Document:

Exhibit 10.1

 

PACIFIC PREMIER BANCORP, INC.

 

AMENDED AND RESTATED
 2012 LONG-TERM INCENTIVE PLAN

 

ARTICLE I
 ESTABLISHMENT OF THE PLAN

 

Pacific Premier Bancorp, Inc. and any Subsidiary thereof (together, the “Company”) hereby establishes the Amended and Restated 2012 Long-Term Incentive Plan (the “Plan”) upon the terms and conditions hereinafter stated.  The Purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging officers, employees, directors and individuals performing services for the Company as consultants or independent contractors to focus on critical long-range objectives, (b) encouraging the attraction and retention of officers, employees, directors, consultants and independent contractors with exceptional qualifications and (c) linking officers, employees, directors, consultants and independent contractors directly to stockholder interests through ownership of the Company. Awards granted under the Plan may be stock options, restricted stock or stock appreciation rights.

 

ARTICLE II
 DEFINITIONS

 

2.01                        “Award” means any Option, Restricted Stock, Restricted Stock Unit, Stock Appreciation Right, Cash Bonus Award or Performance Compensation Award granted under the Plan.

 

2.02                        “Award Agreement” means the written agreement pursuant to Article VI hereof that sets forth the terms, conditions, restrictions and privileges for an Award and that incorporates the terms of the Plan.

 

2.03                        “Board” means the Board of Directors of the Company.

 

2.04                        “Cash Bonus Award” means a cash bonus payment, as determined by the Committee.

 

2.05                        “Cause” shall have the meaning set forth in the Participant’s employment or other agreement with the Company, provided that if the Participant is not a party to any such employment or other agreement or such employment or other agreement does not contain a definition of Cause, then Cause shall mean:  (i) a failure of the Participant to substantially perform his or her duties including, without limitation, repeated refusal to follow the reasonable directions of Participant’s employer, knowing violation of law in the course of performance of the duties of Participant’s employment with the Company, or repeated absences from work without a reasonable excuse, (ii) the Participant’s willful misconduct or gross negligence, (iii) the Participant shall have committed an act of fraud, embezzlement, misappropriation or breach of fiduciary duty against the Company, or (iv) the Participant shall have been convicted by a court of competent jurisdiction of, or pleaded guilty or nolo contendere to, conduct constituting a felony.

 

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2.06                        “Change in Control” shall have the meaning specified in an Award Agreement.  In the absence of any definition in the Award Agreement, “Change in Control” means the occurrence of any of the following events subsequent to the date of this Agreement: (i) the acquisition of control of the Company as defined in the rules and regulations of the applicable banking regulators on the date hereof (provided that in applying the definition of Change in Control as set forth under the rules and regulations of the applicable banking regulators, the Board shall substitute its judgment for that of the applicable banking regulators); (ii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), after the date hereof, other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any affiliate of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities; (iii) the sale or other disposition of all or substantially all of the assets of the Company or the transfer by the Company of greater than 25% of the voting securities of the Company; or (iv) during any period of three consecutive years, individuals who at the beginning of such period constitute the Board of the Company cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period.  Notwithstanding the foregoing, in the event of payment of any Award that is nonqualified deferred compensation subject to Section 409A of the Code, “Change in Control” shall have the meaning set forth in Section 1.409A-3(i)(5) of the applicable Treasury regulations.

 

2.07                        “Code” means the Internal Revenue Code of 1986, as amended.

 

2.08                        “Common Stock” means shares of the common stock, par value $0.01 per share, of the Company.

 

2.09                        “Disability” means any physical or mental impairment which qualifies an Employee for disability benefits under any applicable long-term disability plan maintained by the Company or, if no such plan applies, which would qualify such Employee for disability benefits under the Federal Social Security System.

 

2.10                        “Effective Date” means the later of (i) the date upon which the Board approves the Plan and (ii) the date upon which a majority of the Company’s stockholders vote to approve the Plan.

 

2.11                        “Employee” means any person who is employed by the Company and whose wages are reported on a Form W-2. The Company’s classification as to who is an Employee shall be determinative for purposes of an individual’s eligibility under the Plan.

 

2.12                        “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

2.13                        “Fair Market Value” of a share of the Company’s Common Stock for all purposes under the Plan shall be the last transaction price of the Common Stock quoted for such date by the National Association of Securities Dealers Automated Quotation System (“NASDAQ”) or the closing price reported by the New York Stock Exchange (“NYSE”) or any other stock

 

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exchange or quotation or listing service (as published by the Wall Street Journal, if published) on such date or if the Common Stock was not traded on such date, on the next preceding day on which the Common Stock was traded thereon or the last previous date on which a sale is reported.  If the Common Stock is not traded on the NASDAQ, the NYSE or any other stock exchange, the Fair Market Value of the Common Stock is the value so determined by the Board in good faith by such methods or procedures as the Board may establish.

 

2.14                        “Good Reason” shall have the meaning set forth in the Participant’s employment or other agreement with the Company, provided, that if the Participant is not a party to any such employment or other agreement or such employment or other agreement does not contain a definition of Good Reason, then Good Reason shall mean the occurrence, without the affected Participant’s written consent, of (i) a material diminution in the Participant’s base compensation, (ii) the assignment to the Participant of duties in the aggregate that are materially inconsistent with the Participant’s level of responsibility or any material diminution in the Participant’s authority, duties, or responsibilities, or (iii) the relocation of the Participant’s principal place of employment to a location more than 50 miles from the Participant’s principal place of employment.  Notwithstanding the foregoing, no event or condition shall constitute Good Reason unless (i) the Participant provides notice to the Company of such condition or event no later than 30 days following the initial existence of such condition or event, and (ii) the Company fails to remedy such condition or event no later than 30 days following receipt of such notice.

 

2.15                        “Incentive Stock Option” means any Award granted under this Plan which the Board intends (at the time it is granted) to be an incentive stock option within the meaning of Section 422 of the Code. All Incentive Stock Options issued under this Plan are intended to comply with the requirements of Section 422 of the Code, and the regulations thereunder, and all provisions hereunder shall be read, interpreted and applied with that purpose in mind.

 

2.16                        “Non-Qualified Stock Option” means any Award granted under this Plan which is a stock option but is not an Incentive Stock Option.

 

2.17                        “Officer” means any Employee of the Company who is designated by the Board as a corporate officer.

 

2.18                        “Option” means an Award of an Incentive Stock Option or a Non-Qualified Stock Option granted under Section 7.01 hereof.

 

2.19                        “Participant” means any Employee, Officer, director, consultant or independent contractor who is designated by the Committee pursuant to Article VI to participate in the Plan.

 

2.20                        “Performance Compensation Award” means any Award designated by the Committee as a Performance Compensation Award pursuant to Article XII of the Plan.

 

2.21                        “Performance Compensation Award Formula” means, for any Performance Compensation Award, a formula or table established by the Committee pursuant to Article XII of the Plan which provides the basis for computing the value of a Performance Compensation Award at one or more threshold levels of attainment of the applicable Performance Goal(s) measured as of the end of the applicable Performance Period.

 

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2.22                        “Performance Goal” means a performance goal established by the Committee pursuant to Article XII of the Plan.

 

2.23                        “Performance Period” means a period established by the Committee pursuant to Article XII of the Plan at the end of which one or more Performance Goals are to be measured.

 

2.24                        “Performance Shares” means the grant of a right to receive a number of actual shares of Common Stock based upon the performance of the Company during a Performance Period, as determined by the Committee.

 

2.25                        “Performance Unit” means a bookkeeping entry representing a right granted to a Participant pursuant to Article XII of the Plan to receive a payment equal to the value of a Performance Unit, as determined by the Committee, based upon performance.

 

2.26                        “Retirement” means a termination of employment which constitutes a “retirement” under any applicable qualified pension benefit plan maintained by the Company or a Subsidiary, as that term is defined by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or if no such plan is maintained by the Company, a termination of employment anytime following attainment of age 65.  With respect to an Award that is nonqualified deferred compensation subject to Section 409A of the Code, any termination of employment must also be considered a “separation from service” as defined in Section 1.409A-1(h) of the Treasury regulations.

 

2.27                        “Restricted Stock Award” means an Award granted under Section 7.02 hereof.

 

2.28                        “Restricted Stock Unit Award” means an Award granted under Section 7.03 hereof.

 

2.29                        “Securities Act” means the Securities Act of 1933, as amended.

 

2.30                        “Stock Appreciation Right” or “SAR” means an Award granted under Section 7.04 hereof.

 

2.31                        “Subsidiary” means any corporation in an unbroken chain of corporations beginning with the Company if, at the time of granting of an Award, each of the corporations (other than the last corporation in the unbroken chain) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.

 

ARTICLE III
 ADMINISTRATION OF THE PLAN AND MISCELLANEOUS

 

3.01                        Plan Administration. The Plan shall be administered by the Compensation Committee (the “Committee”) of the Board.  References herein to the Committee shall be deemed to include and refer to the Board of Directors to the extent applicable.  The Committee may, in its discretion, delegate to one or more officers responsibility for the day-to-day operation of the Plan. The Committee shall make all determinations with respect to participation in the Plan by Employees, Officers, directors, consultants or independent contractors of the Company, and with respect to the extent of that participation. The interpretation and construction of any provision of the Plan by the Committee shall be final. No member of the Committee shall be liable for any action or determination made by him or her in good faith.

 

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3.02                        Limitation on Liability. No Committee member shall be liable for any action or determination made in good faith with respect to the Plan. To the maximum extent allowed by law and the Company’s organizational documents   and Bylaws, the Committee shall be indemnified by the Company in respect of all their activities under the Plan.

 

3.03                        Compliance with Law and Regulations. All Awards granted hereunder shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. The Company shall not be required to issue or deliver any certificates for shares of Common Stock prior to the completion of any registration or qualification of, or obtaining of consents or approvals with respect to, such shares under any federal or state law or any rule or regulation of any government body, which the Company shall, in its sole discretion, determine to be necessary or advisable.

 

3.04                        Restrictions on Transfer. The Company shall place a legend upon any certificate representing shares acquired pursuant to an Award granted hereunder noting that the transfer of such may be restricted pursuant to the terms of an Award Agreement or as set forth in applicable laws and regulations.

 

3.05                        Revocation for Misconduct.  Any Award, or portion thereof, under this Plan, whether or not vested, made to a Participant who is discharged from the employ of the Company or any of its subsidiaries (or whose personal services contract is terminated in the case of a consultant or independent contractor) for Cause may be automatically terminated, or rescinded and revoked by determination of the Committee.

 

ARTICLE IV
 ELIGIBILITY

 

Awards may be granted to such Employees, Officers, directors, consultants or independent contractors as may be designated from time to time by the Committee, pursuant to guidelines, if any, which may be adopted from time to time.

 

ARTICLE V
 COMMON STOCK AVAILABLE FOR THE PLAN

 

The aggregate number of shares of Common Stock which may be issued pursuant to this Plan shall be 1,420,000, all of which may be granted as Incentive Stock Options. If and to the extent that the number of issued shares of Common Stock shall be increased or reduced by change in par value, split up, reclassification, distribution of a dividend payable in Common Stock, merger, consolidation, reorganization, recapitalization, reincorporation, or the like, the Board shall make appropriate adjustment in the number of shares of Common Stock authorized by the Plan and in the number and exercise or purchase price of shares covered by outstanding Awards under the Plan; provided that no such adjustment shall cause any Award hereunder which is or becomes subject to Section 409A of the Code to fail to comply with the requirements of such section.  In the event of any adjustment in the number of shares covered by any Award, any fractional shares resulting from such adjustment shall be disregarded and each such Award shall cover only the number of full shares resulting from such adjustment. The Board may make such adjustments, and its determination shall be final, binding and conclusive.

