EMPLOYMENT AND CONFIDENTIALITY AGREEMENT Community West Bank Executive Vice President & Chief Financial Officer
EMPLOYMENT
AND CONFIDENTIALITY
AGREEMENT
Community
West Bank
Executive
Vice President & Chief Financial Officer
This
Employment and Confidentiality Agreement (the “Agreement”) is made and entered
into as of July 1, 2007 (the “Effective Date”) by and between Community West
Bank, a Nationally Chartered Bank and wholly owned subsidiary of Community
West
Bancshares (the “Bank“), Community West Bancshares, a California corporation
(“Parent”) and Xxxxxxx X. Xxxxxxxxxxx (“Executive”).
Witnesseth
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, Xxxxxxxxxx 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 desire to enter into this Agreement;
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 employment with the Bank on and after the Effective
Date:
1.
ARTICLE 1- EMPLOYMENT AND TERM
1.1.
Employment. The Bank shall employ Executive as the Bank’s Executive Vice
President and Chief Financial Officer (the “Position”), and 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 of
the
Bank (the “Board of Directors”).
1.2.
Term. The term of employment under this Agreement (“Term”) shall commence
on the Effective Date and end on June 30, 2010, subject to early termination,
provided in Article 4, below.
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1.3.
Renewal. Upon the expiration of the Term, Executive’s employment under
this Agreement shall automatically renew for a successive period of twelve
(12)
months (“Renewal Term”), and upon expiration of any subsequent Renewal Term
shall automatically renew for a successive period of twelve (12) months;
unless,
at least three (3) months before the expiration of any preceding Term or
Renewal
Term, either (a) the Board provides written notice of non-renewal to Executive;
or, (b) Executive provides written notice of non-renewal to Bank. Each party
shall negotiate in good faith the terms and conditions for any renewal of
the
Term or any Renewal Term of this Agreement.
1.4.
Policies and Regulations. Executive shall observe, comply with and be
bound by all of the policies, rules and regulations established by the Bank
with
respect to its executives and otherwise, all of which policies, rules and
regulations are subject to change by the Bank from time to time.
2.
ARTICLE 2- DUTIES OF EXECUTIVE
2.1.
Powers. At all times Executive shall be empowered by and subject to the
powers and authority of the Board of Directors and the Bank’s shareholders.
Executive shall report directly to the Bank’s President and Chief Executive
Officer (“CEO”).
2.2.
Duties.
(a)
Executive Vice President and Chief Financial Officer of
Bank. Executive, directly
or through subordinate supervision, shall be responsible for technical
and operational activities on a day-to-day basis, as well as formulation
of
strategies and business plans to achieve the Bank's long range
objectives. Executive agrees to render services and perform
the duties and acts of Executive Vice President and Chief Financial Officer
(the
“Duties”) in connection with all aspects of Bank’s business as may be required
by the Board of Directors and/or the Bank’s CEO. Executive shall perform these
Duties, and the 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 industries 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, as amended,
and all regulations thereunder, and the Bank’s Articles of Association and
Bylaws.
(b)
Executive Vice President and Chief Financial Officer of Parent. Executive
also shall have the position of Executive Vice President and Chief Financial
Officer of Parent. Executive agrees to render services and perform the duties
and acts of Executive Vice President and Chief Financial Officer of Parent
as
may be required by the Board of Directors of Parent and/or the Parent’s
CEO.
2.3.
Specific Duties. Without limiting any of Executive’s Duties and
obligations under Section 2.2, above, Executive agrees to undertake and perform
all duties required of the Position (“Specific Duties”), including, but are not
limited to:
(a)
Serve
as coordinator for the Asset and Liabilities Management Committee
(b)
Manage formation and execution of investment policy.
(c)
Implement and review risk management
liabilities.
(d)
Oversee reporting to regulatory authorities, and the
Board.
(e)
Direct preparation and evaluation of budgets and capital
plans,
(f)
Write, review, and distribute financially related policy and procedure
statements to ensure regulatory and policy compliance.
(g)
Evaluate, develop, and administer accounting systems and practices that comply
with GAAP, FASB rulings, regulations and laws.
