Exhibit
10.3


 


FIRST AMENDMENT TO

EMPLOYMENT AGREEMENT


 


This First Amendment to Employment Agreement (this “Amendment”)
is effective as of December 21, 2007 (“Effective Date”), by and among
James H. Burgess (“Executive”) and 1st Pacific Bank of California, a California
state-chartered bank (the “Bank”).


 


RECITALS


 


A.            Executive
and the Bank, have entered into that certain Employment Agreement dated November 17,
2006 (the “Agreement”);


 


B.            Executive
and the Bank desire to amend the Agreement pursuant to the terms and conditions
of this Amendment.


 


NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants and conditions set forth below, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:


 


1.             Definitions.           Unless otherwise defined in this
Amendment, all capitalized terms herein shall have the meanings ascribed to
them in the Agreement.


 


2.             Salary.  Section 3.1 of the Agreement is
deleted in its entirety and replaced with the following:


 


“3.1           Salary.  The Bank shall pay Executive a minimum annual
salary, pro rated for partial years, at the rate of One Hundred Fifty Two
Thousand Dollars ($152,000) for the period of the Effective Date through November 15,
2007, increasing to One Hundred Sixty Six Thousand Four Hundred Dollars
($166,400) for the period of November 15, 2007 through December 31,
2008, due and payable biweekly, or otherwise in accordance with the Bank’s
policy for the scheduling of salary payments to employees as in effect from
time to time.  Other salary increases, if
any, shall only be as approved by the Bank Board in its sole discretion.”


 


3.             Stock Option grant.  A new Section 3.8 shall be added to the
Agreement and shall read as follows:


 


“3.8         Stock Option Grant.
The Bank shall provide or cause to be provided to Executive one grant of stock
options pursuant to the 1st Pacific Bancorp 2007 Omnibus Stock Incentive
Plan.  The grant will be for 20,000 stock
options subject to the terms and conditions set forth in a Non-Qualified Stock
Option Agreement attached hereto as Exhibit D approved by the Bank Board
and the Board of  Directors of 1st
Pacific Bancorp, the parent company of the Bank.  The Non-Qualified Stock Option Agreement is
incorporated by reference to this Agreement.”


 


4.             Exhibit D.  Exhibit D attached hereto to this
Amendment shall be added and attached to the Agreement as a new Exhibit D
thereto.


 


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5.             Counterparts.  This Amendment may be executed in several
counterparts that together shall be originals and constitute one and the same
instrument.  Each of the parties warrants
to each of the other parties that the individual executing this Amendment on
behalf of such party has the requisite authority to execute this Amendment and
to bind such party to all the provisions of this Amendment.


 


6.             Continuing Validity.  Except as expressly modified by this
Amendment, the terms and conditions of the Agreement will remain unchanged and
in full force and effect, and are expressly incorporated by reference in this
Amendment.  In the event of a conflict
between the terms of this Amendment and the Agreement, the terms of this
Amendment will prevail.


 


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IN WITNESS WHEREOF, the parties have executed this
Amendment as of the Effective Date.


 


	
  BANK:

  	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
  1st PACIFIC BANK OF
  CALIFORNIA,

  a California state-chartered bank

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
        /s/
  A. Vincent Siciliano 

  	
   

  	
         /s/
  James H. Burgess 

  
	
    A. Vincent
  Siciliano, President and CEO

  	
   

  	
  James H. Burgess

  
				



 


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Exhibit D


 


Stock Option Agreement


 


1ST PACIFIC BANCORP 2007 OMNIBUS STOCK
INCENTIVE PLAN


 


Non-Qualified Stock Option Agreement


 


THIS Non-Qualified Stock Option Agreement (“Award
Agreement”) is made this 21st day of December, 2007, between 1st
Pacific Bancorp (the “Company”) and James H. Burgess  (“Participant”) pursuant and subject to the
provisions of the 1st Pacific Bancorp 2007 Omnibus Stock Incentive
Plan (the “Plan”).  Unless otherwise
defined herein, all terms used in this Award Agreement that are defined in the
Plan shall have the meaning as defined in the Plan.


 


1.                                       Award of Non-Qualified Stock Option. 
Pursuant to the provisions of the Plan, the Company will and hereby does
award to the Participant a Non-Qualified Stock Option to purchase up to Twenty
Thousand (20,000) shares of Common Stock (“Shares”).  Subject to the other terms of this Award
Agreement and the provisions of the Plan that accelerate or terminate vesting
or result in early termination in certain circumstances, this Non-Qualified
Stock Option shall be exercisable only with respect to vested shares, on or
after the applicable Vesting Date, under the following terms:


 


