SEVERANCE COMPENSATION AGREEMENT
EXHIBIT 10.25
This agreement is entered into the 10th day of January, 2007, by and between Citizens Business Bank
(the “Bank”), and Xxxxxxx X. Xxxxx, Executive Vice President of the Bank (the “Executive”).
Whereas, the Bank’s Board of Directors has determined that it is appropriate to reinforce and
encourage the continued attention and dedication of members of the Bank’s Senior Management
Committee, including the Executive, to their assigned duties without distraction in potentially
disturbing circumstances arising from the possibility of a Change in Control (as defined herein) of
CVB Financial Corporation (the “Company”) directly or indirectly the Bank, a wholly owned
subsidiary of the Company; and
Whereas, this Agreement sets forth the compensation which the Bank agrees it will pay to the
Executive upon a Change in Control and termination or resignation of the Executive’s employment,
Now, therefore, in consideration of these promises and the mutual covenants and agreements
contained herein and to induce the Executive to remain employed by the Bank and to continue to
exert his best efforts on behalf of the Bank, the parties agree as follows:
1. Compensation Upon a Change in Control.
(a) In the event that a Change in Control occurs during the employment of the Executive and
(i) the Executive’s employment is terminated by the Company or the Bank or any successor
to the Company or the Bank other than for Cause (as defined below) within one (1) year
of the completion of such Change in Control; or
(ii) the Executive resigns his employment for any reason within one (1) year of the
completion of such Change in Control; or
(iii) the Executive is offered a position with any successor to the Company or the Bank
at or around the time of such Change in Control but decides that he does not wish to
accept such a position and, as a result, the Executive suffers a job loss (either by
termination or resignation);
the Executive shall receive an amount equal to two times the Executive’s annual base compensation
for the last calendar year ended immediately preceding the Change in Control, plus two times the
average annual bonus received for the last two calendar years ended immediately preceding the
Change in Control. Such amounts, less applicable withholdings, employment and payroll taxes (which
taxes shall be paid upon termination or resignation of Executive’s employment or at the time
payments are made hereunder, as required by law), shall be paid (without interest or other
adjustment) in 24 equal monthly installments on the first day of each month
1
commencing with the first such date that is at least six (6) months after the effective date of the
termination or resignation of the Executive’s employment and continuing for 23 successive months
thereafter. This payment schedule is intended to comply with the requirements of Section 409A of
the Internal Revenue Code and shall be interpreted consistently therewith.
(b) The Executive may designate in writing (only on a form provided by the Bank and delivered by
the Executive to the Bank before Executive’s death) primary and contingent beneficiaries to receive
the balance of any payment under Section 1A that are not made prior to the Executive’s death and
the proportions in which such beneficiaries are to receive such payment. The total amount of the
balance of such payment shall be paid to such beneficiaries in a single unreduced lump sum payment
made within ninety (90) days following the Executive’s death. The Executive may change beneficiary
designations from time to time by completing and delivering additional such forms to the Bank. The
last written beneficiary designation delivered by the Executive to the Bank prior to the
Executive’s death will control. If the Executive fails to designate a beneficiary in such manner,
or if no designated beneficiary survives the Executive, then Executive’s payment balance shall be
paid to the Executive’s estate in an unreduced lump sum payment within ninety (90) days following
the Executive’s death.