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(i)
Establish, maintain, and monitor internal accounting control systems in order
to
ensure safe and sound operations, accurate accounting records for the statement
of the institution's financial condition, and timely, accurate report data
for
regulators and management.
(j)
Supervise the preparation of all regulatory reports and monitors
compliance.
(k)
Manage interest rate risk simulation models to help ensure liquidity and
control
interest rate risk; manage pricing of assets and liabilities acquired or
to be
acquired to make recommendations that will result in net interest
margins consistent with budget objectives.
(l) Initiate
the purchase and sale of security investments in compliance with the Bank’s
Investment Policy.
(m)
Participate in funds acquisition activities through bidding on private and
public money In compliance with the Bank’s Asset & Liability
Policy.
(n)
Assist the CEO and the Board of Directors in accomplishing the activities
to
comply with the Bank’s Capital Plan.
(o)
Serve
as a member of the Executive Management Team.
(p)
Be
responsible, along with the CEO, 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 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 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 shall not,
without the express prior written consent of the Board of Directors, engage
directly or indirectly in any outside employment or consulting of any kind,
whether or not Executive receives remuneration for such services. Nothing
in
this Section 2.5 shall prohibit Executive from providing volunteer consulting
services (the “Volunteer Services”) through established non-profit or charitable
organizations in furtherance of such organization’s purposes, so long as such
Volunteer Services do not materially interfere with Executive’s performance of
his duties and obligations under this Agreement.
3.
ARTICLE 3 — COMPENSATION. 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 January 1, 2007, the Bank shall pay Executive a base salary
of
One Hundred Eighty-One Thousand Four Hundred Forty Dollars ($181,440.00)
per
year, less income tax and other applicable withholdings. On or before
February 28th of each year during the Term and any Renewal Term, the CEO
shall
review the base salary payable to Executive under this Agreement and shall
determine, in the CEO’s sole discretion, whether or not to adjust such salary.
Any such adjustment shall be effective as of the first day of March of each
calendar year. Nothing in this Section 3.1 shall obligate the Bank to increase
the salary payable to Executive as a result of any such review; provided
that in
no event shall the Bank reduce the salary payable to Executive as a result
of
such review. Base salary shall be paid in accordance with Bank’s regular payroll
practices.
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3.2.
Annual Bonus. Executive shall be eligible to receive an annual bonus, at
an amount, if any, determined by the Board of Directors in its sole discretion.
If it is determined that a bonus will be paid Executive for any calendar
year,
the bonus will be paid at or near the close of the calendar year, but no
later
than thirty (30) days after year-end. Executive acknowledges and agrees that
nothing in this Agreement or the Bank’s general policies shall require the Bank
to pay Executive a bonus for any year, to pay Executive a bonus in particular
amount for any year, or to pay Executive a bonus by reason of the Bank’s payment
of a bonus to any other executives of the Bank.
3.3.
Stock Options.
(a)
Initial Option. At the first meeting of the Board of Directors during
July, 2007, Executive shall be granted options covering 3,750 shares
of the Common Stock of Parent (the “Common Stock”) in accordance with the terms
and conditions of the Parent’s 2006 Stock Option Plan (the “Plan”).
(b)
Additional Options. So long as Executive is then employed by the Bank
under the terms of this Agreement, (i) at the first meeting of the Board
of
Directors during July, 2008, Executive shall be granted options covering
an
additional 3,750 shares of Common Stock in accordance with the terms and
conditions of the Plan and (ii) at the first meeting of the Board of Directors
during July, 2009, Executive shall be granted options covering an additional
3,750 shares of Common Stock in accordance with the terms and conditions
of the
Plan.
(c)
Vesting Schedule. Executive’s interest in each of the foregoing options
(the “Options”) shall vest pro rata on an annual basis over a period of five (5)
years from the date of grant of the Option.
(d)
Acknowledgement. Executive acknowledges that (i) under the Plan the
exercise price of the Options will be the per share fair market value of
the
Common Stock as of the date of grant of the Option and (ii) Executive has
read,
reviewed and is familiar with the terms and conditions of the Plan and the
form
of the Option Agreement under which the Options will be granted to
Executive.
