EMPLOYMENT AND CONFIDENTIALITY
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AGREEMENTGOLETA NATIONAL BANK
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President and Chief Executive Officer
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This Employment and Confidentiality Agreement (the "Agreement") is made and
entered into between Goleta National Bank (the "Bank"), its parent company,
Community West Bancshares (the "Company"), and Xxxxx X. Xxxxx ("Executive").
Witnesseth
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Whereas the Bank is a California national banking association duly
organized, validly existing, and in good standing under the laws of the United
States of America, with power to own property and carry on its business as it is
now being conducted, with its principal place of business located at 000 Xxxx
Xxxxxx, Xxxxxx, XX. 00000;
Whereas the Bank desires to avail itself of the skill, knowledge and
experience of Executive in order to insure the successful management of its
business;
Whereas the parties hereto desire to specify the terms of Executive's
employment by the Bank and Company as controlling Executive's employment at the
Bank;
Now, therefore, in consideration of the representations, warranties, and
mutual covenants set forth in this Agreement, the following terms and conditions
shall apply to Executive's said employment effective as of April 1, 2003 (the
"Effective Date"):
1. ARTICLE 1 - EMPLOYMENT AND TERM
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1.1 Employment. The Bank and Company shall employ the Executive as
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Bank's President and Chief Executive Officer (the "Position"), and the Executive
accepts such employment, in accordance with the terms and conditions set forth
in this Agreement. The place of Executive's employment under this Agreement
shall be in Goleta, California, at a location determined by the Board of
Directors.
1.2 Term. The term of employment under this Agreement ("Term")
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shall commence on the Effective Date and end on December 31, 2006, subject to
early termination, provided in Article 4, below.
1.3 Renewal. Upon the expiration of such Term, the Executive's
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employment under this Agreement shall automatically renew for a successive
period of 12 months ("Renewal Term"), and upon expiration of any subsequent
Renewal Terms shall automatically renew for a successive period of 12 months;
unless, at least three (3) months before the expiration of any preceding Term or
Renewal term, either the members of the board of directors of the Bank (the
"Board of Directors" or the "Board") provide written notice of non-renewal to
Executive; or, unless, three (3) months prior to the expiration of any preceding
Term or Renewal Term, that Executive provides written notice of non-renewal to
Bank.
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2. ARTICLE 2 - DUTIES OF THE EXECUTIVE
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2.1 Powers. Executive shall be empowered by and at all times
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subject to the powers by law vested in the Board of Directors of the Bank and in
the Bank's shareholders. The Executive shall report directly to the Board of
Directors of the Bank and the President/Chief Executive Officer of the Company.
2.2 Duties. Executive shall have direct responsibility for the
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management of Bank's activities. Executive agrees to render services and perform
the duties and acts of President and Chief Executive Officer of the Bank in
connection with any aspect of Bank's business as may be required by the Board of
Directors of Bank or the President/Chief Executive Officer of Company. Executive
shall perform these Duties, and Specific Duties as defined below, faithfully,
diligently, to the best of Executive's ability and in the best interests of the
Bank, consistent with the highest standards of the banking industry and in
compliance with all applicable laws, rules, regulations, and policies applicable
to the Bank, including, but not limited to, the Federal Deposit Insurance Act
and all regulations thereunder, Bank's Articles of Association and Bylaws.
2.3 Specific Duties. The Executive agrees to undertake and perform
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all duties required of the Position ("Specific Duties"), including, but are not
limited to:
a. Develop a management plan that recognizes the importance of following
the laws and regulations of the Officer of the Comptroller of the
Currency and a system to monitor compliance of the same;
b. Develop, with the advice and counsel of Company's senior management,
the overall goals, policies and operating plans for the Bank, which
"Goals" shall be submitted to Bank's Board of Directors in writing,
for approval;
c. Represent Bank in its relationship with competitors, governmental
agencies and outside counsel as necessary;
d. Ensure that Bank policies are uniformly disseminated, understood, and
properly interpreted and administered by subordinates;
e. Maintain the adequacy and soundness of the Bank's financial structure,
establish effective control techniques which permit the appropriate
delegation of responsibility and authority to satisfy the Bank's
fiscal needs and to conserve the assets entrusted to the Company;
f. Approve staffing levels and salary considerations on behalf of the
Bank;
g. Prescribe specific limitations on the authority of all subordinates
regarding Bank policies and procedures, contractual commitments,
expenditures and personnel actions;
h. Review and approve appointments, employment, transfers, or termination
of all key executives for the Bank.