 

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The Board also may adjust the number of shares subject to outstanding Awards and the exercise or purchase price and the terms of outstanding Awards to take into consideration material changes in accounting practices or principles, extraordinary dividends, acquisitions or dispositions of stock or property or any other event if it is determined by the Board that such adjustment is appropriate in order to prevent dilution or expansion of the rights of Participants, provided that no such adjustment shall be made in the case of an Incentive Stock Option, without the consent of the Participant, if such adjustment would constitute a modification, extension or renewal of the Option within the meaning of Section 424(h) of the Code. Notwithstanding anything to the contrary in this Article V, the Company shall not engage in any re-pricing of any Options granted under this Plan without approval by the Company’s stockholders who are eligible to vote at a meeting of stockholders.  For purposes of this Article V, the term “re-pricing” shall mean the following: (i) lowering the exercise price of an Option to take into account a decrease in the Fair Market Value of the Company’s Common Stock below the Option’s stated exercise price, or (ii) canceling an Option at a time when its exercise price exceeds the Fair Market Value of the underlying Common Stock in exchange for another Award under the Plan.

 

No shares shall be the subject of more than one Award at any time, but if an Award as to any shares is surrendered before exercise, or expires or terminates for any reason without having been exercised in full, or for any other reason ceases to be exercisable, the number of shares covered thereby shall again become available for grant under the Plan as if no Awards had been previously granted with respect to such shares.

 

ARTICLE VI
 PARTICIPATION; AWARD AGREEMENT

 

The Committee shall, in its discretion, determine from time to time which Employees, Officers, directors, consultants or independent contractors will participate in the Plan and receive Awards under the Plan. In making all such determinations, there shall be taken into account the duties, responsibilities and performance of each respective Employee, Officer, director, consultant or independent contractor, his or her present and potential contributions to the growth and success of the Company, his or her cash compensation and such other factors as the Committee shall deem relevant to accomplishing the purposes of the Plan.

 

Awards may be granted individually or in tandem with other Awards. All Awards are subject to the terms, conditions, restrictions and privileges of the Plan in addition to the terms, conditions, restrictions and privileges for an Award contained in the Award Agreement. No Award under this Plan shall be effective unless memorialized in writing by the Committee in an Award Agreement delivered to and signed by the Participant.

 

Notwithstanding any provision of the Plan and subject to adjustment as provided in Article V, the maximum aggregate number of shares of Common Stock with respect to one or more Awards that may be granted to any one person during any one calendar year shall be 200,000 shares or 15,000 shares in the case of non-employee Directors. The maximum dollar amount payable to any individual for any one calendar year with respect to cash awards under the Plan that are intended to satisfy the conditions for deductibility under Section 162(m) of the Internal Revenue Code as “performance-based compensation” is $2,000,000.

 

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ARTICLE VII
 AWARDS

 

7.01                        Stock Options. The Committee may from time to time grant to eligible Participants Awards of Incentive Stock Options or Non-Qualified Stock Options; provided however that Awards of Incentive Stock Options shall be limited to Employees of the Company. Awards of Incentive and Non-Qualified Stock Options must have an exercise price at least equal to the Fair Market Value of a share of Common Stock at the time of grant, except as provided in Section 8.07.  The exercise price applicable to a particular Award shall be set forth in each individual Award Agreement.

 

7.02                        Restricted Stock. The Committee may from time to time grant to eligible Participants Awards of Restricted Stock in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by law, as it shall determine. A Restricted Stock Award represents shares of Common Stock that are issued subject to such restrictions on transfer and other incidents of ownership and such forfeiture conditions as the Committee may determine. The Committee may, in connection with any Restricted Stock Award, require the payment of a specified purchase price.

 

7.03                        Restricted Stock Unit. The Committee may from time to time grant to eligible Participants Awards of Restricted Stock Units in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by law, as it shall determine.  A Restricted Stock Unit Award represents a hypothetical unit equivalent in value to a share of Common Stock which entitles the Participant to a payment in cash or Common Stock upon the expiration of the restricted period.  A Participant has no voting rights with respect to Restricted Stock Units.  The Committee may, in connection with any Restricted Stock Unit Award, require the payment of a specified purchase price.

 

7.04                        Stock Appreciation Rights.  The Committee may from time to time grant to eligible Participants Awards of Stock Appreciation Rights (“SARs”) in such amounts, on such terms and conditions, as it shall determine. A SAR gives to a Participant the right to receive upon exercise, an amount equal to the excess of (1) the Fair Market Value of one share of Common Stock on the date of exercise over (2) the exercise price of the SAR (which in the case of an SAR granted in tandem with an Option shall be equal to the exercise price of the underlying Option, and which in the case of any other SAR shall be such price as the Committee may determine, provided it is no less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such SAR), times the number of shares of Common Stock covered by such SAR Award.

 

7.05                        Cash Bonus Awards.  The Committee has the authority to make an Award of a cash incentive to any Participant.

 

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7.06                        Performance Compensation Awards.  The Committee has the authority, at the time of grant of any Award described in the Plan, other than stock options or SARs granted with an exercise price equal to or greater than Fair Market Value of the Common Stock on the date of grant to designate such Award as a Performance Compensation Award.

 

ARTICLE VIII
 OPTION AWARDS

 

8.01                        Vesting of Options.

 

(a)                                 General Rules.  Each Option granted under the Plan shall be evidenced by an Award Agreement and subject to such terms and conditions set forth in the Plan and in the Award Agreement.  Incentive Stock Options and Non-Qualified Stock Options shall vest and be exercisable in full on the third (3rd ) anniversary of the date of grant, unless otherwise determined in the sole discretion of the Committee.  Subject to the foregoing, no vesting shall occur on or after the date that a Participant’s employment or personal services contract with the Company terminates for any reason, except as set forth herein and as may be set forth in an applicable Award Agreement.

 

(b)                                 Acceleration of Vesting Upon Death, Disability or Retirement.  In the event a Participant dies while in the employ of the Company or terminates employment with the Company as a result of Disability, any Option(s) granted to such Participant under this Plan not yet vested on such date shall become 100% vested as of such date and be exercisable either by the Participant or the Participant’s representative. In the event of a Participant’s Retirement, any Option(s) granted to such Participant under this Plan not yet vested on such date shall become 100% vested as of such date and become exercisable only if the grant date of such Option(s) precedes the Participant’s date of Retirement by two (2) or more years, except as determined in the sole discretion of the Committee and set forth in an applicable Award Agreement.

 

(c)                                  Accelerated Vesting Upon a Change in Control.  Notwithstanding the general rule described in subsection (a) hereof, all of a Participant’s Options shall become immediately vested and exercisable upon a Change in Control, provided that the Participant has been employed by (or rendered services to) the Company for a period of at least six (6) months as of the date of the Change in Control, except as determined in the sole discretion of the Committee and set forth in an applicable Award Agreement.

 

(d)                                 Accelerated Vesting Upon Certain Separations From Service.  Notwithstanding the general rule described in subsection (a) hereof, all of a Participant’s Options shall become immediately vested and exercisable upon the Participant’s (i) termination without Cause, or (ii) resignation with Good Reason.  If the Participant’s employment or service is terminated by the Company with Cause or if the Participant resigns for other than Good Reason, then the unvested portion of the Option will be forfeited at the close of business on such termination or resignation date, except as determined in the sole discretion of the Committee and set forth in an applicable Award Agreement.

 

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8.02                        Duration of Options.  Subject to the terms of an applicable Award Agreement, each Option granted to a Participant shall be exercisable at any time on or after it vests for a period of (i) ten (10) years from the date of grant (five years in the case of an Incentive Stock Option granted to an individual who, at the time such Incentive Stock Option is granted, owns, directly or indirectly, more than ten percent (10%) of the total combined voting power of all classes of stock issued to stockholders of the Company), or (ii) in the event of termination of employment for any reason except death or Disability, ninety (90) days from the date of termination.

 

8.03                        Exception for Termination Due to Death or Disability.  If a Participant dies while in the employ of the Company or terminates employment with the Company as a result of Disability without having fully exercised his Options, the Participant or his legal representative or guardian, or the executors, administrators, legatees or distributes of his estate shall have the right, during the twelve (12) month period following the earlier of his death or Disability, to exercise such Options to the extent vested on the date of such death or Disability. In no event, however, shall any Option be exercisable more than ten (10) years from the date it was granted.

 

8.04                        Notice of Disposition; Withholding; Escrow.  A Participant shall immediately notify the Company in writing of any sale, transfer, assignment or other disposition (or action constituting a disqualifying disposition within the meaning of Section 421 of the Code) of any shares of Common Stock acquired through exercise of an Incentive Stock Option, within two (2) years after the grant of such Incentive Stock Option or within one (1) year after the acquisition of such shares, setting forth the date and manner of disposition, the number of shares disposed of and the price at which such shares were disposed. The Company shall be entitled to withhold from any compensation or other payments then or thereafter due to the Participant such amounts as may be necessary to satisfy any withholding requirements of federal or state law or regulation and, further, to collect from the Participant any additional amounts which may be required for such purpose. The Board may, in its discretion, require shares of Common Stock acquired by a Participant upon exercise of an Incentive Stock Option to be held in an escrow arrangement for the purpose of enabling compliance with the provisions of this Section.

 

8.05                        Manner of Exercise.  To the extent vested and exercisable, Options may be exercised in part or in whole from time to time by execution of a written notice directed to the Company, at the Company’ principal place of business, accompanied by cash or a check in payment of the exercise price for the number of shares specified and paid for. The Committee may, in its discretion, permit a Participant to exercise vested and exercisable options awarded under this Plan by surrendering an amount of Common Stock already owned by the Participant equal to the Options’ exercise price.  Subject to any limitations set forth in the Award Agreement, for so long as the Common Stock is listed or admitted to trading on a national securities exchange, the Committee may, in its discretion, allow the Participant to make payment by arranging with a third party broker to sell a number of shares otherwise deliverable to the Participant and attributable to the exercise of the Option in order to pay the exercise price of the Option and any applicable withholding and employment taxes due.

 

8.06                        $100,000 Limitation.  Notwithstanding any contrary provisions contained elsewhere in this Plan and as long as required by Section 422 of the Code, the aggregate Fair Market Value, determined as of the time an Incentive Stock Option is granted, of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year under this Plan and stock options that satisfy the

 

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requirements of Section 422 of the Code under any other stock option plan or plans maintained by the Company, shall not exceed $100,000. To the extent that the aggregate value of shares of Common Stock to be received by the Participant for the first time in any one year pursuant to the exercise of an Incentive Stock Option (“ISO Stock”) exceeds $100,000 based on the fair market value of the Common Stock as of the date of the Incentive Stock Option’s grant, such excess shall be treated as Common Stock received pursuant to the exercise of a Non-Qualified Stock Option (“NQSO Stock”). The Company shall designate which shares of Common Stock to be received by the Participant will be treated as ISO Stock and which shares of Common Stock, if any, will be treated as NQSO Stock by issuing separate share certificates identifying in the Company’s share transfer records which shares are ISO Stock.

