AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
AMENDMENT
NO. 1 TO EMPLOYMENT AGREEMENT
This
Amendment No. 1 to Employment Agreement (the "Amendment") is made as of
December 29, 2008, between Mission Community Bank ("Employer") and Mission
Community Bancorp, a California corporation ("MCB") and Xxxxxx Xxxx ("Executive"), with reference to
the following:
W I T N E
S S E T H
A. Employer
and Executive are currently parties to that certain Employment Agreement ("Agreement") effective as of
June 18, 2007 specifying the terms of Executive's employment by Employer as
President of Employer.
B. The
parties hereto now desire to amend the Agreement as provided
herein.
NOW,
THEREFORE, the parties hereto agree that the following shall take effect as of
the date hereof:
1. EESA
Provisions.
(a) Employer's
parent company, MCB, has entered or intends to enter into agreements with the
U.S. Treasury Department ("UST") under which MCB will
issue preferred shares and other securities to the UST as part of the Troubled
Assets Relief Program Capital Purchase Program ("CPP") established under the
Emergency Economic Stabilization Act of 2008 ("EESA"). Executive
is a Senior Executive Officer (as such term is defined under EESA), has
determined that MCB's participation in the CPP will be of material benefit to
Executive, approved MCB's participation in the CPP, requested that MCB
participate in the CPP and agrees to abide by all terms of EESA restricting
payment of compensation to Executive.
(b) EESA
imposes certain restrictions on employment agreements, severance, bonus and
incentive compensation, stock options and awards, and other compensation and
benefit plans and arrangements ("Plans") maintained by
Employer, MCB and their affiliates and requires that such restrictions remain in
place for so long as the UST holds any debt or equity securities issued by
MCB. The parties hereby agree that all Plans providing benefits to
Executive shall be construed and interpreted at all times that the UST maintains
any debt or equity investment in MCB in a manner consistent with EESA, and all
such Plans shall be deemed to have been amended as determined by Employer and
MCB so as to comply with the restrictions imposed by EESA. Executive
recognizes that such changes may result in the reduction or elimination of
benefits otherwise provided to Executive under this Agreement or any other
Plan. Notwithstanding any other terms of this Agreement or any other
Plan providing benefits to Executive, to the extent that any provision of this
Agreement or any other Plan is determined by Employer or MCB, to be subject to
and not in compliance with EESA, including the timing, amount or entitlement of
Executive to any payment of severance, bonus or any other amounts, such
provisions shall be interpreted and deemed to have been amended to comply with
the terms of EESA. Without limiting the foregoing, any "golden
parachute payment" provided under this Agreement or any other Plan, as defined
for purposes of EESA and Section 280(G)(e) of the Internal Revenue Code of 1986,
as amended ("Code"),
shall be prohibited and aggregate severance payments and benefits due as a
result of Executive's "involuntary termination" of
employment
as defined for purposes of EESA and the Code or in connection with any
bankruptcy filing, insolvency or receivership of MCB, Employer or certain other
entities shall be limited to an amount not exceeding three times Executive's
"base amount" as defined in Section 280G(b)(3) of the Code. The
parties hereto further agree that (i) Executive shall at no time be entitled to
receive any compensation based upon incentives that encourage Executive to take
unnecessary and excessive risks on behalf of Employer or MCB; (ii) Executive
shall promptly repay Employer, MCB or any other affiliated entity compensating
Executive, within thirty (30) days of demand, the amount of any bonus or
incentive compensation paid to Executive based upon statements of earnings,
gains or other criteria that are later determined to be materially inaccurate;
and (iii) all golden parachute payments to Executive are
prohibited.
(c) Severance
compensation under Paragraph F of the Agreement and any other Plan will be
reduced as provided below to avoid the penalties imposed on "golden parachute
payments" under the Code and EESA.
(i) If
the present value of all Executive's severance compensation provided by Employer
or MCB under Paragraph F and outside this Agreement is high enough to cause any
such payment to be a “golden parachute payment” (as defined in Section
280G(b)(2) of the Code or EESA), 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 “golden parachute payment.”
(ii) Executive
may direct Employer and MCB regarding the order of reducing severance
compensation and other payments from Employer and MCB to comply with this
paragraph.
2. Section 409A
Limitation. It is the intention of Employer and Executive that
the severance and other benefits payable to the Executive under this Agreement
either be exempt from, or otherwise comply with, Section 409A (“Section 409A”) of the Internal
Revenue Code of 1986, as amended. Notwithstanding any other term or
provision of this Agreement, to the extent that any provision of this Agreement
is determined by Employer, with the advice of its independent accounting firm or
other tax advisors, to be subject to and not in compliance with Section 409A,
including, without limitation, the definition of “change in control” or the
timing of commencement and completion of severance benefit and/or other benefit
payments to the Executive hereunder in connection with a merger,
recapitalization, sale of shares or other "change in control", or the amount of
any such payments, such provisions shall be interpreted in the manner required
to comply with Section 409A. Employer and Executive acknowledge and
agree that such interpretation could, among other matters, (i) limit the
circumstances or events that constitute a “change in control;” (ii) delay for a
period of six (6) months or more, or otherwise modify the commencement of
severance and/or other benefit payments; and/or (iii) modify the completion date
of severance and/or other benefit payments. Employer and Executive
further acknowledge and agree that if, in the judgment of Employer, with the
advice of its independent accounting firm or other tax advisors, amendment of
this Agreement is necessary to comply with Section 409A, Employer and Executive
will negotiate reasonably and in good faith to amend the terms of this Agreement
to the extent necessary so that it complies (with the most limited possible
economic effect on Employer and Executive) with Section 409A. For
example, if this Agreement is subject to Section 409A and it requires that
severance and/or other
benefit
payments must be delayed until at least six (6) months after Executive
terminates employment, then Employer and Executive would delay payments and/or
promptly seek a written amendment to this Agreement that would, if permissible
under Section 409A, eliminate any such payments otherwise payable during the
first six (6) months following Executive’s termination of employment and
substitute therefor a lump sum payment or an initial installment payment, as
applicable, at the beginning of the seventh (7th) month following Executive’s
termination of employment which in the case of an initial installment payment
would be equal in the aggregate to the amount of all such payments thus
eliminated.
3. No Further
Amendment. Except as set forth herein the terms of the
Agreement shall remain in full force and effect without modification or
amendment.
IN
WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day
and year first above written.
|
EMPLOYER:
|
Mission
Community Bank
By: /s/ Xxxxxxx X. Xxx
Name: Xxxxxxx X.
Xxx
Title: Chairman
of the Board
|
|
MCB:
|
By: /s/ Xxxxxxx X. Xxx
Name: Xxxxxxx X. Xxx
Title: Chairman of
the Board
|
|
EXECUTIVE:
|
/s/ Xxxxxx Xxxx
Name: Xxxxxx
Xxxx
|
