EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made this 19th day of
March, 2004, between Financial Data Solutions, Inc. ("FDSI), a California
Corporation, operating as a wholly-owned subsidiary of Southwest Community
Bancorp ("Bancorp"), whose principal place of business is 0000 Xx Xxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxxxx, 00000, and Xxxx X. Xxxx ("Executive"), whose residence
address is [omitted], California 92591 with reference to the following facts:
I. FDSI is a corporation, duly organized, validly existing, and in good
standing under the laws of the State of California, with power to own property
and carry on its business;
II. FDSI desires to avail itself of the skill, knowledge, and experience
of Executive in order to insure the successful management of its business;
III. The parties desire to specify the terms of Executive's employment
with FDSI;
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, terms, and conditions set forth herein, and intending to be
legally bound, it is agreed that FDSI shall employ Executive on the following
terms and conditions
A. Term of Employment
1. Term. FDSI hereby employs Executive, and Executive hereby accepts
employment with FDSI, for the period (the "Term") commencing, July 15, 2004 (the
"Effective Date") and terminating on such date and upon such terns as provided
for in Paragraph F of this Agreement.
B. Duties of Executive
1. Duties. Executive shall perform the duties of Vice Chairman and Chief
Executive Officer of FDSI, subject to the powers by law vested in the Board of
Directors of FDSI and in FDSI's shareholder(s). During the Term, Executive shall
perform exclusively the services herein contemplated by Executive faithfully,
diligently, and to the best standards of the data servicing industry and in
compliance with all applicable laws, FDSI's Articles of Incorporation, Bylaws,
and internal written policies.
2. Conflicts of Interest. Except as permitted by the prior written
consent of the Board of Directors of FDSI, Executive shall devote Executive's
entire production time, ability and attention to the business of FDSI during the
Term, and Executive shall not directly or 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
FDSI's interest. Notwithstanding the foregoing, Executive may make investments
of a passive nature in any business or venture provided, however, that the
amount of such investment does not exceed one percent (1%) of the issued and
outstanding shares or one percent (1 %) of the equity interest in such business
or venture. It is expressly provided, however, that Executive may continue to
provide services as a Director to Natural Alternatives International, Inc. of
San Marcos. California, and such activity shall not be deemed to violate this
Paragraph.
C. Compensation
1. Salary. For Executive's services hereunder, FDSI shall pay or cause
to be paid as annual base salary to Executive the sum of One Hundred Eighty
Thousand Dollars ($180,000) for each year (i.e., 12-month period) of the Term.
Said salary shall be payable in equal monthly installments in conformity with
FDSI's normal payroll period. Annual adjustments after the first year of the
Term may be made in the sole discretion of the Board of Directors.
2. Bonus. Executive shall participate in an annual bonus pool based upon
FDSI's pre-tax earnings for each calendar year during the Term of this
Agreement, computed on a GAAP basis and determined as follows:
(a) The President/Chief Operating Officer of FDSI shall receive
a bonus of ten percent (10%) of the first Three Hundred Thousand Dollars
($300,000) of FDSI's net pre-tax profits.
(b) An additional bonus pool of Fifteen percent (15%) of FDSI's
net pretax profits will then be divided equally between Executive and
the President/Chief Operating Officer.
(c) Bonus shall be paid as soon as practicable after the close
of each calendar year, but not later than February 15th of the following
year.
D. Executive Benefits
1. Vacation. Executive shall be entitled to a four (4) week vacation
during each year of the Term; provided, however, that for each year of the Term,
Executive is required to and shall take at least two (2) weeks of said vacation
(the "Mandatory Vacation"), which shall be taken consecutively. Executive shall
not be entitled to entitled to vacation pay in lieu of vacation.
2. Automobile. During the Term hereunder, FDS1 shall provide Executive,
for Executive's sole use, a suitable full-sized automobile, the specific make
and model of such automobile to be determined by Executive, which automobile
shall be initially new and at no time be older than three (3) years. FDSI shall
pay all operating expenses of any nature whatsoever with regard to such
automobile, provided Executive furnishes to FDSI adequate records and other
documentary evidence required by Federal and State statutes and regulations
issued by the appropriate taxing authorities for the substantiation of such
payments as deductible business expenses of FDSI and not as deductible
compensation to Executive. FDS1 shall also procure and maintain in force an
automobile insurance policy on such automobile, containing all reasonable and
necessary coverage.