(a)                   Vesting Schedule: 
Vesting is subject to a performance-based graded vesting schedule that
annually measures ROAE of 1st Pacific Bank of California (the “Bank”)
for the Performance Period against ROAE of the Comparative Group for that same
Performance Period.  Each “Performance
Period” shall be the calendar year.  The
first Performance Period under this Agreement shall run from January 1,
2008 to December 31, 2008.  A
maximum of 4,000 shares can become vested for any single Performance
Period.  Vesting shall be based on the
Bank’s ROAE during each Performance Period relative to the Comparative Group
for that same Performance Period, as shown on the following table:


 


	
  Bank
  ROAE Relative to Comparative Group

  (Performance Standard)

  	
   

  	
  Vesting Amount

  
	
   

  	
   

  	
   

  
	
  2008 Performance
  Period: Bank ROAE must be equal to or greater than the ROAE at the top of the
  lower 33rd percentile of members of the Comparative Group

  	
   

  	
  4,000
  Shares

  
	
   

  	
   

  	
   

  
	
  2009 Performance
  Period: Bank ROAE must be equal to or greater than the ROAE at the top of the
  50th percentile of members of the Comparative Group

  	
   

  	
  4,000
  Shares

  
	
   

  	
   

  	
   

  
	
  2010 Performance
  Period: Bank ROAE must be equal to or greater than the ROAE at the top of the
  50th percentile of members of the Comparative Group

  	
   

  	
  4,000
  Shares

  
	
   

  	
   

  	
   

  
	
  2011 Performance
  Period: Bank ROAE must be equal to or greater than the ROAE at the top of the
  50th percentile of members of the Comparative Group

  	
   

  	
  4,000
  Shares

  



 


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  2012 Performance
  Period: Bank ROAE must be equal to or greater than the ROAE at the top of the
  50th percentile of members of the Comparative Group

  	
   

  	
  4,000
  Shares

  
	
   

  	
   

  	
   

  
	
  Each Performance
  Period after 2012: Bank ROAE must be equal to or greater than the ROAE at the
  top of the 50th percentile of members of the Comparative Group

  	
   

  	
  100% of
  available Roll Forward Shares, if any, provided that a maximum of 4,000
  Shares may vest for any given Performance Period)

  



 


Vesting can occur for a given Performance Period only
if the Participant is still employed by the Company (or a subsidiary thereof)
on the last day of that Performance Period.


 


The Company may, in its
discretion, lower the performance standards for any given Performance
Period.  The Company shall lower the
performance standards for any given Performance Period to match the actual and
ultimate performance goals applicable under the 1st  Pacific
Bank of California Incentive Compensation Plan for Senior Management.


 


(b)                  Roll Forward Shares:  Any unvested
shares that do not become vested for a Performance Period shall be rolled
forward for possible vesting in a subsequent Performance Period.  For example, if the performance standards are
not met for the first two Performance Periods (2008 and 2009), then there will
still be 20,000 unvested shares available for vesting after 2009.  Continuing this example, if the performance
standards are met for 2010, then 4,000 of the 20,000 unvested shares will vest
for that 2010 Performance Period, and the remaining 16,000 shares will roll
forward for possible vesting in subsequent Performance Periods.  All unvested shares will continue to roll
forward to subsequent Performance Periods during the term of this Award
Agreement.  A maximum of 4,000 shares can
become vested for any single Performance Period.


 


(c)                   Vesting Date: 
The Committee shall make the determination of whether the above vesting
Schedule is satisfied for a given Performance Period using the information
applicable to the Performance Period for the Bank and the Comparative
Group.  Such determination shall occur as
soon as administratively possible following such Performance Period, and in no
event later than two weeks after such data is available by the FFIEC following
the Performance Period for which ROAE would be measured.  Notwithstanding anything in this Agreement to
the contrary, if ROAE of one or more members of a Comparative Group cannot be
calculated as of the end of a Performance Period because such information is
not available or for any other reason, then ROAE of such member of the
Comparative Group shall be calculated and construed in a manner that is most
favorable to the Participant.


 


(d)                  ROAE Defined:  For purposes
of this Agreement, and as applied to the Bank and each member of the
Comparative Group, ROAE for the Performance shall be as set forth in the FFIEC
data base.


 


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(e)                   Comparative Group Defined: 
Until Such time as changed with the consent of the Participant, the
Comparative Group for purposes of this Agreement shall consist of the
following:


 


	
  1. 1st Centennial Bank

  	
  Redlands, California

  
	
  2. American Business Bank

  	
  Los Angeles, California

  
	
  3. American River Bank

  	
  Sacramento, California

  
	
  4. Bank of Alameda

  	
  Alameda, California

  
	
  5. Bridge Bank, N.A.

  	
  San Jose, California

  
	
  6. Butte Community Bank

  	
  Chico, California

  
	
  7. Desert Hills Bank

  	
  Phoenix, Arizona

  
	
  8. First Commerce Bank

  	
  Encino, California

  
	