 

8.07                        Limitation on Ten Percent Stockholders.  The price at which shares of Common Stock may be purchased upon exercise of an Incentive Stock Option granted to an individual who, at the time such Incentive Stock Option is granted, owns, directly or indirectly, more than ten percent (10%) of the total combined voting power of all classes of stock issued to stockholders of the Company, shall be no less than one hundred and ten percent (110%) of the Fair Market Value of a share of the Common Stock of the Company at the time of grant, and such Incentive Stock Option shall by its terms not be exercisable after the expiration of five (5) years from the date such Incentive Stock Option is granted.

 

ARTICLE IX
 RESTRICTED STOCK AWARDS

 

9.01                        Vesting Requirements.  Each Restricted Sock Award granted under the Plan shall be evidenced by an Award Agreement and subject to such terms and conditions set forth in the Plan and in the Award Agreement.  The restrictions imposed on shares granted under a Restricted Stock Award shall lapse in accordance with the vesting requirements specified by the Committee in an applicable Award Agreement, except as provided below. Such vesting requirements may be based on the continued employment of the Participant with the Company for a specified time period or periods, or upon the attainment of specified business goals or measures established by the Committee in its sole discretion, in either case as set forth in the Award Agreement.

 

A Participant’s Restricted Stock Award shall immediately vest upon (i) a Change in Control, provided that the Participant has been employed by (or rendered services to) the Company for a period of at least six (6) months as of the date of the Change in Control, (ii) the Participant’s death while in the employ of the Company, (iii) the Participant’s termination of employment with the Company as a result of Disability, (iv) the Participant’s termination without Cause, or (v) the Participant’s resignation with Good Reason, in each case except as determined in the sole discretion of the Committee and set forth in an applicable Award Agreement.

 

9.02                        Restrictions.  Shares granted under any Restricted Stock Award may not be transferred, assigned or subject to any encumbrance, pledge, or charge until all applicable restrictions are removed or have expired, unless otherwise allowed by the Committee. The Committee may require the Participant to enter into an escrow agreement providing that the certificates representing the shares granted or sold under a Restricted Stock Award will remain in

 

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the physical custody of an escrow holder until all restrictions are removed or have expired. Failure to satisfy any applicable restrictions shall result in the subject shares of the Restricted Stock Award being forfeited and returned to the Company, with any purchase price paid by the Participant to be refunded, unless otherwise provided by the Committee. The Committee may require that certificates representing the shares granted under a Restricted Stock Award bear a legend making appropriate reference to the restrictions imposed.

 

9.03                        Rights as Stockholder.  Subject to the foregoing provisions of this Article IX and the applicable Award Agreement, the Participant will have all rights of a stockholder with respect to the shares granted to him under a Restricted Stock Award, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto, unless the Committee determines otherwise at the time the Restricted Stock Award is granted.

 

9.04                        Section 83(b) Election.  The Committee may provide in a Stock Award Agreement that the Restricted Stock Award is conditioned upon the Participant’s refraining from making an election with respect to the Award under section 83(b) of the Code. Irrespective of whether an Award is so conditioned, if a Participant makes an election pursuant to section 83(b) of the Code with respect to a Restricted Stock Award, the Participant shall be required to promptly file a copy of such election with the Company.

 

ARTICLE X
 RESTRICTED STOCK UNIT AWARDS

 

10.01                 Vesting Requirements.  Each Restricted Stock Unit Award granted under the Plan shall be evidenced by an Award Agreement and subject to such terms and conditions set forth in the Plan and in the Award Agreement.  The restrictions imposed on units granted under a Restricted Stock Unit Award shall lapse in accordance with the vesting requirements specified by the Committee in an applicable Award Agreement, except as provided below. Such vesting requirements may be based on the continued employment of the Participant with the Company for a specified time period or periods, or upon the attainment of specified business goals or measures established by the Committee in its sole discretion, in either case as set forth in the Award Agreement.

 

A Participant’s Restricted Stock Unit Award shall immediately vest upon (i) a Change in Control, provided that the Participant has been employed by (or rendered services to) the Company for a period of at least six (6) months as of the date of the Change in Control, (ii) the Participant’s death while in the employ of the Company, (iii) the Participant’s termination of employment with the Company as a result of Disability, (iv) the Participant’s termination without Cause, or (v) the Participant’s resignation with Good Reason, in each case except as determined in the sole discretion of the Committee and set forth in an applicable Award Agreement.

 

10.02                 Restrictions.  Restricted Stock Units awarded to any Participant will be subject to forfeiture until the vesting requirements have been met. Restricted Stock Units granted under any Restricted Stock Unit Award may not be transferred, assigned or subject to any encumbrance, pledged, or charged until all applicable restrictions are removed or have expired, unless otherwise allowed by the Committee. Failure to satisfy any applicable restrictions shall result in the subject units of the Restricted Stock Unit Award being forfeited and returned to the Company, with any purchase price paid by the Participant to be refunded, unless otherwise provided by the Committee.

 

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10.03                 Rights as Stockholder.  No shares of Common Stock shall be issued at the time Restricted Stock Units are awarded and the Company will not be required to set aside a fund for the payment of such Award.  A Participant has no voting rights with respect to any Restricted Stock Units. At the discretion of the Committee, each Restricted Stock Unit (representing one share of Common Stock) may be credited with cash and stock dividends paid by the Company in respect of one share of Common Stock (“Dividend Equivalents”). If credited, Dividend Equivalents will be withheld by the Company for the Participant’s account, without interest (unless otherwise provided in the Award Agreement).  Dividend Equivalents credited to a Participant’s account and attributable to any particular Restricted Stock Unit (and earnings thereon, if applicable) will be distributed in cash or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to the amount of such Dividend Equivalents (and earnings, if applicable) rounded down to nearest whole share to the Participant upon settlement of such Restricted Stock Unit and, if such Restricted Stock Unit is forfeited, the Participant will also forfeit the right to such Dividend Equivalents.

 

10.04                 Settlement of Restricted Stock Units.  Upon the expiration of the restricted Period with respect to any outstanding Restricted Stock Units, the Company will deliver to the Participant, or his or her beneficiary, without charge, one share of Common Stock for each such outstanding Restricted Stock Unit and cash equal to any Dividend Equivalents credited with respect to each such Vested Unit (and the interest thereon, if any) or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to such Dividend Equivalents (and the interest thereon, if any) rounded down to the nearest whole share; provided, however, that, if explicitly provided in the applicable Award Agreement, the Committee may, in its sole discretion, elect to pay cash or part cash and part Common Stock in lieu of delivering only shares of Common Stock for vested Restricted Stock Unit.  If a cash payment is made in lieu of delivering shares of Common Stock, the amount of such payment will be equal to the Fair Market Value of the Common Stock as of the date on which the restricted period lapsed with respect to each vested Restricted Stock Unit.

 

ARTICLE XI
 STOCK APPRECIATION RIGHTS AWARDS

 

11.01                 Grant of SARs.  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant SARs to Participants in such amounts as the Committee shall determine.  A SAR shall represent a right to receive a payment in cash, shares of Common Stock, or a combination thereof, equal to the excess of the Fair Market Value of a specified number of shares of Common Stock on the date the SAR is exercised over an amount (the “SAR exercise price”) which shall be no less than the Fair Market Value on the date the SAR was granted (or the Option exercise price for SARs granted in tandem with an Option), as set forth in the applicable Award Agreement.

 

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11.02                 Award Agreement.  Each SAR grant shall be evidenced by an Award Agreement that shall specify the SAR exercise price, the duration of the SAR, the number of Shares to which the SAR pertains, whether the SAR is granted in tandem with the grant of an Option or is freestanding, the form of payment of the SAR upon exercise, and such other provisions as the Committee shall determine.  SARs granted under this Article XI shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve and which shall be set forth in the applicable Award Agreement, which need not be the same for each grant or for each Participant.

 

A Participant’s SAR Award shall immediately vest upon (i) a Change in Control, provided that the Participant has been employed by (or rendered services to) the Company for a period of at least six (6) months as of the date of the Change in Control, (ii) the Participant’s death while in the employ of the Company, (iii) the Participant’s termination of employment with the Company as a result of Disability, (iv) the Participant’s termination without Cause, or (v) the Participant’s resignation with Good Reason, in each case except as determined in the sole discretion of the Committee and set forth in an applicable Award Agreement.  Each SAR may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The SAR may be subject to such other terms and conditions on the time or times when it may be exercised as the Committee may deem appropriate.  The vesting provisions of individual SAR may vary. No SAR may be exercised for a fraction of a share of Common Stock.  The Committee may, but shall not be required to, provide for an acceleration of vesting and exercisability in the terms of any SAR upon the occurrence of a specified event.

 

11.03                 Duration of SAR.  Each SAR granted to a Participant shall expire at such time as the Committee shall determine at the time of grant; provided, however, that no SAR shall be exercisable on or later than the tenth (10th) anniversary date of its grant.

 

11.04                 Exercise.  SARs shall be exercised by the delivery to the Company of written or other notice of exercise acceptable to the Company, setting forth the number of Shares with respect to which the SAR is to be exercised.  The date of exercise of the SAR shall be the date on which the Company shall have received notice from the Participant of the exercise of such SAR.  SARs granted in tandem with the grant of an Option may be exercised for all or part of the shares of Common Stock subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option.  SARs granted in tandem with the grant of an Option may be exercised only with respect to the shares for which its related Option is then exercisable.

 

With respect to SARs granted in tandem with an Incentive Stock Option, (a) such SAR will expire no later than the expiration of the underlying Incentive Stock Option, (b) the value of the payout with respect to such SAR may be for no more than 100% of the difference between the Option exercise price of the underlying Incentive Stock Option and the Fair Market Value of the shares of Common Stock subject to the underlying Incentive Stock Option at the time such SAR is exercised, and (c) such SAR may be exercised only when the Fair Market Value of the shares of Common Stock subject to the underlying Incentive Stock Option exceeds the Option exercise price of the Incentive Stock Option.  SARs granted in tandem with an Incentive Stock Option granted to a Participant under the Plan shall be exercisable during the Participant’s lifetime only by such Participant.

 

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SARs granted independently from the grant of an Option may be exercised upon the terms and conditions contained in the applicable Award Agreement.  In the event the SAR shall be payable in shares of Common Stock, a certificate for the shares of Common Stock acquired upon exercise of an SAR shall be issued in the name of the Participant, or the Company shall transfer the shares of Common Stock electronically from its transfer agent to the Participant, as soon as practicable following receipt of notice of exercise.  No fractional Shares will be issuable upon exercise of the SAR and, unless provided in the applicable Award Agreement or otherwise determined by the Committee, the Participant will receive cash in lieu of fractional Shares.

 

11.05                 Exercise Upon Termination of Employment. Each Participant’s Award Agreement shall set forth the extent to which the Participant shall have the right to exercise a SAR following termination of the Participant’s employment with the Company.  Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into the Participants, need not be uniform among all SARs issued pursuant to this Article XI, and may reflect distinctions based on the reasons for termination of employment.

