ex10-2.htm


    


    COMPENSATION
MODIFICATION AGREEMENT

    


    THIS
AGREEMENT (“Agreement”), made this ____ day of January, 2009, by and between
Pacific Coast National Bancorp, Pacific Coast National Bank, 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 shareholders to participate in the Troubled Asset Relief
Program Capital Purchase Program (“CPP”) of the United States Department of the
Treasury (“UST”), pursuant to which the Corporation will issue to UST preferred
stock (the “Preferred Stock”) in return for cash, along with a warrant to
acquire additional shares of preferred stock (the “Warrant”); and

    


    WHEREAS,
in order for the Corporation to participate in the CPP, the Corporation and its
senior executive officers who are subject to the Compensation Guidelines (as
defined below) 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 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 has authorized the execution of 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 senior executive officers who are subject to the Compensation
Guidelines that encourage such officers 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 who is subject to 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 senior executive officer who is subject to the Compensation
Guidelines; and

    


    WHEREAS,
the Corporation is required to deliver to UST in connection with the
consummation of the CPP transaction a waiver from each of its senior executive
officers who are subject to the Compensation Guidelines 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,
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 shareholders
and furthers the long-term best interests of the Corporation and its senior
executive officers, including Executive.

    


    NOW,
THEREFORE, to allow the Corporation to participate in the CPP for the mutual
benefit of the Corporation, its shareholders and Executive, and for other good
and valuable consideration, the Corporation and Executive hereby agree as
follows:

    


    1.           GENERAL MODIFICATION OF
EMPLOYMENT, COMPENSATION AND BENEFIT AGREEMENTS, PLANS AND
POLICIES:  Until such time as 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 the Preferred Stock and the Warrant to
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 the Preferred Stock and the Warrant to UST.  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 Executive encourages 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 UST ceases to own any debt or
equity securities of the Corporation acquired pursuant to


    
      
         


      

      
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    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 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 therefor, 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 UST ceases to own any debt or
equity securities of the Corporation acquired pursuant to the CPP, Executive
agrees that: (a) 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 _______ __, 2009.

    


    5.           COVERED EMPLOYMENT,
COMPENSATION AND BENEFIT AGREEMENTS, PLANS AND
POLICIES:  Executive acknowledges that all employment,
compensation and benefit agreements, plans and policies applicable to Executive,
including but not limited to those listed in Annex A hereto,  are
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 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


    
      
         


      

      
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    shall be
governed by federal law, to the extent applicable, and otherwise by the laws of
the State of California.

    


    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.

    
 

    
      
        	 
      	
                EXECUTIVE

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      
	 
      	
                Signature

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      
	 
      	
                Print
      Name

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                PACIFIC
      COAST NATIONAL BANCORP

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	 
      	
                Chairman,
      Compensation Committee

              
	 
      	 
      	 
      
	 
      	
                PACIFIC
      COAST NATIONAL BANK

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	 
      	
                Chairman,
      Compensation
Committee

              


      





    
      
         


      

      
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    ANNEX
A

    


    


    


    


    Employment
Agreements:

    


    


    


    


    


    


    


    


    


    Severance
Agreements

    


    


    


    


    


    


    


    Other
Benefit Plans or Agreements

    


    


    


    


    


    


    


    


    Other
Employment Compensation and Benefit Plans and Policies


    
      
         


      

      
         


         


      

      
         


      

    


    ANNEX
C

    


    SENIOR
EXECUTIVE OFFCIER WAIVER

    


    


    In
consideration for the benefits I will receive as a result of my employer’s
participation in the United States Department of the Treasury’s TARP Capital
Purchase Program, I hereby voluntarily waive any claim against the United States
or my employer for any changes to my compensation or benefits that are required
to comply with the regulation issued by the Department of the Treasury as
published in the Federal Register on October 20, 2008.

     

    I
acknowledge that this regulation may require modification of the compensation,
bonus, incentive and other benefit plans, arrangements, policies and agreements
(including so-called “golden parachute” agreements) that I have with my employer
or in which I participate as they relate to the period the United States holds
any equity or debt securities of my employer acquired through the TARP Capital
Purchase Program.

     

    This
waiver includes all claims I may have under the laws of the United States or any
state related to the requirements imposed by the aforementioned regulation,
including without limitation a claim for any compensation or other payments I
would otherwise receive, any challenge to the process by which this regulation
was adopted and any tort or constitutional claim about the effect of these
regulations on my employment relationship.

     

    


     

    


     

    Date:  ______________                                 ____________________________

     

    Name

    Title