  9. First National Bank of Northern California

  	
  Daly City, California

  
	
  10. Heritage Oaks Bank

  	
  Paso Robles, California

  
	
  11. National Bank of California

  	
  Los Angeles, California

  
	
  12. Nevada Security Bank

  	
  Reno, Nevada

  
	
  13. Pacific State Bank

  	
  Stockton, California

  
	
  14. Premier Commercial Bank

  	
  Anaheim, California

  
	
  15. Premier Valley Bank

  	
  Fresno, California

  
	
  16. Regents Bank, N.A.

  	
  La Jolla, California

  
	
  17. Valley Business Bank

  	
  Visalia, California

  



 


Notwithstanding the
foregoing, the Company reserves the right to adjust the Plan’s Comparative
Group from time to time.  If the
Participant and the Company do not agree on the Company’s proposed adjustments,
then the Participant shall have the right to present his position to the full
board of directors.  In that event,
implementing the adjustments proposed by the Company shall require a two-thirds
majority of those directors present and eligible to vote.


 


2.                                       Exercise Price. 
The exercise price of this Award is Ten Dollars ($10.00) per Share,
which is not less than the Fair Market Value of Common Stock on the date of
grant of this Award.  The exercise price
per Share shall be paid upon exercise of all or any part of each installment
which has become exercisable by the Participant.  Payment of the exercise price shall be made
by cash at the time of exercise.


 


3.                                       Minimum Exercise. 
The minimum number of Shares with respect to which this Award may be
exercised at any one time is the lesser of 500 or the number of Shares as to
which this Award is exercisable at the date of exercise.


 


4.                                       Taxation.  The
Participant acknowledges that federal and state income and payroll tax may
apply upon exercise of this Award.  The
Participant hereby agrees that if withholding is required, the Company shall
withhold applicable taxes on such amount from other income or assets payable to
the Participant as required to satisfy all withholding requirements.  If withholding pursuant to the foregoing
sentence is insufficient (in the sole judgment of the Company) to satisfy the
full withholding obligation, the Participant agrees that he or she will pay
over to the Company the amount of cash necessary to satisfy such remaining
withholding 


 


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obligation on the date this Award is exercised or at a
time thereafter specified in writing by the Company.


 


5.                                       Assurances Upon Exercise. 
The Participant hereby makes the following representations, and the
Company may require any person to whom this Award is transferred under Section 9
of this Award Agreement to make the following representations, as a condition
of exercising this Award: (i) that he or she has the requisite knowledge
and experience in financial and business matters and/or he or she will employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising this Award; and (ii) that
he or she is acquiring Shares subject to this Award for such person’s own
account and not with any present intention of selling or otherwise distributing
the Shares.  The foregoing requirements
and assurances given pursuant to such requirements, shall be inoperative if: (i) the
issuance of the Shares upon the exercise of this Award has been registered
under a then currently effective registration statement under the Securities
Act of 1933, as amended; or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws.  The Company may, upon advice of counsel to
the Company, place legends on stock certificates issued upon exercise of this
Award as such counsel deems necessary or appropriate in order to comply with
Applicable Laws, including, but not limited to, legends restricting the
transfer of the stock.


 


6.                                       Term.  The term of
this Award Agreement commences on the date hereof and, unless sooner terminated
as set forth in the Plan, terminates ten (10) years from the date it was
granted.  Notwithstanding the provisions
of Section 6.4(b) of the Plan, if the Participant’s employment with
the Bank is terminated as described in Section 4.1.5 of the Participant’s
Employment Agreement dated November 17, 2006, as amended (the “Employment
Agreement”), then this Option shall remain exercisable for the remainder of the
otherwise applicable term of the Award Agreement, notwithstanding such
termination, provided that the Participant complies with the Business
Protection Covenants of Section 6.6 of the Employment Agreement.  If the Participant fails to comply with the
Business Protection Covenants of Section 6.6 of the Employment Agreement,
then the Options under this Award Agreement shall be automatically terminated.


 


7.                                       Participant Acknowledgments. By executing this Award Agreement, the
Participant acknowledges and agrees as follows:


 


(a)                                  The Participant and his or her
transferees have no rights as a shareholder with respect to any Shares covered
by this Award Agreement until the date of the issuance of a stock certificate
for such Shares.


 


(b)                                 The Company is not providing the
Participant with advice, warranties or representations regarding any of the
legal or tax effects to the Participant with respect to this Award Agreement or
the Fair Market Value of the Common Stock.


 


8.                                       Notice of Exercise. 
This Award may be exercised, to the extent specified above, by
delivering written notice of exercise together with the exercise price to the
Secretary of the 


 


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Company, or to such other person as the Company may
designate, during regular business hours, together with such additional
documents as the Company may then require pursuant to the Plan.  The notice must specify the number of Shares
to be purchased upon exercise and a date within fifteen (15) days after receipt
of the notice by the Company on which the purchase is to be completed.