3. Group Medical and Life Insurance Benefits. FDSI shall provide for
Executive, at FDSI's expense, participation in FDSI's Group Life/Medical
Insurance Programs. Said coverage shall be in existence or shall take effect as
of the Effective Date hereof and shall continue throughout the Term. FDSI's
liability to Executive for any breach of this Paragraph shall be limited to the
amount of premiums required hereunder to be payable by FDS1 to obtain or
maintain, as applicable, the coverage contemplated herein.
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4. Stock Options. Subject to any required regulatory approvals and
compliance with applicable laws, rules, and regulations, FDS1 shall use its
diligent best efforts to arrange for Bancorp to grant Executive the right to
participate in FDSI's and Bancorp's Stock Option plans and to grant an option to
purchase up to Ten Thousand (10,000) shares of FDSI's authorized but unissued
Common Stock and up to Seven Thousand Five Hundred (7,500) shares of Bancorp's
authorized but unissued Common Stock, at an exercise price equal to marker value
on the date of grant.
Bancorp, FDSI, and Executive further agree that, to the maximum extent permitted
by law, the options will qualify as "incentive stock options" within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended. Such stock
options will be granted to Executive pursuant to Current Stock Option Plans and
an agreement between Bancorp, FDSI, and Executive containing the terms as may be
greed upon by such parties.
5. 401(k) Plan. When such a Plan is established by FDSI, Executive shall
be entitled to participate in FDSI's 401(k) Plan, subject to the eligibility and
vesting requirements set forth in said Plan.
6. Long-Term Disability Insurance. FDSI shall make available to
Executive any long term disability insurance policy which it may provide for
other employees of FDSI on the same basis as made available to other employees.
E. Reimbursement for Business Expenses
Executive shall be entitled to reimbursement by FDSI for any ordinary and
necessary business expenses incurred by Executive in the performance of
Executive's duties and in acting for FDSI during the Term, which types of
expenditures shall be determined by the Board of Directors, provided that:
1. Each such expenditures is of a nature qualifying it as a proper
deduction on the Federal and State income tax returns of FDSI as a business
expense and not as a deductible compensation to Executive; and
2. Executive furnishes to FDSI adequate records and other documentary
evidence required by Federal and State statues and regulations issued by the
appropriate taxing authorities for the substantiation of such expenditures as
deductible business expense of FDSI and not as deductible compensation to
Executive.
F. Termination
1. Termination for Cause. FDSI may terminate this Agreement at any time
by action of the Board of Directors if Executive fails to perform or habitually
neglects the duties he is required to perform hereunder, if Executive engages in
illegal activity which materially adversely affects FDSI's reputation in the
community or which evidences the lack of Executive's fitness or ability to
perform Executive's duties as reasonably determined by the Board of Directors in
good faith, or if Executive commits any act which would cause termination of
coverage under either FDSI's or Bancorp's Blanket Bond as to Executive (as
distinguished from
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termination of coverage as to either FDSI or Bancorp as a whole). In the event
FDSI terminates this Agreement for cause as provided herein, Executive shall not
be eligible for any severance benefits otherwise contemplated by this Agreement.
Such termination shall not prejudice any remedy which FDSI may have at law, in
equity, or under this Agreement.
2. Death or Disability. In the event of Executive's death, or if
Executive is found to be physically or mentally disabled (as hereinafter
defined) by the Board of Directors in good faith, this Agreement shall terminate
without any further liability or obligation by FDSI to Executive.
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 calendar year. If there should be a dispute between
FDSI and Executive as to 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 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 San Diego County Medical Association. The certification of
such physician or psychiatrist as to the question in dispute shall be final and
binding upon the parties hereto.
3. Action by Supervisory Authority. If Bancorp and/or FDSI is closed by
or taken over by the California Department of Financial Institutions, the
Federal Deposit Insurance Corporation, or other regulatory or legal authority
with jurisdiction over either entity, such regulatory or legal authority may
immediately terminate this Agreement without further liability or obligation by
FDSI or Bancorp to Executive.