2. Definitions.
(a) Change in Control. For purposes of this Agreement, a “Change in Control” shall deemed to
have occurred if:
(i) any one person, or more than one person acting as a group, acquires (or has acquired
during the 12 month period ending on the date of the most recent acquisition) ownership
of stock of the Company or the Bank possessing more than 50% of the total voting power
of the Company’s or the Bank’s stock; provided, however, it is expressly acknowledged by
the Executive that this provision shall not be applicable to any person who is, as of
the date of this Agreement, a Director of the Company or the Bank;
(ii) a majority of the members of the Company’s or the Bank’s Board of Directors is
replaced during any 12 month period by directors whose appointment for election is not
endorsed by a majority of the members of the Company’s or the Bank’s board prior to the
date of the appointment or election;
(iii) a merger or consolidation where the holders of the Bank’s or the Company’s voting
stock immediately prior to the effective date of such merger or consolidation own less
than 50% of the voting stock of the entity surviving such merger or consolidation;
(iv) any one person, or more than one person acting as a group, acquired (or has
acquired during the twelve month period ending on the date of the most recent
acquisition by such person or persons) assets from the Bank that have a total fair
market value greater than 50% of the total
2
fair market value of all of the Bank’s assets immediately before the acquisition or
acquisitions; provided, however, transfer of assets which otherwise would satisfy the
requirements of this subsection (iv) will not be treated as a change in the ownership of
such assets if the assets are transferred to:
(A) an entity, 50% or more of the total value or voting power of which is owned,
directly or indirectly by the Company or the Bank;
(B) a person, or more than one person acting as a group, that owns, directly or
indirectly, 50% or more of the total value or voting power of all the outstanding
stock of the Company or the Bank; or
(C) an entity, at least 50% of the total value or voting power is owned, directly
or indirectly by a person who owns, directly or indirectly, 50% or more of the
total value or voting power of all the outstanding stock of the Bank.
Each event comprising a Change in Control is intended to constitute a “change in ownership or
effective control”, or a “change in the ownership of a substantial portion of the assets,” of
the Company or the Bank as such terms are defined for purposes of Section 409A of the Internal
Revenue Code and “Change in Control” as used herein shall be interpreted consistently therewith.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur as a result of
any transaction which merely changes the jurisdiction of incorporation of the Company or the
Bank.
B. Cause. For purposes of this Agreement, the Bank shall have “Cause” to terminate the
Executive’s employment and shall not be obligated to make any payments hereunder or otherwise in
the event the Executive has:
(i) committed a significant act of dishonesty, deceit or breach of fiduciary duty in the
performance of Executive’s duties as an employee of the Bank;
(ii) grossly neglected or willfully failed in any way to perform substantially the
duties of such employment; or
(iii) acted or failed to act in any other way that reflects materially and adversely on
the Bank. In the event of a termination of Executive’s employment by the Bank for
Cause, the Bank shall deliver to Executive at the time the Executive is notified of the
termination of his employment a written statement setting forth in reasonable detail the
facts and circumstances claimed by the Bank to provide a basis for the termination of
the Executive’s employment for Cause.
3. Term.
This agreement shall terminate, except to the extent that any obligation of the Bank hereunder
remains unpaid as of such time, upon the earliest of:
3
(i) the termination or resignation of the Executive’s employment from the Bank for any
reason if a Change in Control has not occurred prior to the date of such termination or
resignation;
(ii) three (3) years from the date hereof if a Change in Control has not occurred during
such period;
(iii) the termination of Executives’ employment from the Bank for Cause within one (1) year
after a Change in Control;
(iv) one (1) year after a Change in Control if Executive is still employed with the Bank or
its successor; or
(v) after a Change in Control of the Company or the Bank upon satisfaction of all of the
Company’s or the Bank’s obligations hereunder.
4. No Obligation to Mitigate Damages; No Effect on Other Contractual Rights.
A. The Executive shall not be required to mitigate damages or the amount of any payment provided
for under this Agreement by seeking other employment or otherwise, nor shall the amount of any
payment provided for under this Agreement be reduced by any compensation earned by the Executive
as the result of employment by another employer after the effective date of termination or
resignation, or otherwise, by his engagement as a consultant or his conduct of any other
business activities.
B. The provisions of this Agreement, and any payment provided for hereunder, shall not reduce
any amounts otherwise payable, or in any way diminish the Executive’s existing rights, or rights
which would accrue solely as a result of the passage of time, under any employment agreement or
other plan, arrangement or deferred compensation agreement, except as otherwise agreed to in
writing by the Bank and the Executive.