 


9.                                       Transferability. 
Other than pursuant to a domestic relations order (within the meaning of
Rule 16a-12 promulgated under the Exchange Act) and unless determined
otherwise by the Administrator, this Award may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or
by the laws of descent or distribution, and may be exercised, during the
lifetime of the Participant, only by the Participant.


 


10.                                 Securities Registration.  THE SECURITIES BEING OFFERED HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
UNLESS SUCH SECURITIES ARE INCLUDED IN AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ARE QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS, OR SUCH
OFFER, SALE OR TRANSFER IS EXEMPT THEREFROM.


 


11.                                 Successors and Assigns. 
Except as otherwise expressly provided herein, this Award Agreement
shall be binding upon and inure to the benefit of the parties hereto, and their
respective representatives, successors and assigns.  The Participant may not assign any of his or
her rights or delegate any of his or her duties hereunder, without the written
consent of the Company, which may be withheld in its sole and absolute
discretion, and any such attempted assignment or delegation without such
consent shall be void.


 


12.                                 Notices.  All notices,
requests, demands and other communications hereunder shall be in writing and
shall be deemed to have been duly given to the Company when received by the
Secretary of the Company, and to the Participant on the second business day
following the date mailed by United States Mail, postage prepaid, at the
following addresses, or at such other address as shall be given in writing by
either party to the other:


 


	
   

  	
  Company:

  	
  A. Vincent
  Siciliano

  
	
   

  	
   

  	
  Chief Executive
  Officer

  
	
   

  	
   

  	
  1st Pacific Bank
  of California

  
	
   

  	
   

  	
  9333 Genesee,
  Suite 300

  
	
   

  	
   

  	
  San Diego, CA
  92121

  
	
   

  	
   

  	
  Fax: (858)
  875-2020

  
	
   

  	
   

  	
   

  
	
   

  	
  Participant:

  	
  James H. Burgess

  
	
   

  	
   

  	
  C/O 1st Pacific
  Bank of California

  
	
   

  	
   

  	
  9333 Genesee,
  Suite 300

  
	
   

  	
   

  	
  San Diego, CA
  92121

  
	
   

  	
   

  	
  Fax: (858)
  875-2020

  



 


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13.                                 Choice of Law and Venue. 
This Award Agreement and all questions relating to its validity,
interpretation, performance and enforcement shall be governed by and construed
in accordance with the laws of the State of California, without giving effect
to the conflict of laws provisions thereof. 
Any legal proceeding arising out of this Award Agreement shall be
brought only in a state or federal court of competent jurisdiction located in
San Diego, California.


 


14.                                 Amendment.  This Award
Agreement may be amended or modified only by the written agreement of all
parties hereto.


 


15.                                 Entire Agreement. 
The Plan and this Award Agreement and the other documents delivered
hereunder constitute the full and entire understanding and agreement between
the parties with regard to the subject matter hereof, and supersede all prior
agreements, understanding, inducements or conditions, express or implied, oral
or written, relating to the subject matter hereof, except as herein
contained.  The express terms of the Plan
and this Award Agreement control and supersede any course of performance and/or
usage of trade inconsistent with any of the terms hereof.


 


16.                                 Attorney Fees. 
If any legal action is necessary to enforce the terms of this Award
Agreement, the prevailing party shall be entitled to recover, in addition to
other amounts to which the prevailing party may be entitled, actual attorneys’
fees and costs.


 


17.                                 Severability. 
The provisions of this Award Agreement are severable.  In the event that one or more of the
provisions contained in the Plan or this Award Agreement or in any other
agreement referred to herein shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity or unenforceability
shall not effect the remaining provisions of the Plan or the Award
Agreement.  Further a court of competent
jurisdiction shall have the authority to rewrite, interpret or construe the
terms of the Plan and Award Agreement so as to render them enforceable to the
maximum extent allowed by law, consistent with the intent of the parties as
evidenced hereby.


 


18.                                 Counterparts. 
This Award Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and the same
instrument.


 


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IN WITNESS WHEREOF, 1st
Pacific Bancorp has caused this Award Agreement to be signed by the
Administrator, and the Participant has affixed his or her signature hereto.


 


1st
Pacific Bancorp:


 


 


	
   

  
	
  A. Vincent
  Siciliano, Chief Executive Officer

  



 


ACCEPTANCE AND ACKNOWLEDGMENT


 


I, a resident of the State of California, accept the
Non-Qualified Stock Option Award described in this Award Agreement and in the
Plan, and acknowledge receipt of a copy of the Plan and this Award
Agreement.  I further acknowledge that I
have read the Plan and Award Agreement carefully, I fully understand their
contents, and I agree to be bound by the same.


 


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  James H. Burgess