bank that Executive should be removed from office;

(e) if the Bank is closed by or taken over by the California Commissioner of Financial Institutions or other supervisory authority, including the Federal Deposit Insurance Corporation;

(f) in the event of Executive’s death, or if Executive is found to be physically or mentally incapable of performing Executive’s duties for a period of ninety (90) days or greater by the Board of Directors, in good faith; or

(g) any other act or omission which would constitute “cause” under California law occurs. Such termination shall not prejudice any remedy which the Bank may have at law, in equity, or under this Agreement.

Termination pursuant to this Paragraph F.1 shall become effective upon written notice of termination.

2. Change in Control Event. In the event of a “Change of Control” Executive’s employment with the Bank may not be terminated by Bank, the surviving or resulting entity or the transferee of the Bank’s assets. In the event of a “Change of Control” Executive may terminate Executive’s employment under this Agreement for “Good Cause.”

(a) A Change of Control shall be deemed to have occurred if:

(i) there shall be consummated (A) any consolidation or merger of the Company, other than a merger of the Company in which the holders of the Company’s Common Stock immediately prior to the merger have substantially the same proportionate ownership of common stock of the surviving corporation immediately after the merger, in which the Company is not the continuing or surviving corporation, or pursuant to which shares of the Company’s Common Stock would be converted in whole or in part into cash, securities or other property, if as a result of the consolidation or merger, the continuing or surviving corporation acquired more than 50% of the total fair market value or total voting power of the Company’s Common Stock, or (B) any sale, lease, exchange or transfer (in one transaction or a series of related transactions) of all or substantially all the assets (which shall be defined as more than 50% of the total gross fair market value of all of the assets) of the Company, or

(ii) the shareholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company, or

(iii) any “person” (as such term is used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”)), other than the Company or a subsidiary thereof or a corporation owned, directly or indirectly, by the shareholder of the Company, shall become the beneficial owner (within the meaning of Rule 13(d)(3) under the Exchange Act) of securities of the Company representing 35% or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, or

(iv) at any time during a twelve-month period, individuals who, at the beginning of such period, constituted the Board of Directors of the Company shall cease for any reason to constitute at least a majority thereof, unless the election or the nomination for election by the Company’s shareholders of each new director during such twelve-month period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such twelve-month period, or

(v) any “person” (as such term is used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”)), other than the Company, Bank or a subsidiary thereof or a corporation owned, directly or indirectly, by the shareholder of the Company or Bank, shall become the beneficial owner (within the meaning of Rule 13(d)(3) under the Exchange Act) of securities of the Bank representing 35% or more of the combined voting power of the Bank’s then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise.

(b) The following shall constitute “Good Cause”:

(i) subsequent to a Change of Control, and without Executive’s express written consent, the assignment to Executive of any duties substantially inconsistent with Executive’s positions, duties, responsibilities and status with Bank immediately prior to the Change of Control, or a substantial change in Executive’s reporting

responsibilities, titles or offices as in effect immediately prior to the Change of Control, or any removal of Executive from or any failure to re-elect Executive to any of such positions, except in connection with the termination of Executive’s employment pursuant to Paragraph F.1 hereof, or as a result of Executive’s retirement, or by Executive other than for Good Cause;

(ii) subsequent to a Change of Control a 10% or greater reduction by Bank in Executive’s Base Salary and benefits as in effect on the Effective Date or as the same may be increased from time to time;

(iii) subsequent to a Change of Control and without Executive’s express written consent, Bank’s requiring Executive to be based anywhere other than within 15 miles of Bank’s main office location immediately prior to the Change of Control, exclusive of required travel on Bank business; or

(iv) subsequent to a Change of Control, the failure by Bank to obtain the assumption of the agreement to perform this Agreement by any successor as contemplated in Paragraph G.5 hereof.

3. Termination Without Cause. Notwithstanding anything to the contrary contained herein, it is agreed by the parties hereto that either the Bank or Executive may at any time elect to terminate Executive’s employment by the Bank for any reason. Such termination shall be effective upon the giving of not less than five (5) days prior written notice where the Bank is terminating Executive’s employment and upon the giving of not less than sixty (60) days’ prior written notice where Executive is terminating Executive’s employment hereunder.

4. Expiration of Term Without Renewal. If the Bank is unwilling, for any reason whatsoever, to enter into a new employment agreement with Executive at the expiration of the full Term, or the Executive and Bank are unable to reach a mutually agreeable contract prior to the expiration of a full Term, or Executive decides to retire or to take employment elsewhere at the expiration of the full Term, then Executive=s employment with Bank shall terminate at the end of the full Term.