4. Merger or Other Corporation Reorganization. In the event (i) a
merger where FDSI is not the surviving corporation, (ii) a transfer of all or
Substantially all of the assets of FDSI, or (iii) any acquisition,
consolidation, or other corporate reorganization where there is a change in
ownership of at least fifty-one percent (51%), except that may result from a
transfer of shares to another corporation in exchange for at least eighty
percent (80%) control of that corporation, and, in the event that this Agreement
and Executive's employment are terminated for any reason during the two (2)-year
period immediately following the effective date of consummation of such merger
or other corporate reorganization by either Executive or by the surviving
entity, in the event of a merger; by either Executive or by the acquirer, in the
event of an acquisition of stock in FDSI, then Executive shall be entitled to
the same severance benefits as contemplated by Paragraph F.5 below for a twelve
(12) month period immediately following such termination of this Agreement;
provided, however, that if, on the first business day immediately preceding the
effective time of such merger or other corporate reorganization, FDSI's total
sales equal $12 million or greater then Executive shall be entitled to said
severance benefits for a two (2) year period immediately following such
termination. "Total sales" shall be computed based upon on-going gross revenues
for the then current quarter on an annualized basis, including projected gross
revenues from new service contracts whose term will commence within the
following ninety (90) days. Notwithstanding the foregoing, no such severance
benefits shall be payable to Executive in the event that this Agreement is
terminated during the above-described two (2) year period for any of the reasons
delineated in paragraph F.1 above.
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5. Termination without Cause. Notwithstanding anything to the contrary
contained herein, it is agreed by the parties hereto that employment hereunder
is "At Will" and either FDSI or Executive may at any time elect to terminate
this Agreement and Executive's employment by FDSI for any reason. Such
termination shall be effective thirty (30) days following proper delivery of
notice of termination to the non-terminating party in accordance with the notice
provisions set forth herein. In the event this Agreement is terminated by
Executive, all benefits provided by FDSI hereunder to Executive shall cease upon
the effective date of such termination of this Agreement, and Executive shall
not be entitled to any severance benefits whatsoever. In the event this
Agreement is terminated by FDSI (other than in accordance with Paragraph F.1
hereof), Executive shall be entitled to each of the following severance benefits
commencing upon the effective date of termination of this Agreement: (i)
Executive shall continue to be paid Executive's salary for a period of six (6)
months immediately following the effective date of Executive's termination,
which payments shall be payable to Executive in accordance with the normal
method of payment as specified in this Agreement; (ii) Executive shall be paid
his pro-rata share of the bonus pool by February 15 of the following calendar
year; and (iii) Executive shall be entitled to retain all medical and life
insurance benefits which were granted to him during his employment with FDSI for
a period of six (6) months immediately following the effective date of
Executive's termination.
6. Effect of Termination. In the event of the termination of this
Agreement for any reason (except as provided herein). Executive shall be
entitled to the salary and bonus, if any, earned by Executive prior to the date
of termination, as provided for in this Agreement (except that Executive shall
not be entitled to any bonus in the event his employment is terminated for cause
as provided in Paragraph F.1 above), computed pro rata up to and including that
date; but Executive shall be entitled to no further compensation for services
rendered after the date of termination, except as provided in Paragraph F.4
above regarding merger or other corporate reorganization, or Paragraph F.5 above
regarding termination without cause by FDSI. Executive further agrees that, in
the event of any such termination, he will resign from the Board of Directors of
FDSI on the effective date of the termination of this Agreement.
G. General Provisions
1. Trade Secrets. During the Term, Executive will have access to and
become acquainted with what Executive, FDSI, and Bancorp acknowledge are trade
secrets; to wit, knowledge or data concerning FDSI, including its operations and
methods of doing business, and the identity of customers of FDSI, including
knowledge of their financial condition and their financial needs. Executive
shall not disclose any of the aforesaid trade secrets, directly or indirectly,
or use them in any way, either during the Term of for a period of two (2) years
after the termination of this Agreement, except as required in the course of
Executive's employment with FDSI.