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i. Assume a leadership role in community affairs and local organizations,
and maintain positive relationships with local businesses and other
senior bank officers, with the objective to promote public relations
which may lead to business development activities on behalf of the
Bank;
j. Develop and implement programs to encourage the successful future
management of the Bank (Succession Planning);
k. Serve as a member of the Bank's Board of Directors, Director's Loan
Committee and other such committees as determined by the Board;
m. Be responsible, along with the Chief Financial Officer, for the
protection of shareholder and creditor rights and interests,
implementing controls and audits as they deem necessary to protect
such rights.
2.4 Conflict of Interests. Executive shall not directly or
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indirectly render any services of a business, commercial or professional nature,
to any other person, firm or corporation, whether for compensation or otherwise,
which are in conflict with the Bank's interests. Further, Executive shall not
engage in any activity that would impair the Executive's ability to act and
exercise independent judgment in the best interests of Bank.
2.5 Exclusive Services. During employment by the Bank, Executive
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shall not, without the express prior written consent of the Board of Directors
of the Bank, engage directly or indirectly in any outside employment or
consulting of any kind, whether or not the Executive receives remuneration for
such services.
3. ARTICLE 3 B COMPENSATION
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As the total consideration for the services that Executive renders under
this Agreement, Executive shall be entitled to the following:
3.1 Base Salary. Effective April 1, 2003, the Bank shall pay Executive
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a base salary of $160,000.00 per year, less income tax and other applicable
withholdings. On July 1, 2003, the Bank shall increase Executive's base salary
to $175,000.00 per year, less income tax and other applicable withholdings. Base
salary shall be paid in accordance with Bank's regular payroll practices.
3.2 Annual Bonus. At the sole discretion of Bank, Executive may be
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eligible to receive an annual bonus, at an amount determined by the Board in its
sole discretion. If it is determined that a bonus will be paid Executive in any
calendar year, the bonus will be paid at or near the close of the calendar year,
but no later than 30 days after year-end.
3.3 Stock Options. The Executive shall be entitled to options of
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30,000 shares of Common Stock of Community West Bancshares (the "Options"), in
accordance with the terms and conditions set forth in the Bank's Stock Option
Plan ("The Option Documents".
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3.5 401K Plan. Executive will be eligible to participate in the
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Bank's 401 (k) Plan.
3.6 Bank Executive Benefits. The Executive shall be provided with
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Bank's Executive benefit plans, for both Executive and family, to include
medical, dental, vision, prescription plan, life insurance (one and one-half
times [1.5x] annual base), and short-term disability benefits. In all events,
the Bank's liability to Executive shall be limited to the amount of premiums
payable by the Bank to obtain the coverage contemplated herein.
3.7 Vacation. Executive shall be entitled to vacation time of not
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be more than four (4) weeks per year, provided however that, during each year of
the Term or Renewal Term(s), Executive is required to and shall take at least
two (2) weeks of said vacation (the "mandatory vacation"), which shall be taken
consecutively.
3.8 Reimbursement for Expenses. The Bank shall reimburse Executive
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for any and all reasonable business expenses incurred by Executive on behalf of
Bank in the performance of this Agreement, approved expenditures to be
determined by the Board of Directors ("Business Expenses"). A reimbursable
Business Expense shall be of a nature qualifying it as a proper business expense
deduction on the federal and state income tax returns of the Bank. Executive
must be able to furnish adequate records and other documentary evidence as may
be required by Federal and State statues.