5. Effect of Termination.

(a) In the event Executive=s employment with Bank is terminated for any of the reasons specified in Paragraphs F.1 or F.3 (as a result of Executive’s election to terminate) of this Agreement, Executive shall be entitled to (i) the Base Salary and Incentive Bonus earned by Executive prior to the date of termination, computed pro rata up to and including that date, and (ii) accrued but unused vacation time, but Executive shall be entitled to no further compensation or benefits otherwise provided for or contemplated under this Agreement.

(b) In the event Executive=s employment with Bank is terminated pursuant to Paragraph F.3 of this Agreement (as a result of Bank’s election to terminate and no Change of Control has occurred), Executive shall be entitled to (i) the Base Salary and Incentive Bonus earned by Executive prior to the date of termination, computed up to and including that date, (ii) accrued but unused vacation time, and (iii) an amount equal to six (6) months of Executive’s Base Salary in effect immediately prior to the date of termination,

payable in equal installments over six (6) months in accordance with the Bank’s normal payroll periods.

(c) In the event Executive=s employment with Bank is terminated pursuant to Paragraph F.2 of this Agreement (as a result of Executive’s election to terminate for Good Cause), or by Bank or the resulting or surviving entity pursuant to Paragraph F.3 after a Change of Control has occurred, Executive shall be entitled to (i) the Base Salary and Incentive Bonus earned by Executive prior to the date of termination, computed pro rata up to and including that date, (ii) accrued but unused vacation time, (iii) the continuation of the Insurance Coverage as provided in Paragraph D.3 hereof and the automobile allowance as provided in Paragraph D.2 hereof for a period of twelve (12) months from and after the date of termination, and (iv) an amount equal to twelve (12) months of Executive’s Base Salary in effect immediately prior to the date of termination in a lump sum payment.

(d) The payment of such benefits shall discharge Bank from any further liability to Executive under this Agreement.

(e) In the event Executive=s employment with Bank and the Term are terminated pursuant to Paragraph F of this Agreement, the provisions of Paragraph G hereof shall survive said termination and shall inure to the benefit of and be binding upon the parties hereto and their respective executors, administrators, successors and assigns.

(f) In the event Executive=s employment with Bank is terminated in accordance with this Paragraph F of this Agreement (whether by Executive or Bank) and at such time Executive is a member of the Board of Directors of Company, Bank or any subsidiary thereof, or holds any other office thereof, Executive shall, and hereby agrees to, tender Executive=s resignation from the Board of Directors of the Company, Bank and all subsidiaries thereof and any committees thereof and all other offices of the Company, Bank and all subsidiaries thereof then held by Executive effective on the date of termination. If such resignation is not received by the Bank within three (3) days after the date of termination, Executive hereby authorizes and directs the Board of Directors of all such entities to consider the failure to so act as Executive’s resignation from all said positions effective as of the date of termination.

6. Golden Parachute Limitation. Severance compensation as provided above will be reduced as provided below to the extent required to avoid the penalties imposed on “parachute payments” under the Internal Revenue Code of 1986 (the “Code”).

(a) If the present value of all Executive’s severance compensation provided by the Bank hereunder and outside this Agreement is high enough to cause any such payment to be a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then one or more of such payments will be reduced by the minimum amount required to prevent the severance compensation under this Agreement from being a “parachute payment.”

(b) Executive may direct the Bank regarding the order of reducing severance compensation and other payments from the Bank to comply with this Paragraph F.6.

G. GENERAL PROVISIONS

1. Trade Secrets. During the Term, Executive will have access to and become acquainted with what Executive and Bank acknowledge are trade secrets; to wit, knowledge or data concerning the Bank, including its operations and methods of doing business, and the identity of customers of the Bank, including knowledge of their financial condition and their financial needs. Executive shall not disclose any of the aforesaid trade secrets, directly or indirectly, or use them in any way, either during the Term or for a period of five (5) years after the termination of this Agreement, except as required in the course of Executive’s employment with the Bank.

2. Covenant Not to Interfere. Executive hereby covenants and agrees that Executive will not during the Term, or for the period during which Executive receives any compensation from Bank, whether pursuant to this Agreement or otherwise, plus an additional period of one (1) year, disrupt, damage, impair or interfere with the business of Bank, whether by way of interfering with or raiding its employees, disrupting its relationships with customers or their agents, representatives or vendors, or otherwise. After termination of employment, Executive is not, however, restricted from being employed by or engaging in a competing business.