 

ARTICLE XII
 PERFORMANCE COMPENSATION AWARDS

 

12.01                 Grant Requirement and Types of Performance Compensation Awards.  The Committee will, in its sole discretion, designate within the first 90 days of a Performance Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code) which Participants will be eligible to receive Performance Compensation Awards in respect of such Performance Period.  However, designation of a Participant eligible to receive an Award hereunder for a Performance Period shall not in any manner entitle the Participant to receive payment in respect of any Performance Compensation Award for such Performance Period.  The determination as to whether or not such Participant becomes entitled to payment in respect of any Performance Compensation Award shall be decided solely in accordance with the provisions of this Article XII. Moreover, designation of a Participant eligible to receive an Award hereunder for a particular Performance Period shall not require designation of such Participant eligible to receive an Award hereunder in any subsequent Performance Period and designation of one person as a Participant eligible to receive an Award hereunder shall not require designation of any other person as a Participant eligible to receive an Award hereunder in such period or in any other period.  Performance Compensation Awards may be in the form of Performance Shares, Performance Units or Cash Bonus Awards.  Each Award Agreement evidencing a Performance Compensation Award shall specify the number of Performance Shares, Performance Units or Cash Bonus Award opportunity subject thereto, the Performance Compensation Award Formula, the Performance Goal(s) and Performance Period applicable to the Award, and the other terms, conditions and restrictions of the Award.  The Committee has full discretion to select the length of the Performance Period provided any such performance period will not be less than one fiscal quarter in duration, the types of Performance Compensation Awards to be issued, the performance criteria used to establish Performance Goals, the kinds and/or levels of the Performance Goals that apply and the Performance Compensation Award Formula.

 

12.02                 Award Agreement.  Performance Compensation Awards shall be evidenced by Award Agreements in such form as the Committee shall from time to time establish.  No Performance Compensation Award or purported Performance Compensation Award shall be a valid and binding obligation of the Company unless evidenced by a fully executed Award Agreement.  Award Agreements evidencing Performance Compensation Awards may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the terms and conditions of this Article XII.

 

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12.03                 Types of Performance Awards Authorized.  Performance Compensation Awards may be in the form of Performance Shares, Performance Units or Cash Bonus Awards.  Each Award Agreement evidencing a Performance Compensation Award shall specify the number of Performance Shares, Performance Units or Cash Bonus Award opportunity subject thereto, the Performance Compensation Award Formula, the Performance Goal(s) and Performance Period applicable to the Award, and the other terms, conditions and restrictions of the Award.

 

12.04                 Value of Performance Awards.  The final value payable to the Participant in settlement of a Performance Compensation Award determined on the basis of the applicable Performance Compensation Award Formula will depend on the extent to which Performance Goals established by the Committee are attained within the applicable Performance Period established by the Committee.

 

12.05                 Establishment of Performance Period, Performance Goals and Performance Compensation Award Formula.  In granting each Performance Compensation Award, the Committee shall establish in writing the applicable Performance Period, Performance Compensation Award Formula and one or more Performance Goals which, when measured at the end of the Performance Period, shall determine on the basis of the Performance Compensation Award Formula the final value of the Performance Award to be paid to the Participant.  With respect to any Performance Compensation Award that the Committee designates as a Performance Compensation Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee shall establish the Performance Goal(s) and Performance Compensation Award Formula applicable to each Performance Compensation Award no later than the earlier of (a) the date ninety (90) days after the commencement of the applicable Performance Period or (b) the date on which 25% of the Performance Period has elapsed, and, in any event, at a time when the outcome of the Performance Goals remains substantially uncertain.  Once established, the Performance Goals and Performance Compensation Award Formula shall not be changed during the Performance Period.

 

The Company shall notify each Participant granted a Performance Compensation Award of the terms of such Award, including the Performance Period, Performance Goal(s) and Performance Compensation Award Formula.

 

12.06                 Measurement of Performance Goals.  Performance Goals shall be established by the Committee on the basis of targets to be attained (“Performance Targets”) with respect to one or more measures of business or financial performance (each, a “Performance Measure”), subject to the following:

 

(a)                                 Performance Measures.  Performance Measures shall have the same meanings as used in the Company’s financial statements, or, if such terms are not used in the Company’s financial statements, they shall have the meaning applied pursuant to generally accepted accounting principles, or as used generally in the Company’s industry.  Performance Measures shall be calculated with respect to the Company and each Subsidiary consolidated therewith for financial reporting purposes or such division or other business unit as may be selected by the Committee.

 

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The Committee may determine Performance Measures to be one or more of the following: revenue; net interest income; non-interest income; net interest margin; operating income; earnings before taxes; earnings before interest taxes depreciation and amortization; earnings before interest and taxes; pre-tax income; net earnings, net income; market share; business unit volume; capital; tangible book value; expense management; the market price of the Common Stock; total shareholder return; return on equity; return on capital; return on assets; return on tangible equity; return on tangible common equity; efficiency ratio; number of customers; number of accounts; assets; asset mix; deposits; non-interest bearing deposits; deposit mix; loans; loan mix; asset quality; credit quality; regulatory exam results; audit results; customer satisfaction (determined based on objective criteria approved by the Committee); execution of strategic initiatives (determined based on objective criteria approved by the Committee); cost of funds; cost of deposits; and Texas ratio.  A Performance Measure may be expressed in any form that the Committee determines, including, but not limited to: absolute value, ratio, average, percentage growth, absolute growth, cumulative growth, performance in relation to an index, performance in relation to peer company performance, per share of common stock outstanding, or per full-time equivalent employee.

 

Performance Measures applicable to a Performance Compensation Award may exclude the effect (whether positive or negative) of changes in tax law, generally accepted accounting principles or other such laws or provisions affecting reported financial results, including unforeseen and extraordinary changes in statutes and regulations that govern the company and its industry; accruals or charges relating to  reorganization and restructuring programs; special gains or losses or other financial impact in connection with mergers and acquisitions involving the Company or any of its significant subsidiaries, the purchase or sale of branches or significant portions of the Company or any of its significant subsidiaries, or the sale of securities and investments of the Company; write-downs or write-offs of assets, including intangible assets such as goodwill and valuation adjustments related to the impact of hedging; litigation or claim matters; expenses relating to unplanned regulatory actions; any other significant items as discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operation appearing or incorporated by reference in the Annual Report on Form 10-K filed with the Securities and Exchange Commission; gains or losses on the early repayment of debt; or any other unforeseen events of occurrences of a similar nature identified in the first 90 days of a performance cycle.  However no such adjustment will be made if the exercise of such authority by the Committee would constitute the exercise of “impermissible discretion,” would cause awards granted under the Plan that are intended to qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code to otherwise fail to qualify as “performance-based compensation” under Section 162(m).

 

(b)                                 Performance Targets.  Performance Targets may include a minimum, maximum, target level and intermediate levels of performance, with the final value of a Performance Award determined under the applicable Performance Compensation Award Formula by the level attained during the applicable Performance Period.  A Performance Target may be stated as an absolute value or as a value determined relative to a standard selected by the Committee.

 

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12.07                 Settlement of Performance Compensation Awards.

 

(a)                                 Determination of Final Value.  As soon as practicable following the completion of the Performance Period applicable to an Award, the Committee shall certify in writing the extent to which the applicable Performance Goals have been attained and the resulting final value of the Award earned by the Participant and to be paid upon its settlement in accordance with the applicable Performance Compensation Award Formula.

 

(b)                                 Discretionary Adjustment of Award Formula.  With respect to any Performance Compensation Award that the Committee designates as a Performance Compensation Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee, in its discretion, may, either at the time it grants a Performance Compensation Award or at any time thereafter, provide for the negative adjustment of the Performance Compensation Award Formula applicable to such Performance Compensation Award to reflect such Participant’s individual performance in his or her position with the Company or such other factors as the Committee may determine.  If permitted under such Participant’s Award Agreement, the Committee shall have the discretion, on the basis of such criteria as may be established by the Committee, to reduce some or all of the value of the Performance Compensation Award that would otherwise be paid to such Participant upon its settlement notwithstanding the attainment of any Performance Goal and the resulting value of the Performance Compensation Award determined in accordance with the Performance Compensation Award Formula. No such reduction may result in an increase in the amount payable upon settlement of another Participant’s Performance Compensation Award.

 

With respect to any other Performance Compensation Award, the Committee, in its discretion, may, either at the time it grants a Performance Compensation Award or at any time thereafter, provide for the positive or negative adjustment of the Performance Compensation Award Formula applicable to such Performance Compensation Award to reflect such Participant’s individual performance in his or her position with the Company or such other factors as the Committee may determine.

 

(c)                                  Effect of Leaves of Absence.  Unless otherwise required by law, payment of the final value, if any, of a Performance Compensation Award held by a Participant who has taken in excess of thirty (30) days in leaves of absence during a Performance Period shall be prorated on the basis of the number of days of the Participant’s Service during the Performance Period during which the Participant was not on a leave of absence.

 

(d)                                 Notice to Participants.  As soon as practicable following the Committee’s determination and certification in accordance with 11.03(a) and (b), the Company shall notify each Participant of the determination of the Committee.

 

(e)                                  Payment in Settlement of Performance Compensation Awards.  As soon as practicable following the Committee’s determination and certification in accordance with 11.03 (a) and (b), payment shall be made to each eligible Participant (or such Participant’s legal representative or other person who acquired the right to receive such payment by reason of the Participant’s death) of the final value of the Participant’s Performance Compensation Award. Payment of such amount shall be made in cash, shares of Common Stock, or a combination

 

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thereof as determined by the Committee.  Unless otherwise provided in the Award Agreement evidencing a Performance Compensation Award, payment shall be made in a lump sum. In no event shall payment of a Performance Compensation Award be made later than the 15th day of the third month following the taxable year of the Participant in which the Participant has a legally binding right to the Performance Compensation Award.

 

(f)                                   Provisions Applicable to Payment in Shares.  If payment is to be made in shares of Common Stock, the number of such shares shall be determined by dividing the final value of the Performance Compensation Award by the Fair Market Value of a share of Common Stock.  Shares of Common Stock issued in payment of any Performance Compensation Award may be fully vested and freely transferable shares or may be shares of Common Stock subject to vesting conditions established by the Committee as provided in 9.01 or 10.01.  Any shares subject to Vesting Conditions shall be evidenced by an appropriate Award Agreement.

 

(g)                                  Effect of Termination of Service.  Unless otherwise provided by the Committee in the grant of a Performance Compensation Award and set forth in the Award Agreement, the effect of a Participant’s termination of service on the Performance Compensation Award shall be as follows.  If the Participant’s service with the Company terminates because of the death or Disability of the Participant before the completion of the Performance Period applicable to the Performance Compensation Award, the final value of the Participant’s Performance Compensation Award shall be determined by the extent to which the applicable Performance Goals have been attained with respect to the entire Performance Period and shall be prorated based on the number of months of the Participant’s service to the Company during the Performance Period.  Payment shall be made following the end of the Performance Period in any manner permitted by Section 12.07.  If the Participant’s service terminates for any reason except death or Disability before the completion of the Performance Period applicable to the Performance Compensation Award, such Award shall be forfeited in its entirety.

 

ARTICLE XIII
 NONASSIGNABILITY; NONTRANSFERABILITY

 

Unexercised or unsettled Awards shall not be transferable by a Participant except by will or the laws of descent or distribution and, during a Participant’s lifetime, shall be exercisable only by such Participant or the Participant’s guardian or legal representative.