4. ARTICLE 4 - TERMINATION
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4.1 Termination At Will. Pursuant to the provisions of 12 U.S.C.
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Section 24 and notwithstanding anything to the contrary herein, the Bank may
terminate this Agreement at any time by action of the Board of Directors of the
Bank. Such termination shall be effective immediately upon receipt of notice by
Executive from the Bank.
4.2 Termination Without Cause.
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(a) If during the Term or Renewal Term, the Executive is
terminated without cause, Executive shall be entitled to the following:
(b) Notice Period. Three (3) months notice shall be provided
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by Bank to Executive of (i) termination of employment without cause or, (ii)
Bank's decision not to renew the Agreement ("Notice Period").
(c) Compensation.
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(i) Notice Payment. During the Notice Period,
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Executive will continue to receive salary and benefits and shall continue to
perform the Duties and Specific Duties of employment as defined under the
Agreement, described above, in which case the terms of the Mutual Agreement will
apply.
(ii) Deferred Compensation. Commencing on the
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Effective Date, Bank shall establish a balance sheet liability account for the
benefit of Executive. At the end of each month an amount equal to six percent
(6%) of the Executive's base salary for that month shall be credited to said
liability account. In addition, interest on the balance
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in said account shall be credited monthly at a rate equivalent to the then
current rate offered on a six (6) month certificate of deposit at the Bank. If
Executive's employment terminates for any reason, the balance in said liability
account shall be paid to Executive upon her demand. Said liability account shall
not be insured by the FDIC or any other insurer, and Executive shall be an
unsecured creditor in the event of the Bank's insolvency.
(d) Benefits.
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(i) After Termination, all Executive benefits available
under Article 3.6 herein, shall be continued by Bank, contingent upon and
subject to Executive's COBRA election described under Article 4.2 (d)(ii) below,
with Bank to pay the premium cost for the first six (6) months, and Executive to
pay the premium cost thereafter. Such Benefits to continue until the earlier of
(a) the expiration of one (1) year following Executive's termination of
employment with the Bank, or (b) the date Executive becomes covered under any
other group health plan not maintained by the Bank, the Company or any of its
subsidiaries, or (c) Executive provides notice to Bank or the COBRA provider to
discontinue The Benefits.
(ii) In the event Executive is required to make an
election under Executive Retirement Income Security Act of 1974 Sections 601 et.
seq. ("COBRA") to qualify for The Benefits, Bank's obligation hereunder shall be
conditioned upon Executive's making a timely election.
4.3 Termination for Cause (12 C.F.R. ' 563.39). Termination for Cause
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shall mean termination because of Executive's incompetence, personal dishonesty,
willful misconduct, any breach of fiduciary duty involving personal profit,
habitual neglect of duties, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other than traffic violations
or similar offenses) or final cease-and-desist order or material breach of any
provision of this Agreement. Written notice delivered to Executive is a
prerequisite to Termination for Cause and such termination shall be effective on
the delivery date of the written notice. Executive shall have the right to
receive compensation or other benefits which have already vested or been earned
as of the date of notice of Termination for Cause, unless expressly prohibited
by the terms of any plan, program or agreement governing such compensation or
benefits; and Executive shall be entitled to Deferred Compensation and Benefits
described under Termination Without Cause, 4.2 (c)(ii),and (d).
4.4 Termination by Other Event
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(a) Termination by "Other Event" shall mean: Executive's
resignation based upon a material change in Executive's assigned duties and
responsibilities at Bank which are inconsistent with Executive's status as
President/Chief Executive Officer of Bank and which cause Executive's position
to become one of lesser responsibility, importance, or scope from the Duties and
Specific Duties described herein, or if Bank is otherwise in material breach of
any of the terms or covenants of this Agreement; and such material change or
breach occurs and continues without Executive's written consent. As a
prerequisite to such resignation, the Bank shall have an opportunity to cure
said material change or breach within fifteen (15) days of Bank's receipt of
written notice
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specifying the material breach or unacceptable change and the opportunity for
Bank to resolve said breach.