3. Return of Documents. Executive expressly agrees that all manuals, documents, files, reports, studies, instruments, or other materials used and/or developed by Executive during the Term are solely the property of the Bank, and that Executive has no right, title, or interest therein. Upon termination of this Agreement, Executive or Executive’s representative shall promptly deliver possession of all of said property to the Bank in good condition.

4. Notices. All notices, demands, or other communications hereunder shall be in writing and shall be delivered in person (professional courier acceptable); or by United States mail, certified or registered, postage prepaid, with return receipt requested; or by facsimile transmission; or otherwise actually delivered, to the addresses for the parties appearing at the inception of this Agreement. The persons or addresses to which mailings or deliveries shall be made may change from time to time by notice given pursuant to the provisions of this Paragraph G.4. Any notice, demand, or other communication given pursuant to this Agreement shall be deemed to have been given on the date actually delivered, if delivered in person, three (3) days following the date mailed, if delivered by U.S. mail, or upon written confirmation of transmission, if delivered by facsimile.

5. Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective executors, administrators, successors and assigns.

6. Review by Counsel. Executive represents and warrants to the Bank that Executive has had this Agreement reviewed by independent legal counsel of Executive’s choice, or if Executive has not, that Executive has had the opportunity to do so, and hereby waives any claim, objection, or defense on the grounds that this Agreement has not been reviewed by legal counsel of Executive’s choice.

7. California Law. This Agreement is to be governed by and construed in accordance with the laws of the State of California.

8. Captions and Paragraph Headings. Captions and paragraph headings used herein are for convenience only and are not a part of this Agreement and shall not be used in construing this Agreement.

9. Invalid Provisions. Should any provision of the Agreement for any reason by declared invalid, void, unenforceable by a court of competent jurisdiction, the validity and binding effect of any remaining portion shall not be affected, and the remaining portions of this Agreement shall remain in full force and effect as if this Agreement had been executed with said provisions eliminated.

10. Entire Agreement. This Agreement and the other agreements, plans or documents specifically referred to herein, including Stock Option Agreements, contain the entire agreement of the parties. This Agreement supersedes any and all other agreements, either oral or in writing, between the parties with respect to the employment of Executive by the Bank, including the Original Agreement and any Salary Protection Agreement. Each party to this Agreement acknowledges that no representation inducements, promises, or agreements, oral or otherwise, have be made by any party, or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement, premise not contained in this Agreement shall be valid or binding. This Agreement may not be modified or amended by oral agreement but only by an agreement in writing signed by both the Bank and Executive.

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

MISSION COMMUNITY BANK


By	/s/Xxxxxxx X. Xxx
		Xxxxxxx X. Xxx
Its:		Chairman of the Board of Directors


By		/s/ Xxxxxxx Xxxx
		Xxxxxxx Xxxx
Its:		Vice Chairman of the Board of Directors


EXECUTIVE


/s/ Xxxxxx Xxxx
Xxxxxx Xxxx

Exhibit A

BANK’S OFFICERS’ INCENTIVE COMPENSATION PROGRAM

PURPOSE

The purpose of the Incentive Compensation Plan (“Plan”) is to provide an incentive to key employees to improve the Bank’s financial performance, and to provide a vehicle for awarding exceptional performance. Incentives are based on the achievement of annual financial objectives consistent with the Bank’s long-term goals.

ELIGIBLITY

All Corporate Officers and designated Loan Officers of Mission Community Bank are eligible to participate in the Plan. Target awards are based on production and grouping.

A minimum of three months continuous service with Mission Community Bank is necessary in order to be eligible for an award under the Plan.

PLAN ADMINISTRATION

A Personnel Committee of the Board of Directors (“Committee”) administers the Plan, which approves: (1) plan participants, (2) bonus award levels, (3) bank and Production objectives and target performance levels. The Committee also approves final incentive payouts at the end of the plan year. The CEO of the Bank is delegated the responsibility for the day-to-day administration of the Plan, the objectives and the awards for the officers for quarterly production awards.

PERFORMANCE OBJECTIVES

Awards under the Plan are based on achievement of annual Bank objectives and Production objectives. The weighting of Bank objectives is dependent on the position the participating employee holds within the Bank.