 

ARTICLE XIV
 AMENDMENT AND TERMINATION OF THE PLAN

 

The Board may, by resolution, at any time terminate or amend the Plan with respect to any shares of Common Stock or Awards which have not been granted, but no such action shall adversely affect the rights under any outstanding Award without the holder’s consent. If and to the extent necessary to ensure that Incentive Stock Options granted under the Plan remain qualified under Section 422 of the Code or for the Plan to comply with any law, regulation or stock exchange requirement, Plan amendments shall be subject to approval by the Company’s stockholders who are eligible to vote at a meeting of stockholders.

 

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ARTICLE XV
 EMPLOYMENT RIGHTS

 

Neither the Plan nor any Award hereunder shall create any right on the part of any Employee of the Company to continue in such capacity.

 

ARTICLE XVI
 WITHHOLDING AND TAXES

 

16.01                 Withholding.  The Company may withhold from any cash payment made under this Plan sufficient amounts to cover any applicable withholding and employment taxes, and if the amount of such cash payment is insufficient, the Company may require the Participant to pay to the Company the amount required to be withheld as a condition to delivering the shares acquired pursuant to an Award. The Company also may withhold or collect amounts with respect to a disqualifying disposition of shares of Common Stock acquired pursuant to exercise of an Incentive Stock Option, as provided in Section 8.02(c).

 

The Board is authorized to adopt rules, regulations or procedures which provide for the satisfaction of a Participant’s tax withholding obligation by the retention of shares of Common Stock to which he otherwise would be entitled pursuant to an Award or by the Participant’s delivery of previously-owned shares of Common Stock or other property. However, if the Company adopts rules, regulations or procedures which permit withholding obligations to be met by the retention of Common Stock to which a Participant otherwise would be entitled pursuant to the exercise or settlement of an Award, the fair market value of the Common Stock retained for such purpose shall not exceed the minimum required Federal, state and local tax withholding due upon exercise or settlement of the Award.

 

16.02                 Section 409A.  The Board intends that payments and benefits under the Plan comply with Section 409A of the Code to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted and be administered to be in compliance therewith.  Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, any Participant shall not be considered to have terminated employment with the Company for purposes of the Plan and no payment that is payable upon termination of employment shall be due to the Participant under the Plan or any Award Agreement until the Participant would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A of the Code.  Any payments described in the Plan that are due within the “short term deferral period” as defined in Section 409A of the Code shall not be treated as deferred compensation unless applicable law requires otherwise.  Notwithstanding anything to the contrary in the Plan, to the extent that any Awards are payable upon a separation from service and such payment would result in accelerated taxation and/or tax penalties under Section 409A of the Code, the settlement and payment of such portion of such Award shall instead be made on the first business day after the date that is six months following such separation from service (or the Participant’s death, if earlier).

 

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ARTICLE XVII
 EFFECTIVE DATE OF THE PLAN; TERM

 

17.01                 Effective Date of the Plan.  This Plan shall become effective on the Effective Date, and Awards may be granted hereunder as of or after the Effective Date and prior to the termination of the Plan, provided that no Incentive Stock Option issued pursuant to this Plan shall qualify as such unless this Plan is approved by the requisite vote of the holders of the outstanding voting shares of the Company at a meeting of stockholders of the Company or by a written consent of such stockholders held or executed within twelve (12) months before or after the Effective Date.

 

17.02                 Term of Plan.  Unless sooner terminated, this Plan shall remain in effect for a period of ten (10) years ending on the tenth anniversary of the Effective Date. Termination of the Plan shall not affect any Awards previously granted and such Awards shall remain valid and in effect until they have been fully exercised or earned, are surrendered or by their terms expire or are forfeited.

 

ARTICLE XVIII
 GOVERNING LAW

 

This Plan shall be construed and interpreted in accordance with the internal laws of the State of Delaware (without regard to choice of law provisions).

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the Company has caused a duly authorized officer to execute this Pacific Premier Bancorp, Inc. Amended and Restated 2012 Long-Term Incentive Plan, and to apply the corporate seal hereto as of the 26th day of May 2015.

 

	
 
    	
PACIFIC   PREMIER BANCORP, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Steven R. Gardner
    
	
 
    	
Name:
    	
Steven   R. Gardner
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    

 

21Exhibit 10.2

 

Execution Copy

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (“Agreement”) dated this 22nd day of May 2015, by and between E. Allen Nicholson (the “Executive”), Pacific Premier Bancorp, Inc. (the “Company”) and Pacific Premier Bank (the “Bank” and, together with the Company, the “Employers”).

 

WITNESSETH

 

WHEREAS, the Employers desire to assure themselves of the services of the Executive for the period provided in this Agreement, and the Executive is willing to serve in the employ of the Employers for such period, all in accordance with the terms and conditions contained in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants herein set forth, it is agreed that, effective June 22, 2015 (the “Effective Date”), the following terms and conditions shall apply to Executive’s employment with the Employers:

 

1.             Definitions.  The following words and terms shall have the meanings set forth below for the purposes of this Agreement:

 

(a)           Affiliate.  Affiliate of any person or entity means any stockholder or person or entity controlling, controlled by or under common control with such person or entity, or any director, officer or key executive of such entity or any of their respective relatives.  For purposes of this definition, “control,” when used with respect to any person or entity, means the power to direct the management and policies of such person or entity, directly or indirectly, whether through ownership of voting securities, by contracting or otherwise; and the terms “controlling” and “controlled” have meanings that correspond to the foregoing.

 

(b)           Base Salary.  References to “Base Salary” shall mean the Executive’s annual base salary as then in effect.

 

(c)           Cause.  Termination of the Executive’s employment for “Cause” shall mean termination because of personal dishonesty or incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or other misdemeanor offenses) or final cease-and-desist order or material breach of any provision of this Agreement.

 

(d)           Change in Control.  “Change in Control” shall mean the occurrence of any of the following events subsequent to the Effective Date: (i) the acquisition of control of the Company or the Bank as defined in the rules and regulations of the applicable banking regulators on the date hereof (provided that in applying the definition of Change in Control as set forth under the rules and regulations of the applicable banking regulators, the Board of Directors of Employers shall substitute its judgment for that of the applicable banking regulators); (ii) an event that would be required to be reported in response to Item 5.01(a) of the Current Report on Form 8-K pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or any successor thereto, whether or not any class of securities of the

 

 

Company is registered under the Exchange Act; (iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), after the date hereof, other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Affiliate of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities; (iv) the sale or other disposition of all or substantially all of the assets of the Company or the transfer by the Company of greater than 25% of the voting securities of the Company; or (v) during any period of three consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period.

 

(e)           Code.  “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(f)            Confidential and Proprietary Information.  “Confidential and Proprietary Information” shall mean any and all (i) confidential or proprietary information or material not in the public domain about or relating to the business, operations, assets or financial condition of the Employers or any Affiliate of the Employers or any of the Employers’ or any such Affiliate’s trade secrets; and (ii) information, documentation or material not in the public domain by virtue of any action by or on the part of the Executive, the knowledge of which gives or may give the Employers or any Affiliate of the Employers an advantage over any person not possessing such information. For purposes hereof, the term Confidential and Proprietary Information shall not include any information or material (i) that is known to the general public other than due to a breach of this Agreement by the Executive or (ii) was disclosed to the Executive by a person who the Executive did not reasonably believe was bound to a confidentiality or similar agreement with the Employers.

 

(g)           Date of Termination.  “Date of Termination” shall mean (i) if the Executive’s employment is terminated for Cause or for Disability, the date specified in the Notice of Termination, and (ii) if the Executive’s employment is terminated for any other reason, the date on which a Notice of Termination is given or as specified in such Notice.

 

(h)           Disability.  Termination by the Employers of the Executive’s employment based on “Disability” shall mean termination because of any physical or mental impairment which qualifies the Executive for disability benefits under the applicable long-term disability plan maintained by the Company or the Bank or, if no such plan applies, which would qualify the Executive for disability benefits under the Federal Social Security System.

 

(i)            Good Reason.  Termination by the Executive of the Executive’s employment for “Good Reason” shall mean termination by the Executive following a Change in Control based on:

 

(A)                               Without the Executive’s express written consent, a material adverse change made by the Employers which would reduce the Executive’s functions, duties or responsibilities as Executive Vice President and Chief Financial Officer of the Company and the Bank.

 

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(B)                               Without the Executive’s express written consent, a material reduction by the Employers in the Executive’s Base Salary as the same may be increased from time to time; or

 

(C)                               Without the Executive’s express written consent, the Employers require the Executive to be based at a location more than 50 miles from Irvine, California (which requirement shall be deemed to be a material change in the geographic location at which the Executive must perform services for the Employers), except for required travel on business of the Employers to an extent substantially consistent with the Executive’s present business travel obligations.

 

Good Reason shall, for all purposes under this Agreement, be construed and administered in manner consistent with the definition of “good reason” under Treasury Regulation § 1.409A-1(n).

 

(j)            IRS.  IRS shall mean the Internal Revenue Service.

 

(k)           Notice of Termination.  Any purported termination of the Executive’s employment by the Employers for any reason including, without limitation, for Cause or Disability, or by the Executive for any reason including, without limitation, for Good Reason, shall be communicated by written “Notice of Termination” to the other party or parties hereto.  For purposes of this Agreement, a “Notice of Termination” shall mean a dated notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, (iii) specifies a Date of Termination, which shall be not less than thirty (30) nor more than ninety (90) days after such Notice of Termination is given, except in the case of the Company’s termination of Executive’s employment for Cause, which shall be effective immediately; and (iv) is given in the manner specified in Section 14 hereof.

 

(l)            Separation from Service.  “Separation from Service” means termination of Executive’s employment with the Employers for reasons other than death or Disability and shall be determined in accordance with the requirements of Section 409A of the Code and Treasury Regulation § 1.409A-1(h) based on the facts and circumstances surrounding the termination of the Executive’s employment and whether the Employers and the Executive intended for the Executive to provide significant services for the Employers following such termination.

 

(m)          Specified Employee.  A Specified Employee of the Employers shall include any Executive identified as a “specified employee” under Treasury Regulation section 1.409A-1(i) if any stock of the Company is publicly traded on an established securities market or otherwise.

 

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2.             Term of Employment.

 

(a)           Each of the Company and the Bank hereby employs the Executive as Executive Vice President and Chief Financial Officer of the Company and the Bank, and the Executive hereby accepts said employment and agrees to render such services to the Employers, on the terms and conditions set forth in this Agreement.  The term of employment under this Agreement shall be for a term of one year commencing the Effective Date, unless such term is extended as provided in this Section 2.  On the annual anniversary of the Effective Date and each annual anniversary thereafter, the term of this Agreement shall automatically be extended for an additional one year unless either the Executive on the one hand, or the Company or the Bank on the other hand, gives written notice to the other party or parties hereto of such party’s or parties’ election not to extend the term, with such notice to be given not less than ninety (90) days prior to any such anniversary date, in which case this Agreement shall terminate at the conclusion of its remaining term.  References herein to the “Term of Employment” shall refer both to the initial term and any extension thereof.