(b) In the event of Termination by Other Event, The Executive
shall be entitled to Deferred Compensation and The Benefits described under
Termination Without Cause, 4.2 (c)(ii), and (d).
4.5 Termination By the Executive or Death. If the Executive's
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employment is terminated as a result of Executive's death, the Bank shall pay to
the Executive, her beneficiary or beneficiaries or Executive's estate, as the
case may be, the base salary earned but unpaid through the Termination Date,
which shall be the date of death.
4.6 Termination by Mental or Physical Disability.
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(a) If Executive is absent from work or found to be
physically or mentally incapable of performing Executive's Duties and Specific
Duties for a period of ninety (90) consecutive days, or a cumulative period of
one hundred twenty (120) days in any one (1) calendar year, the Board of
Directors acting in good faith, may terminate the Executive's employment
hereunder as of the Termination Date specified in a written notice of
termination delivered to Executive, except that there is no minimum Notice
Period requirement.
(b) For purposes of this Agreement only, physical or mental
disability shall be defined as Executive being unable to fully perform under
this Agreement for a continuous period of ninety (90) days or a cumulative
period of one hundred twenty (120) days in any one (1) calendar year.
(c) If the Executive's employment is terminated by the Bank
pursuant to this Section, such termination shall be with cause, as defined in
Section 4.3, Termination With Cause, and Executives' rights shall be subject to
the provisions thereof.
(d) If there should be a dispute between the Bank and the
Executive as to the Executive's physical or mental disability for purposes of
this Agreement, the question shall be settled by the opinion of an impartial
reputable physician or psychiatrist mutually agreed upon by the parties or their
representatives, or if the parties cannot agree within ten (10) days after a
request for designation of such party, then by a physician or psychiatrist
designated by the Santa Xxxxxxx County Medical Association.
4.7 Change in Control. If Executive's employment is terminated within
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twelve (12) months following a merger, consolidation or reorganization where the
Bank is not the surviving or resulting entity, or upon a sale or other
disposition of all or substantially all of the assets of the Bank, or the
acquisition of fifty percent (50%) or more of the combined outstanding voting
shares of the Bank (collectively "Change in Control"), Executive shall be
entitled to six (6) months base salary, and to Deferred Compensation and
Benefits described under Termination Without Cause, 4.2 (c)(ii), and (d).
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5. ARTICLE 5- CONFIDENTIALITY AND NON-SOLICITATION
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5.1 Confidentiality and Trade Secrets. Executive acknowledges
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that, in the course of employment with the Bank, Executive will acquire
information about the Bank's borrowers and clients, terms and conditions of Bank
transactions, pricing information for the purchase or sale of assets, financing
and securitization arrangements, research materials, manuals, computer programs,
formulas analyzing assets portfolios, techniques, data, marketing plans and
tactics, technical information, lists of asset sources, the processes and
practices of the Bank and related companies, information contained in electronic
or computer files, financial information, salary and wage information, and other
information that is designated by the Bank or its affiliates as confidential or
that Executive knows or should know is confidential information provided by
third parties and that the Bank or its affiliates are obligated to keep
confidential as well as other proprietary information of the Bank or its
affiliates ("Confidential Information"). Executive acknowledges that all
Confidential Information is and shall continue to be the exclusive property of
the Bank. The Executive agrees not to disclose any Confidential Information,
either during the Term or thereafter, directly or indirectly, under any
circumstances or by any means, to any third person or party without the prior
written consent of the Bank.
5.2 Non-Solicitation of Executives. Except as permitted by the
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prior written consent of the President/CEO of Company and Board of Directors of
Bank, during the period of six (6) months after the termination date, Executive
shall not directly or indirectly solicit for employment or for independent
contractor work from any Executive of the Bank or the Company, and shall not
encourage any such Executive to leave the employment of Bank or the Company.