Bonus Opportunity for:	Bank Objectives		Production Objectives
· President	100	%	0	%
· Executive Vice Presidents	100	%	0	%
· SVP’s, VP’s, and AVP’s (Support)	100	%	0	%
· SVP’s, VP’s and AVP’s (Branch Managers)	20	%	80	%
· SVP’s, VP’s, and AVP’s (Production)	0	%	100	%
· Designated Loan Officers	0	%	100	%

Bank and Production objectives are specified in advance of the Plan year and approved by the CEO and the Board.

PRODUCTION OBJECTIVES

Production objectives are established for each participating officer based on the Bank’s annual goals and budget. Production objectives are specified at the beginning of the Plan year.

Depending on annual goals for the Bank, Production objectives will typically include commercial and construction loans, commercial real estate loans, consumer loans, equity lines of credit, leases, and deposits. The measurement of Production objectives will be based on gross loan origination and net growth in deposits. In addition, award payout guidelines include the following stipulations:

· Loans which are 60 consecutive days delinquent for payment or by maturity, or are adversely classed as “substandard” or “doubtful” during the first twelve months of the a loan will result in a 50% commission charge back to the production officer.

· Loans which are classified “loss” during the first twelve months of a loan will result in a 100% commission charge back to the production officer.

· Commercial Lines of Credit will be commissioned at 50% of the commitment amount.\

· For Participation sold, incentive will be based on amount of loan retained by the Bank.

The Bank offers a separate Brokered Loan Incentive Program. The loans that are brokered to a secondary market lender are paid a referral fee and are not a part of the production objectives. The Bank also offers a separate Sales Referral Incentive Program for SBA loans and Leases referred, approved and funded.

Bonus Opportunity for Production Objectives: Commercial Lenders & Branch Managers

Commercial, Construction & Commercial Real Estate Loans
$0 — $999,999		-0-
$1,000,000 - $4,999,999		10BP
$5,000,000 - $9,999,999		20 BP
Over $10,000,000		30 BP
Deposits
Certificate of Deposits		5 BP
Savings Accounts		25 BP
Demand Deposit Accounts		50 BP

If more than one Production Officer participates in the origination and funding of a loan, they will share the incentive award based on terms outlined by the Incentive Sharing Agreement. For deposit incentives, the award is based on the quarterly increase in average balance. All officers, production or support, are eligible for deposit incentives. Officers will be paid on a pro-rata share of the increase in average balance.

INCENTIVE AWARDS

Incentive awards for Production Officers are paid out quarterly. Support Officers will receive a quarterly pay out for deposit incentives. At year end, payout calculation is “trued up,” i.e. calculated on a year-to-date basis and incentive paid year-to-date subtracted out to arrive at 4th quarter payout.

Final awards for the Bank are distributed following the end of the Plan year. Awards for Support officers and Branch managers are calculated against the achievement of Bank objectives as shown below (as % of base salary).

Bonus Opportunity for Bank Objectives for Support Officers and Branch Managers

		Minimum (80% of Goals)		Target (100% Goals)		Maximum
Group 1:	· President	20	%	30	%	Unlimited
Group 2:	· Executive Vice Presidents	10	%	15	%	Unlimited
Group 3:	· Senior Vice Presidents	8	%	12	%	Unlimited
Group 4:	· Vice Presidents	7	%	10	%	Unlimited
Group 5:	· Assistant Vice Presidents	7	%	10	%	Unlimited

Incentive awards will be paid on a pro-rata basis if the Participant does not have full year of service during the plan year. Incentive awards are based on the Participant’s base salary for bank objectives. Other bonuses, incentives, benefits, or perks are not included in total wages for incentive award payout.

TERMINATION OF EMPLOYMENT

Unless determined otherwise by the Committee, a Participant who terminates employment with the Bank or is terminated by the Bank is not eligible to receive an incentive awards.

Participants must be employed with the Bank when incentive is paid out to be eligible for the award.

In the event of competitive activity, failure to cooperate with the Bank or conduct detrimental to the best interest of the Bank, the Committee may, at its discretion, remove a participant from the Plan.

DEFINITIONS

The “Plan”	Incentive Compensation Plan of Mission Community Bank

“Participants”	All active Corporate Officers and designate Loan Officers of Mission Community Bank with a minimum of 3 months continuous service.

The “Bank”	Mission Community Bank

The “Committee”	The Personnel Committee of the Board of Directors

“Production Objectives”	Production objectives are established at the beginning of each annual performance period

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EMPLOYMENT AGREEMENT

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