 

(b)           During the Term of Employment, the Executive shall perform such executive services for the Employers consistent with Executive’s titles and such executive services which are from time to time assigned to Executive by the Employers’ respective Boards of Directors.  The Executive shall devote Executive’s entire business time, attention, skill and energy exclusively to the business of the Employers.  The Executive shall not engage or prepare to engage in any other business activity, whether or not such business activity is pursued for gain, profit or other economic or financial advantage; provided, however, that the Executive may engage in appropriate civic, charitable or religious activities and devote a reasonable amount of time to private investments or boards or other activities provided that such activities do not interfere or conflict with the Executive’s responsibilities and are not or not likely to be contrary to the Employers interests.

 

3.             Compensation and Benefits.

 

(a)           The Employers shall compensate and pay the Executive for services during the Term of Employment a base salary of $275,000 per year (“Base Salary”), which may be increased from time to time in such amounts as may be determined by the Board of Directors of the Employers and may not be materially reduced without the Executive’s express written consent.  The Executive’s Base Salary shall be paid in periodic installments (not less than monthly) in accordance with the general payroll practices of the Employers, as in effect from time to time.

 

(b)           During the Term of Employment, the Executive shall be entitled to participate in and receive pension or other retirement benefit plan, profit sharing, stock option, employee stock ownership, or other plans, benefits and privileges given to employees and executives of the Employers, to the extent commensurate with Executive’s then duties and responsibilities as fixed by the Boards of Directors of the Employers.

 

(c)           Executive shall be entitled to receive all benefits and conditions of employment generally available to other executives of Employers, including, without limitation, sick leave, disability, accident, life, hospitalization, medical and dental insurance, paid holidays, and participation in any pension, profit sharing or other retirement plan pursuant to the terms of said plans

 

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(d)           Executive shall accrue paid vacation at the rate of four weeks per year and paid sick leave at the rate of two hours per pay period unless extended for years of service as governed by the Employers’ Employee Handbook.  Except as stated herein, other terms and conditions of Executive’s vacation and sick pay shall be governed by Employers’ Employee Handbook, as amended from time to time.

 

(e)           Executive shall be eligible for a discretionary performance bonus in accordance with the Employers’ executive compensation plan.

 

(f)            On and as of the Effective Date, the Executive shall be awarded 10,000 restricted shares of the Company’s common stock, par value $0.01 per share (the “Restricted Shares”), which shall be granted pursuant to the Company’s Amended and Restated 2012 Long-Term Incentive Plan (the “LTIP”).  The Restricted Shares shall vest one-third (1/3) on each of the first, second and third anniversaries of the Effective Date, if not earlier forfeited pursuant to the terms of the LTIP or the restricted stock award agreement evidencing the grant of the Restricted Shares to the Executive.

 

4.             Expenses.  The Employers shall reimburse the Executive or otherwise provide for or pay for all reasonable expenses incurred by the Executive in furtherance of or in connection with the business of the Employers, including, but not by way of limitation, traveling expenses, subject to such reasonable documentation and other limitations as may be established by the Boards of Directors of the Employers.  If such expenses are paid in the first instance by the Executive, the Employers shall reimburse the Executive therefore.

 

5.             Termination.

 

(a)           The Employers shall have the right, at any time upon prior Notice of Termination, to terminate the Executive’s employment for any reason, including, without limitation, termination for Cause or Disability, and the Executive shall have the right, upon prior Notice of Termination, to terminate Executive’s employment for any reason.

 

(b)           In the event that, during the Term of Employment, (i) the Executive’s employment is terminated by the Employers for Cause or (ii) the Executive terminates his employment hereunder other than for Disability or Good Reason, the Executive shall have no right pursuant to this Agreement to compensation or other benefits for any period after the applicable Date of Termination other than for Base Salary accrued through the Date of Termination.  To the extent that Executive voluntarily terminates his employment with either one of the Employers, he shall be deemed to have voluntarily terminated his employment with the other Employer.

 

(c)           In the event that the Executive’s employment is terminated as a result of Disability or death during the Term of Employment, the Executive or the Executive’s estate (as the case may be) shall receive the lesser of (i) Executive’s existing Base Salary as in effect as of the Date of Termination or death, less taxes and other required withholding and (ii) Executive’s Base Salary for the duration of the Term of Employment, less taxes and other required withholding.  Payment pursuant to this Section 5(c) shall be paid to the Executive or Executive’s estate (as the case may be) on the sixtieth (60th) day after the Date of Termination or death.

 

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(d)           In the event that the Executive’s employment is terminated during the Term of Employment (i) by the Employers for other than Cause, Disability, or the Executive’s death or (ii) by the Executive for Good Reason, and, in each case, such termination occurs within two (2) years following a Change in Control, then the Employers shall, subject to Section 6 hereof, if applicable, provide the benefits described in subparagraphs (A) and (C) of this Section 5(d).  Such a termination shall be deemed an involuntary termination, provided that, with respect to a termination by the Executive for Good Reason, the Good Reason basis for termination has not been cured within thirty (30) business days after a written notice of such Good Reason basis has been given by the Executive to the Employers, and such written notice has been given no more than ninety (90) days after the initial occurrence of the Good Reason basis for termination.

 

In the event that the Executive’s employment is terminated by the Employers for other than Cause, Disability, or the Executive’s death and such termination does not occur in conjunction with or within two (2) years following a Change in Control, then the Employers shall provide the benefits described in subparagraphs (B) and (C) of this Section 5(d).  Such a termination shall be deemed an involuntary termination.

 

(A)          Pay to the Executive a cash severance amount equal to the sum of the Executive’s Base Salary plus his incentive bonus for the previous year as in effect immediately prior to the Date of Termination, less taxes and other required withholding.

 

(B)          Pay to the Executive a cash severance amount equal to the Executive’s Base Salary as in effect immediately prior to the Date of Termination.

 

(C)          Permit for a period ending at the earlier of (i) the one-year anniversary of the Date of Termination or (ii) the date of the Executive’s full-time employment by another employer, the Executive to obtain group health, life, accident, and disability insurance in which the Executive was entitled to participate immediately prior to the Date of Termination (other than any stock option or other stock compensation plans or bonus plans of the Employers), provided that in the event that Executive’s participation in any such plan, program or arrangement is barred, the Employers shall cease such benefits.  The Employers shall charge the Executive 100% of the “applicable premium” (as within the meaning of section 4980B(f)(4) of the Code) for such continued coverage. For each month in which the Executive is required to pay the “applicable premium,” the Employers shall reimburse the Executive for the after-tax cost of the “applicable premium,” minus the same deductible and co-payment rate as are paid by the Employers’ employees, as in effect from time to time (the “Health Payment”).  The Employers shall pay the Health Payment on the first payroll day of each month during which the Executive is required to pay the “applicable premium.”  The Health Payment paid to the Executive during the period of time during which the Executive would be entitled to continuation coverage under the Employers’ group health plan under COBRA is intended to qualify for the exception from deferred compensation as a medical benefit provided in accordance with the requirements of Treasury Regulation §1.409A-l(b)(9)(v)(B). The Health Payment shall be reimbursed to the Executive in a manner that complies with the requirements of Treasury Regulation §1.409A-3(i)(l)(iv).  The COBRA health care continuation coverage period under Section 4980B of the Code shall run concurrently with the period of continued health coverage following the Date of Termination.

 

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Other than the monthly payments required by Section 5(d)(C) above, any payment required to be made by the Employers pursuant to this Section 5(d) shall be paid in a lump sum on the sixtieth (60) day following the Date of Termination.  Notwithstanding the foregoing, if necessary to comply with the requirements of Section 409A of the Code, the Employers shall not be required to make any payments pursuant to this Section 5(d) unless the Executive has undergone a Separation from Service.

 

(e)           In receiving any payments pursuant to this Section 5, the Executive shall not be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive hereunder, and such amounts shall not be reduced or terminated whether or not the Executive obtains other employment.

 

(f)            Restrictions on Timing of Distribution.  Notwithstanding any provision of this Agreement to the contrary, if Executive is a Specified Employee on the Date of Termination and, as a result thereof, Section 409A of the Code and the rules promulgated thereunder would so require, payments pursuant to Section 5(d) may not commence earlier than six (6) months and one day after the Date of Termination.  For the avoidance of doubt, this Section 5(f) shall not result in any forfeiture of payment but only a delay until such time as payment can be made in compliance with Section 409A of the Code.

 

(g)           In addition to the provisions of Sections 5(b) through 5(e), the Executive or the Executive’s estate, as applicable, shall be entitled to Executive’s Base Salary and vacation accrued through the Date of Termination or death, payable in accordance with California law, and reimbursement of all expenses reimbursable to the Executive at the Date of Termination or death. In the event the Executive dies during the six (6) month postponement period described in Section 5(f), the amounts withheld on account of Section 409A of the Code shall be paid to the Executive’s estate.

 

(h)           NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, THE EXECUTIVE’S ENTITLEMENT TO ANY BENEFITS UNDER SECTION 5(d) ABOVE ARE CONTINGENT UPON THE EXECUTIVE EXECUTING A RELEASE OF ANY AND ALL CLAIMS (“RELEASE”) IN FAVOR OF THE EMPLOYERS, THE FORM OF WHICH RELEASE IS BEING PROVIDED TO THE EXECUTIVE SIMULTANEOUS HEREWITH.  THE RELEASE MUST BE RETURNED DULY EXECUTED BY THE EXECUTIVE TO THE EMPLOYERS NO LATER THAN THE CONCLUSION OF THE EXECUTIVE’S EMPLOYMENT, AND MUST BECOME EFFECTIVE AND NON-REVOCABLE BY THE PAYMENT DATE SPECIFIED ABOVE.  THE EXECUTIVE’S FAILURE TO TIMELY COMPLY WITH THE TERMS OF THIS SECTION 5(h) SHALL RESULT IN A COMPLETE FORFEITURE OF THE APPLICABLE BENEFITS AND PAYMENTS.

 

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(i)            The payments and benefits under this Agreement are intended to either be exempt from Section 409A of the Code or comply with the requirements of Section 409A of the Code.  Any ambiguity or question about the application of Section 409A of the Code shall first be resolved in favor of an exemption from Section 409A of the Code and, if not permissible, in compliance with Section 409A of the Code.  Accordingly, this Agreement shall be interpreted and administered at all times in accordance with the foregoing and Section 409A of the Code to the extent applicable.  Notwithstanding the foregoing or any other provision of this Agreement to the contrary, neither the Employers nor any of their officers, directors, executives or agents makes any guarantee or representation regarding the tax consequences of this Agreement or any payments or benefits provided for hereunder.  The Executive acknowledges that he is solely responsible for any taxes incurred in connection with this Agreement including, without limitation, any excise taxes, penalties or interest payments to the extent applicable to any payments or benefits under this Agreement.

 

6.             Limitation of Benefits under Certain Circumstances.  If the payments and benefits pursuant to Section 5 hereof, either alone or together with other payments and benefits which the Executive has the right to receive from the Employers, would constitute a “parachute payment” under Section 280G of the Code, the payments and benefits payable by the Employers pursuant to Section 5 hereof shall be reduced, in the manner determined by the Executive, by the amount, if any, which is the minimum necessary to result in no portion of the payments and benefits payable by the Employers under Section 5 being non-deductible to the Employers pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code. The determination of any reduction in the payments and benefits to be made pursuant to Section 5 shall be based upon the opinion of independent counsel selected by the Employers’ independent public accountants and paid by the Employers.  Such counsel shall be reasonably acceptable to the Employers and the Executive; shall promptly prepare the foregoing opinion, but in no event later than thirty (30) days from the Date of Termination; and may use such actuaries as such counsel deems necessary or advisable for the purpose.  Nothing contained herein shall result in a reduction of any payments or benefits to which the Executive may be entitled upon termination of employment under any circumstances other than as specified in this Section 6, or a reduction in the payments and benefits specified in Section 5 below zero.