5.3 Non-Solicitation of Customers. During the period of six (6)
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months following the termination date, Executive shall not directly: (a) solicit
business from any customers of the Bank or Company; (b) encourage any customers
to stop using the facilities or services of the Bank or Company; or (c)
encourage any customers to use the facilities or services of any competitor of
the Bank or Company.
5.4 Company to Benefit from Provisions. To the extent any
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provisions of this Article 5 relate in any way to Confidential Information and
trade secrets of the Company, then the obligations of Executive set forth herein
shall also extend to the Company and inure to its benefit.
6. ARTICLE 6 - BANK'S OWNERSHIP IN EXECUTIVE'S WORK
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6.1 Bank's Ownership. The Executive agrees that all inventions,
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discoveries, improvements, trade secrets, formulas, techniques, mask works,
processes, and know-how, whether or not patentable, and whether or not reduced
to practice, that are conceived or developed during the Executive's employment
with the Bank, either alone or jointly with others, or relating to the Bank or
to the banking industry ("Bank's Work"), and any written record that Executive
may maintain of Bank's Work, shall be owned exclusively by the Bank. Executive
hereby assigns to Bank, all of Executive's right, title, and interest, if any,
in such intellectual property defined as Bank's Work. Executive shall furnish to
Bank any and all such records pertaining to Bank's Work, immediately upon
request.
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6.2 Return of Bank's Property and Materials. Upon termination
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of employment with the Bank, Executive shall deliver to the Bank all Bank
property and materials that are in the Executive's possession or control,
including Bank's Work, within five (5) calendar days.
6.3 Company to Benefit from Provisions. To the extent any
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provisions of this Article 5 relate in any way to information, property, rights,
projects, ventures, or inventions of the Company, then the obligations of
Executive set forth in this Article 6 shall also extend to the Company and inure
to its benefit.
7. ARTICLE 7 - ARBITRATION
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7.1 If any dispute, controversy or claim arises out of or relates
to this Agreement, such dispute, controversy, or claim shall be settled by
binding arbitration only, in accordance with the Rules of Judicial Arbitration
and Mediation Services, using legal principles and damages according to
California Law, and shall be selected by and agreed upon by both parties.
Judgment upon the arbitrator's award shall be entered in the jurisdiction
thereof. The arbitrator shall determine which is the prevailing party and shall
include in the award, the prevailing party's actual attorney's fees and costs.
The arbitrator shall have no authority to grant either punitive or consequential
damages to any party.
7.2 If the parties cannot agree upon the selection of an
arbitrator within ten (10) days of written demand upon the other, the parties
shall choose from a list to be provided by the main Los Angeles office of the
American Arbitration Association ("AAA") or of the Federal Mediation and
Conciliation Service, using the strike method, with the first to strike being
determined by the flip of a coin.
7.3 As soon as practicable after selection of the arbitrator, the
arbitrator or their designated representative shall determine a reasonable
estimate of anticipated fees and costs setting forth that party's pro rata share
of said fees and costs. Thereafter, each party shall, within ten (10) days of
receipt of said statement, deposit said sum with the arbitrator. Failure of any
party to make such a deposit shall result in a forfeiture by the non- depositing
party of the right to prosecute or defend the claim which is the subject of the
arbitration, but shall not otherwise serve to xxxxx, stay, or suspend the
arbitration.
7.4 Unless the parties agree otherwise, within one hundred and
twenty (120) days of the selection of the arbitrator, a hearing shall be
conducted at a time and a place in Los Angeles County agreed upon by the
parties. Arbitration shall be conducted in accordance with AAA employment rules
and procedures ("AAA Rules"), then in effect. In the event of any inconsistency
between AAA Rules and this Agreement, the terms of this Agreement shall prevail.
7.5 Within thirty (30) days of conclusion of the arbitration
hearing, the arbitrator shall issue an award, accompanied by a written decision
explaining the basis for the arbitrator's award. The decision of the arbitrator
shall be final, binding, and non- appealable, except as otherwise permitted by
law, and may be enforced as a final judgment in any court of competent
jurisdiction.