2. Covenant Not to Compete. Executive hereby covenants and agrees that,
for a period of six (6) months following termination of this Agreement by FDSI
without cause, or for a period of eighteen (18) months following termination of
this Agreement by FDSI for cause, or for a period of twelve (12) months
following voluntary termination of this Agreement by Executive, Executive shall
not contact, solicit, contract, or negotiate with any customer of FDSI for the
same or similar services, either His an owner, officer, partner, agent,
employee, or in any other capacity. Executive further acknowledges that such
activity would involve the use of trade
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secrets and confidential information of FDSI and would constitute an unfair
trade and business practice.
3. Indemnification. To the extent permitted by law, applicable statutes,
and the Bylaws or Resolutions of FDSI in effect from time to time, FDSI shall
indemnify Executive against liability or loss arising out of Executive's actual
or asserted misfeasance or non-feasance in the performance of Executive's duties
or out of any actual or asserted wrongful act against, or by, FDSI, including
but not limited to judgments, fines, settlements, and expenses incurred in the
defense of actions, proceedings, and appeals therefrom. However, FDSI shall have
no duty to indemnify Executive with respect to any claim, issue, or matter as to
which Executive has been adjudged to be liable to FDSI in the performance of his
duties, unless and only to the extent that the Court in which such action was
brought shall determine to indemnification for the expenses which such Court
shall determine. FDSI shall endeavor to apply for and obtain Directors and
Officers Liability Insurance to indemnify and insure FDSI and Executive from and
against the aforesaid liabilities. The provisions of this Paragraph G.3 shall
apply to the estate, executor, administrator, heirs, legatees, or devisees of
Executive.
4. Return of Documents. Executive expressly agrees that all manuals,
documents, files, reports, studies, instruments, or other materials used and/or
developed by Executive during the Term are solely the property of FDSI, and that
Executive has no right, title, or interest therein. Upon termination of this
Agreement, Executive or Executive's representative shall promptly deliver
possession of all of said property to FDSI in good condition.
5. Notices. All notices, demands, or other communications hereunder
shall be in writing and shall be delivered in person (professional courier
acceptable), or by United States mail, certified or registered, postage prepaid,
with return receipt requested, or by facsimile transmission, or otherwise
actually delivered, to the addresses for the parties appearing at the inception
of this Agreement. The persons or addresses to which mailings or deliveries
shall be made may change from time to time by notice given pursuant to the
provisions of this Paragraph G.5. Any notice, demand, or other communication
given pursuant to this Agreement shall be deemed to have been given on the date
actually delivered, if delivered in person, three (3) days following the date
mailed, if delivered by United States mail, or upon written confirmation of
transmission, if delivered by facsimile.
6. Review by Counsel. Executive represents and warrants to FDSI that he
has had this Agreement reviewed by independent counsel of his choice, or, if he
has not, that he has had the opportunity to do so, and thereby waives any claim,
objection, or defense on the grounds that this Agreement has not been reviewed
by legal counsel of his choice.
7. California Law. This Agreement is to be governed by and construed in
accordance with the laws of the State of California.
8. Captions and Paragraph Headings. Captions and paragraph headings used
herein are for convenience only and are not a part of this Agreement and shall
not be used.
9. Invalid Provisions. Should any provision of this Agreement for any
reason be declared invalid, void, or unenforceable by a Court of competent
jurisdiction, the validity and the
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remaining portions of this Agreement shall remain in full force and effect as if
this Agreement had been executed with said provision eliminated.
10. Entire Agreement. This Agreement contains the entire agreement of
the parties. It supersedes any and al other agreements, either oral or in
writing, between the parties hereto with respect to the employment of Executive
by FDSI. Each party to this Agreement acknowledges that no representations.
inducement, promises, or agreements, either oral or otherwise, have been made by
any party, or anyone acting on behalf of any party, which are not embodied
herein, and that no other agreement, statement, or promise not contained in this
Agreement shall be valid or binding. This Agreement may not be modified or
amended by oral agreement, but only an agreement in writing, signed by both FDSI
and Executive.
11. Recent of Agreement. Each of the parties hereto acknowledges that he
has 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 executed this Agreement as
of the date and year first above written.
FINANCIAL DATA SOLUTIONS, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxxxxx, Chairman
EXECUTIVE
/s/ Xxxx X. Xxxx
-------------------------------------
Xxxx X. Xxxx
SOUTHWEST COMMUNITY BANCORP
By: /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxxxxx, President and
Chief Executive Officer
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