 

7.             Restrictions Respecting Confidential Information and Non-Solicitation

 

(a)           The Executive acknowledges and agrees that by virtue of the Executive’s position and involvement with the business and affairs of the Employers, the Executive will develop substantial expertise and knowledge with respect to all aspects of the Employers’ business, affairs and operations and will have access to all significant aspects of the business and operations of the Employers and to Confidential and Proprietary Information.

 

(b)           The Executive hereby covenants and agrees that, during the Term of Employment, unless otherwise authorized by the Employers in writing, the Executive shall not, directly or indirectly, under any circumstance: (i) disclose to any other person or entity (other than in the regular course of business of the Employers) any Confidential and Proprietary Information, other than pursuant to applicable law, regulation or subpoena or with the prior written consent of the Employers; (ii) act or fail to act so as to impair the confidential or proprietary nature of any Confidential and Proprietary Information; (iii) use any Confidential and Proprietary Information other than for the sole and exclusive benefit of the Employers; or (iv) 

 

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offer or agree to, or cause or assist in the inception or continuation of, any such disclosure, impairment or use of any Confidential and Proprietary Information. Following the Term of Employment, the Executive shall return all documents, records and other items containing any Confidential and Proprietary Information to the Employers (regardless of the medium in which maintained or stored), or provide certification to the Employers as to their destruction.

 

(c)           While the Executive is employed by the Employers and for two (2) years after the Date of Termination, the Executive shall not hire or solicit or attempt to solicit for hire a Covered Employee, encourage another person to hire a Covered Employee, or otherwise seek to adversely influence or alter such Covered Employee’s relationship with the Employers or any of the Employers’ Affiliates (except during the Executive’s employment with the Employers, when acting on the good faith belief that ending the Covered Employee’s employment would be in the Employers’ best interest). A “Covered Employee” shall be any person who has been employed by the Employers or any of the Employers’ Affiliates in which Executive was directly involved or had access to Confidential and Proprietary Information at any time within the twelve (12) months prior to the date of any action prohibited by the preceding sentence occurs.

 

(d)           The Executive acknowledges that as a result of Executive’s employment with the Employers, Executive has held and will continue to hold a position of the highest trust in which Executive comes to know the Employers’ employees, its customers and its Confidential and Proprietary Information.  The Executive agrees that the provisions of Section 7 (c) are necessary to protect the Employers’ legitimate business interests.  The Executive warrants that these provisions will not unreasonably interfere with Executive’s ability to earn a living or to pursue Executive’s occupation after Executive’s employment ends for any reason.  Executive agrees to promptly notify the Employers of the name and address of any Person or entity to which Executive provides services during the Covered Period and authorizes the Employers, after consultation with Executive as to the form and content of any such notice, to notify that entity of Executive’s obligations under this Agreement.

 

(e)           The parties agree that nothing in this Agreement shall be construed to limit or negate the California Trade Secrets Act, codified at California Civil Code section 3426 et seq., common law of torts, confidentiality, trade secrets, fiduciary duty and obligations where such laws provide the Employers with any broader, further or other remedy or protection than those provided herein.

 

(f)            Because the breach of any of the provisions of this Section 7 will result in immediate and irreparable injury to the Employers for which the Employers will not have an adequate remedy at law, the Employers shall be entitled, in addition to all other rights and remedies, to seek a degree of specific performance of the restrictive covenants contained in this Section 7 and to a temporary and permanent injunction enjoining such breach, without posting bond or furnishing similar security.

 

8.             Cooperation in Legal Proceedings.  After the Date of Termination, the Executive agrees to reasonably cooperate with the Employers and any of their Affiliates in the defense or prosecution of any claims or actions that may be brought against or on behalf of the Employers or their Affiliates, which relate to events or occurrences that transpired while the Executive was employed by the Employers.  The Executive’s reasonable cooperation in 

 

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connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Employers or any of their Affiliates.  The Executive also agrees to reasonably cooperate with the Employers and any of their Affiliates in connection with any investigation or review of any federal, state, or local regulatory authority as any such investigation or review relates to any acts or omissions that transpired while the Executive was employed by the Employers.  The Executive understands that in any legal action, investigation, or review covered by this Section 8 that the Employers expects the Executive to provide only accurate and truthful information or testimony.  The Employers will pay expenses necessarily and reasonably incurred by the Executive in complying with this Section.

 

9.             Work Product.  The Executive acknowledges that all inventions innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (whether or not patentable) which relate to the Employers or their Affiliates, research and development or existing or future products or services and which are conceived, developed or made by the Executive while employed by the Employers and their Affiliates (“Work Product”) belong to the Employers or such Affiliates (as applicable). The Executive shall prom disclose such Work Product to the Boards of Directors of the Employers and perform all actions reasonably requested by the Boards of Directors (whether during or after the Executive’s employment) to establish and confirm such ownership (including, without limitation, executing assignments, consents, powers of attorney and other instruments).

 

10.          Return of Property.  On and after the Date of Termination for any reason, or at any time during Executive’s employment, on the request or direction of the Employers, the Executive will immediately deliver to the Employers any or all equipment, property, material, Confidential and Proprietary Information, Work Product or copies thereof which are owned by the Employers and are in the Executive’s possession or control.  This includes documents or other information prepared by the Executive, on Executive’s behalf or provided to the Executive in connection with the Executive’s duties while employed by the Employers, regardless of the form in which such document or information are maintained or stored, including computer, typed, written, electronic, audio, video, micro-fiche, imaged, drawn or any other means of recording or storing documents or other information.  The Executive hereby warrants that the Executive will not retain in any form such documents, Confidential and Proprietary Information, Work Product or other information or copies thereof.  The Executive may retain a copy of this Agreement and any other document or information describing any rights the Executive may have after the termination of the Executive’s employment.

 

11.          Dispute Resolution.  The Executive and the Employers agree that arbitration in accordance with the Federal Arbitration Act and a Mutual Arbitration Agreement in the form attached hereto as Attachment A entered into by the Executive and the Employers simultaneous herewith shall be the exclusive means for final resolution of any dispute between the parties arising out of or relating to the Executive’s employment or this Agreement.  Such Mutual Arbitration Agreement is incorporated by reference herein as though set forth in full and will be deemed fully-executed and mutually binding on both the Employers and the Executive once signed by the Executive.  The only exceptions to proceeding under the mutual arbitration as provided for therein are:  (1) for workers’ compensation and unemployment claims by Executive; and (2) when injunctive relief is necessary to preserve the status quo or to prevent irreparable injury to either party.  The parties hereto agree that injunctive relief may be sought only from any court of competent jurisdiction located in Orange County, California and the parties hereto consent to venue and personal jurisdiction in any such court.

 

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12.          Withholding.  All payments required to be made by the Employers hereunder to the Executive shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Employers may reasonably determine should be withheld pursuant to any applicable law or regulation.

 

13.          Assignability.  The Employers may assign this Agreement and their rights and obligations hereunder in whole, but not in part, to any corporation or other entity with or into which the Employers may hereafter merge or consolidate or to which the Employers may transfer all or substantially all of their respective assets, if in any such case said corporation or other entity shall by operation of law or expressly in writing assume all obligations of the Employers hereunder as fully as if it had been originally made a party hereto, but may not otherwise assign this Agreement or its rights and obligations hereunder. The Executive may not assign or transfer this Agreement or any rights or obligations hereunder because the Executive’s obligations are personal in nature to the Executive.

 

14.          Notice.  For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the signature page hereto.  Any notice, request, demand or other communication delivered or sent in the manner aforesaid shall be deemed given or made (as the case may be) upon the earliest of (a) the date it is actually received, (b) the business day after the day on which it is delivered by hand, (c) the business day after the day on which it is properly delivered to Federal Express (or a comparable overnight delivery service), or (d) the third business day after the day on which it is deposited in the United States mail. The Employers or the Executive may change their respective addresses by notifying the other party or parties of the new addresses in any manner permitted by this Section 14.

 

15.          Amendment; Waiver.  No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer or officers as may be specifically designated by the Boards of Directors of the Employers to sign on their behalf.  No waiver by any party hereto at any time of any breach by any other party hereto of, or 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.

 

16.          Governing Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the United States where applicable and otherwise by the substantive laws of the California, without regard to any conflicts of laws provisions thereof.

 

17.          Nature of Obligations.  Nothing contained herein shall create or require the Employers to create a trust of any kind to fund any benefits which may be payable hereunder, and to the extent that the Executive acquires a right to receive benefits from the Employers hereunder, such right shall be no greater than the right of any unsecured general creditor of the Employers.

 

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18.          Headings.  The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

19.          Validity.  The invalidity, illegality or unenforceability of any provision of this Agreement, in whole or in part, shall not affect the validity, legality or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.

 

20.          Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

21.          Negotiation of Agreement and Right of Independent Counsel. Each of the parties hereto agrees that this Agreement will be deemed negotiated and drafted by both parties, each of which has had the opportunity to review its contents with independent counsel selected by such party prior to signing.  No inferences will be drawn in favor of either party hereto with regard to any asserted ambiguity in the terms of this agreement under any provision of the California Civil Code.

 

22.          Regulatory Prohibition and Required Provisions.

 

(a)           Notwithstanding any other provision of this Agreement to the contrary, any payments made to the Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. §1828(k), and the regulations promulgated thereunder, including 12 C.F.R. Part 359.  Furthermore, following such termination for Cause, the Executive will not, directly or indirectly, participate in the affairs or the operations of the Employers.

 

(b)           If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the FDIA, 12 U.S.C. § 1818(e)(3) or (g)(1), the Bank’s obligations under this contract shall be suspended as of the date of service, unless stayed by appropriate proceedings.  If the charges in the notice are dismissed, the Bank may in its discretion (i) pay Executive all or part of the compensation withheld while their contract obligations were suspended; and (ii) reinstate (in whole or in part) any of the obligations which were suspended.

 

(c)           If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(l) of the FDIA, 12 U.S.C. § 1818(e)(4) or (g)(l), all obligations of the Bank under this contract shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

 

(d)           If the Bank is in default as defined in Section 3(x)(l) of the FDIA, 12 U.S.C. § 1813(x)(l) all obligations of the Bank under this contract shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

 

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(e)           All obligations of the Bank under this contract shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the institution, by the Federal Deposit Insurance Corporation (“FDIC”), at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the FDIA, 12 U.S.C. § 1823(c).

 

23.          Entire Agreement.  This Agreement embodies the entire agreement between the Employers and the Executive with respect to the matters agreed to herein.  All prior agreements between the Employers and the Executive with respect to the matters agreed to herein are hereby superseded and shall have no force or effect.

 

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IN WITNESS WHEREOF, this Agreement has been executed as of the date first above written.