5. Successor to the Bank.
A. The Bank will require any successor or assign (whether direct or indirect by purchase or
otherwise) to all or substantially all of the business and/or assets of the Bank, by written
agreement with the Executive, to assume and agree to perform this Agreement in full. As used in
this Agreement, “Bank” shall mean the Bank as herein before defined and any successor or assign
to its business and/or assets as aforesaid which executes and delivers the agreement provided
for in this section 5 or which otherwise becomes bound by all the terms and provisions of this
Agreement by operations of law. Notwithstanding the assumption of this Agreement by a successor
assign of the Bank, if a Change in Control (as defined in section 2 (a) above) has occurred, the
Executive shall have and be entitled from such successor to all rights under section 1 of this
Agreement.
B. If the Executive should die while any amounts are still payable to him hereunder, all such
amounts shall be paid in accordance with the terms of this Agreement to the Executive’s
designated beneficiary(ies) or, if there are no such
4
designated beneficiary(ies), to the Executive’s estate. This Agreement shall, therefore, inure
to the benefit of and be enforceable by the Executive’s designated beneficiaries, personal and
legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees.
6. Confidentiality.
The Executive shall retain in confidence any and all confidential information known to the
Executive concerning the Company and the Bank and its business so long as such information is not
otherwise publicly disclosed.
7. Legal Fees and Expenses.
The Bank shall pay all legal fees and expenses which the Executive may incur as a result of the
Bank’s contesting the validity, enforceability or the Executive’s interpretation of, or
determinations, under, this Agreement if the Executive prevails in any such contest or proceeding.
8. Limitation on Payments.
This Agreement is made expressly subject to the provision of law codified at 12 U.S.C. 1828 (k) and
12 C.F.R. Part 359 which regulate and prohibit certain forms of benefits to Executive. Executive
acknowledges that he understands these sections of law and that the Bank’s obligations to make
payments hereunder are expressly relieved if such payments violate these sections of law or any
successors thereto.
Notwithstanding any other provisions of this Agreement, if the Company’s principal tax advisor
determines that the total amounts payable pursuant to this Agreement, together with other payments
to which Executive is entitled, would constitute an “excess parachute payment” (as defined in
Section 280G of the Internal Revenue Code), as amended, such payments shall be reduced, in such
order and manner as the Bank and/or Resulting Entity and Executive may agree, (or in the absence of
such agreement, as shall be determined by Executive), to the largest amount which may be paid
without any portion of such amount being subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code.
9. Notice.
For purposes of this Agreement, notices and all other communications provided for in the Agreement
shall be in writing and shall be deemed to have been given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid as follows:
If the Bank:
|
Citizens Business Bank | |
| 000 X. Xxxxx Xxxxxx, Xxxxx 000 | ||
| Xxxxxxx, Xxxxxxxxxx 00000 | ||
| Attention: Xxxxxxxxxxx X. Xxxxx, President and CEO |
5
If to the Executive: At the address below his signature or such other address as either party may
have been furnished to the other in writing in accordance herewith, except that notices of change
of address shall be effective only upon receipt.
10. Validity.
The invalidity or unenforceability of any provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall remain in full
force and effect.
11. 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.
12. Miscellaneous.
No provisions of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by the Executive and the Bank. No waiver
by either party hereto at any time of any breach by the 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 any prior to subsequent
time. No agreements or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth expressly in this
Agreement. Any and all prior discussions, negotiations, agreements and/or Severance Agreements on
the subject matter hereof here merged and integrated into and are superseded by this Agreement.
This Agreement shall be governed by and construed in accordance with the laws of the State of
California.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above,
Citizens Business Bank
By:
|
||||
| Xxxxxxxxxxx X. Xxxxx President and CEO |
EXECUTIVE:
|
||||
| Xxxxxxx X. Xxxxx, Executive Vice President |
||||
| Address: 000 X. Xxxxx Xxxxxx | ||||
| Xxxx and State: Xxxxxxx, Xxxxxxxxxx 00000 | ||||
6