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8. ARTICLE 8 - MISCELLANEOUS
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8.1 Severable Provisions. Should any provisions or parts of this
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Agreement be declared invalid, void or unenforceable, by a court of competent
jurisdiction, the validity and binding effect of any remaining portions shall
not be affected and they shall remain in full force and effect as if this
Agreement had been executed with said provision(s) or part(s) eliminated.
8.2 Indemnification. The Bank and Executive agree to maintain in
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place at all times during the Term and Renewal Term(s), under this Agreement, an
"Indemnification Agreement" substantially similar in form and content as the
Indemnification Agreement entered into by the parties on December 20, 2001 ("The
Indemnification Agreement"). Any payments made to Executive pursuant to The
Indemnification Agreement are subject to and conditioned upon compliance with 12
C.F.R. Section 545.121, any rules or regulations promulgated thereunder, and all
benefits and privileges to which the Executive is otherwise entitled by law or
pursuant to the Bylaws of the Bank or the Company.
8.3 Successors and Assigns. The Bank shall require any successor
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or assignee, whether direct or indirect, by purchase, merger, consolidation, or
otherwise to all or substantially all of the business or assets of the Bank to
expressly assume and agree to perform in writing this Agreement in the same
manner and to the same extent that the Bank would be required to perform it if
no such succession or assignment had taken place. This Agreement shall inure to
the benefit of and be binding upon the Bank, its successors and assigns, and
upon the Executive and Executive's heirs, executors, administrators and legal
representatives. No party to this Agreement may delegate its or their duties
hereunder without the prior written consent of the other party to this
Agreement.
8.4 Governing Law. This Agreement is entered into in the State
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of California, and California law shall in all respects govern the validity,
construction, and interpretation of this Agreement.
8.5 Entire Agreement. This Agreement, including any documents
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expressly incorporated into it by the terms of this Agreement, constitutes the
entire agreement between the parties. This Agreement supersedes and rescinds any
and all prior oral and written agreements, understandings, negotiations, and
discussions relating to the employment of Executive by Bank. This Agreement may
not be modified, supplemented or amended by oral agreement, but only by an
agreement in writing signed by Bank and Executive.
8.6 Notice. Any notice or other communication required or
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permitted under this Agreement shall be in writing and shall be deemed received
(i) when personally delivered, or, (ii) if mailed, one week after having been
placed in the United States mail, registered, or certified, postage prepaid,
addressed to the party to whom it is directed at the address listed below or
(iii) if sent by facsimile, when the notice is transmitted to the facsimile
number specified below, and the appropriate confirmation is received:
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If to the Bank:
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Goleta National Bank Telephone:(000) 000-0000 (X.Xxxxxxx)
000 Xxxx Xxxxxx Facsimile: (000) 000-0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Chairman of the Board
If to the Executive:
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Xxxxx X. Xxxxx Telephone:(000) 000-0000
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx xxxxxx Xxxxxx, Xxxxxxxxxx 00000
In order for a party to change its address or other information for the
purpose of this section, the party must first provide notice of that change in
the manner required by this section.
9. ARTICLE 9- RECEIPT OF AGREEMENT
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(a) Receipt of Agreement. Each of the parties hereto acknowledges that
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they have read this Agreement in its entirety and does hereby acknowledge
receipt of a fully executed copy thereof. A fully executed copy shall be an
original for all purposes, and is a duplicate original.
In witness whereof, the parties hereto have caused this Agreement to be
executed as of the date and year set forth below.
ACCEPTED AND AGREED:
GOLETA NATIONAL BANK, A COMMUNITY
WEST BANCSHARES COMPANY
Date:___________________ By:___________________________
Name: Xxxxxxx Xxxxxxxxx
Title: Chairman of the Board
EXECUTIVE Date:
Date:___________________ By:___________________________
Name: Xxxxx X. Xxxxx, Executive
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