 

	
 
    	
PACIFIC   PREMIER BANCORP, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Steven R. Gardner
    
	
 
    	
 
    	
Name:   Steven R. Gardner
    
	
 
    	
 
    	
Title:   President and Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
17901   Von Karman Avenue
    
	
 
    	
Suite   1200
    
	
 
    	
Irvine,   California 92614
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PACIFIC   PREMIER BANK
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Steven R. Gardner
    
	
 
    	
 
    	
Name:   Steven R. Gardner
    
	
 
    	
 
    	
Title:   President and Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
17901   Von Karman Avenue
    
	
 
    	
Suite   1200
    
	
 
    	
Irvine,   California 92614
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   E. Allen Nicholson
    
	
 
    	
 
    	
Name:   E. Allen Nicholson
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    

 

 

Attachment A

 

MUTUAL AGREEMENT TO ARBITRATE DISPUTES

 

THIS MUTUAL AGREEMENT TO ARBITRATE DISPUTES (“Arbitration Agreement”) is made as of this        day of  May, 2015, by and between Pacific Premier Bancorp, Inc., a Delaware corporation (the “Company”), Pacific Premier Bank, a California-chartered commercial bank (the “Bank” and together with the Company, the “Employers”), and E. Allen Nicholson (the “Executive”).  (The Executive and the Employers may be referred to collectively as the “parties” or individually as the “party.”)  Reference is made to that certain Employment Agreement, dated as of the date hereof, between the Executive and the Employers (the “Employment Agreement”), into which the terms of this Arbitration Agreement are hereby incorporated as though set forth therein in their entirety.

 

1.             Any dispute, controversy, or claim (“Claims”) between the parties arising out of or in any way relating to the employment of the Executive by the Employers or the Employment Agreement, or the breach thereof, or otherwise arising out of or relating to the Executive’s employment or the termination of that employment, or any other matters between the parties, shall be resolved, to the fullest extent permitted by law, by final and binding arbitration before a single neutral arbitrator under the Judicial Arbitration and Mediation Services (“JAMS”) Employment Arbitration Rules and Procedures (the “Rules”) then in effect, as modified by this Arbitration Agreement.  Unless otherwise provided in this Arbitration Agreement, the Rules shall apply for all matters related to any arbitration hereunder, including, but not limited to, the selection of a neutral arbitrator; provided, however, that the Rules applicable to class claims in arbitration shall not apply.  A copy of the Rules is attached hereto and is incorporated into this Arbitration Agreement by this reference as though set forth in its entirety.  The parties mutually agree that the venue of the arbitration shall be in Orange County, California, and both parties hereby consent to the jurisdiction of the arbitrator, and to submit to said jurisdiction, in Orange County, California.

 

2.             The parties waive their rights (a) to proceed before a civil court, except in the limited circumstances expressly set forth below, (b) to have a jury trial, and (c) as to wage claims, to proceed before the California Labor Commissioner, Division of Labor Standards Enforcement.

 

3.             Claims include, without limitation, Claims arising out of or relating to the construction, interpretation or application of this Arbitration Agreement.  This Arbitration Agreement applies, without limitation, to disputes regarding any local, state, or federal administrative, regulatory, statutory, constitutional or common law Claims, regarding, without limitation, the employment relationship, trade secrets, unfair competition, compensation, termination, discrimination, harassment or retaliation; claims arising under the Uniform Trade Secrets Act, Civil Rights Act of 1964, Americans With Disabilities Act, Age Discrimination in Employment Act, Family Medical Leave Act, Fair Labor Standards Act, Executive Retirement Income Security Act, California Fair Employment and Housing Act, California Family Rights Act, California Labor Code, California Industrial Welfare Commission Wage Orders, and all other local, state, or federal administrative, regulatory, statutory, constitutional or common law claims (excluding workers compensation, state disability insurance, and unemployment

 

 

insurance claims).  Claims may be brought before an administrative agency but only to the extent applicable law requires so, and only to the extent applicable law requires access to such agency despite the existence of an agreement to arbitrate all claims.  The preceding sentence is intended to apply at least to charges brought before the Equal Employment Opportunity Commission, the U.S. Department of Labor, or the National Labor Relations Board.  Nothing in this Arbitration Agreement shall be deemed to preclude or excuse a party from bringing an administrative claim before any agency in order to fulfill the party’s obligation to exhaust administrative remedies before making a claim in arbitration.  In the event that any person or entity other than the Executive or the Employers (and its agents, representatives, and executives) may be a party with regard to any such controversy or claim, such controversy or claim shall be submitted to arbitration subject to such other person or entity’s agreement.  Further, in accordance with the Employment Agreement, both parties shall have the right to seek injunctive relief or other relief for any violation of the terms and conditions of its provisions as set forth in the Employment Agreement.

 

4.             There shall be no right or authority for any Claims to be brought, heard or arbitrated as a class, collective, or representative action except as noted below (“Class Action Waiver”).  Each party expressly intends and agrees that class, collective or representative actions or procedures and claims for public benefit shall not be asserted in any civil court or other forum, nor shall they apply or be permitted in an arbitration pursuant to this Arbitration Agreement.  Each party shall submit only such party’s own, individual Claims in arbitration and shall not seek to represent the interests of any other person, or otherwise seek to assert a claim for public benefit or other representative claim, including any under the California Unfair Competition Law.  The parties further agree that this Arbitration Agreement provides the sole and exclusive manner for resolving Claims between them.  As a limitation on the arbitrator, each party agrees that any claim that this Class Action Waiver is unenforceable, unconscionable, void, or voidable shall be determined only by a court of competent jurisdiction and not by an arbitrator.  Despite the foregoing, nothing in this Arbitration Agreement shall operate to require the arbitration of any claim brought under California’s 2004 Private Attorneys General Act (“PAGA”).  PAGA claims may continue to be brought in a court of law and will not be subject to this Arbitration Agreement.

 

5.             The party asserting any Claims must make a written demand for arbitration (a “Demand”) and deliver the Demand to the other party.  The statutes of limitation otherwise applicable under the law shall apply to any and all Claims made in any arbitration pursuant to this Arbitration Agreement.

 

6.             The Employers will pay all of the administrative costs of the arbitration, the fees and expenses of the arbitrator, and other expenses of the arbitration incurred or approved by the arbitrator.  To the extent allowed by law, each party is solely responsible for such party’s own costs in connection with the arbitration as if the Claims at issue had been brought in a court of law, such as attorneys’ fees and witness fees.  However, if under applicable law, the Employers are not required to pay all of the arbitrator’s and/or arbitration fees, such fee(s) will be apportioned between the parties in accordance with said applicable law, and any disputes in that regard will be resolved by the arbitrator.

 

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7.             The parties will have the right to conduct civil discovery, bring dispositive motions, and present witnesses and evidence, and disputes in this regard shall be resolved by the arbitrator.

 

8.             The arbitrator shall issue a written arbitration decision and shall include a statement of the essential findings and conclusions upon which the decision is based.  The award shall be sufficient to allow for limited judicial review, which may be obtained by either party as available by law.  The arbitrator may award, if appropriate, damages and other relief or remedies permitted by law, and each party shall be entitled to recover in arbitration any and all types of damages and other relief or remedies that would otherwise be available to a prevailing party if the Claims were brought in a judicial forum before a jury or court.  Except as expressly limited in paragraph 3 above, the arbitrator has exclusive authority to resolve any dispute relating to the applicability or enforceability of this Arbitration Agreement.  However, the arbitrator may not add to, subtract or modify any of the terms of this Arbitration Agreement or the policies set forth in any employee handbook of the Employers.

 

9.             Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  The award may be subject to judicial review as allowed by law or a clear error of law exceeding the arbitrator’s authority.  This Arbitration Agreement shall be specifically enforceable.  Except as may be required by court order, no party or arbitrator may disclose the existence, content, or results of any arbitration hereunder without prior written consent of the parties.

 

10.          Either party hereto may pursue an action in a court of competent jurisdiction for the purpose of obtaining a temporary restraining order or preliminary injunction in furtherance of their agreement to arbitrate, such as a court action to decide the enforceability or revocability of this Arbitration Agreement or any portion thereof, or in order to preserve the status quo and prevent irreparable damage to either party.

 

11.          This Arbitration Agreement, together with the Employment Agreement, constitute  the complete agreement of the parties on the subject of arbitration of disputes regardless of any changes that may occur to any policies, programs, or benefits outlined in any employee handbook provided to the Executive.  This Arbitration Agreement will remain effective and may not later be modified or altered except by writing signed by each Employer’s President and the Executive.  This Arbitration Agreement shall survive the termination of the Executive’s employment.

 

12.          If any portion of this Arbitration Agreement is determined to be invalid or unenforceable, the parties hereto desire that such invalidity or unenforceability shall not affect the remainder of this Arbitration Agreement, and to this end, this Arbitration Agreement’s terms are declared to be severable.  If any applicable Rule is adjudged to be unenforceable, in whole or in part, such adjudication shall not affect the validity of this Arbitration Agreement or the remaining applicable Rules.  This Arbitration Agreement is governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq., except with regard to the parties’ limited appeal rights, and applicable state law consistent therewith.

 

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EACH PARTY ACKNOWLEDGES AND AGREES THAT SUCH PARTY HAS CAREFULLY READ THIS ARBITRATION AGREEMENT AND UNDERSTANDS ITS TERMS, AND ENTERS INTO THIS ARBITRATION AGREEMENT VOLUNTARILY AND KNOWINGLY AND NOT IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS ARBITRATION AGREEMENT, AND THAT SUCH PARTY IS LEGALLY BOUND BY THIS ARBITRATION AGREEMENT.  EACH PARTY ACKNOWLEDGES AND AGREES THAT SUCH PARTY WAS PROVIDED THE OPPORTUNITY TO CONSULT WITH COUNSEL OF SUCH PARTY’S OWN CHOICE.  EACH PARTY AGREES TO RESOLVE ALL CLAIMS BY FINAL AND BINDING NEUTRAL ARBITRATION PURSUANT TO THIS ARBITRATION AGREEMENT AND HEREBY WAIVES (AND AGREES TO TAKE ANY ADDITIONAL NECESSARY ACTION THAT MAY BE REQUIRED TO WAIVE) ANY STATUTORY, COMMON LAW OR CONSTITUTIONAL RIGHTS SUCH PARTY MAY HAVE TO A JURY OR COURT TRIAL, OR TRIAL BEFORE ANY ADMINISTRATIVE AGENCY OR TRIBUNAL.  EACH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO CLASS, REPRESENTATIVE, AND COLLECTIVE PROCEDURES EXCEPT AS LIMITED IN PARAGRAPH 4 ABOVE.  EACH PARTY ACKNOWLEDGES THAT THIS ARBITRATION AGREEMENT IS A CONDITION OF ANY OBLIGATIONS OF THE BANK UNDER THE EMPLOYMENT AGREEMENT.

 

IN WITNESS WHEREOF, the Executive and the Employers have caused this Arbitration Agreement to be duly executed as of the day and year first above written.

 

	
PACIFIC PREMIER BANCORP, INC.
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:   Steven R. Gardner
    	
 
    
	
 
    	
Title:   President and Chief Executive Officer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
PACIFIC PREMIER BANK
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:   Steven R. Gardner
    	
 
    
	
 
    	
Title:   President and Chief Executive Officer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
EXECUTIVE
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
E. Allen Nicholson
    	
 
    

 

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