(e)
Adjustment of Option Shares. The foregoing number of shares covered by
any Option shall be appropriately adjusted in the event of a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or similar change in the capital structure of the Bank that
occurs
between the Effective Date of this Agreement and the date on which the Option
is
granted.
3.4.
Deferred Compensation.
(a)
Deferred Compensation. The Bank hereby establishes a balance sheet
liability account for the benefit of Executive (the “Deferred Account”). The
provisions of this Section 3.4 shall control all obligations of the Bank
with
respect to all amounts credited to the Deferral Account.
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(i)
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Xxxxx
Xxxxxxx 0000. As of the Effective Date of this Agreement, the Bank
shall credit to the Deferral Account Forty Thousand Dollars ($40,000.00)
with respect to the calendar quarter ended September 30,
2007.
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(ii)
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Fourth
Quarter 2007. Subject to the provisions of Section 3 .4(b)(iv), below,
and provided that Executive is then employed by the Bank under
this
Agreement, as of December 31, 2007, the Bank shall credit to the
Deferral
Account an additional Forty Thousand Dollars ($40,000.00) with
respect to
the calendar quarter ended December 31,
2007.
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(iii)
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Monthly
Credits. Subject to the provisions of Section 3 .4(b)(iv) below,
beginning with July 2007 and continuing throughout the Term and
any
Renewal Term of this Agreement, the Bank shall credit to the Deferral
Account on the last day of each calendar month an additional One
Thousand
Six Hundred Dollars ($1,600.00) per month; provided that in no
event shall
the Bank be obligated to credit any amount to the Deferral Account
with
respect to any month unless Executive is employed by the Bank under
this
Agreement as of the last day of such calendar
month.
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(iv)
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No
Credit During Disability. Notwithstanding anything in this Agreement
to the contrary, the Bank shall not be obligated to credit any
amount to
the Deferral Account under Section 3 .4(a)(ii) above or Section
3
.4(c)(iii) with respect to any period during which Executive is
disabled (as defined in Section 4.6 below). Notwithstanding the
foregoing,
interest shall accrue on the balance of the Deferral Account during
any
period during which Executive is
disabled.
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(b)
Interest Accrual. The Bank shall credit to the Deferral Account at the
end of each calendar month interest on the balance of the Deferral Account
at a
rate equal to the then current rate offered by the Bank on a six (6) month
certificate of deposit. Interest shall continue to accrue on the balance
in the
Deferral Account so long as any amounts remain credited to the Deferral Account
and unpaid to Executive.
(c)
Payment of Deferral Amounts.
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(i)
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No
Payment if Termination of Employment Prior to Age 65. Except as
provided in Section 3.4(d) below, if Executive’s employment under this
Agreement terminates for any reason other than only Executive’s death or
disability prior to the date on which he attains age 65, the Bank
shall
have no obligation to pay any amount to Executive with respect
to any
amounts credited to the Deferral
Account.
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(ii)
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Payment
After Age 66. Subject to the provisions of Section 3.4(c)(i), above,
at such time as Executive attains age 66, whether or not he is
then
employed with the Bank, the Bank shall make payments to Executive
with
respect to amounts credited to the Deferral Account as
follows.
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(A)
Beginning on the first day of the first calendar month after Executive attains
age 66, the Bank shall pay to Executive an annual amount selected by Executive,
but in any event not less than Nineteen Thousand Two Hundred Dollars
($19,200.00) and not more than Forty Thousand Dollars ($40,000.00). The Bank
shall pay such amount on a monthly, quarterly or annual basis as selected
by
Executive. Executive may change the amount and the time for payment of any
amounts under this Section 3 .4(c)(ii)(A) so long as such change is made
in
compliance with the election and other requirements of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”).
(B)
The
parties intend that the provisions of Section 3 .4(c)(ii)(A) provide for
the
payment of the Deferred Account balance at a specified time within the meaning
of Section 409A(a)(2)(A)(iv) of the Code.
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(iii)
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Payment
on Executive’s Disability. If the Bank terminates this Agreement by
reason of Executive’s disability (as defined in Section 4.6 below), the
Bank shall pay to or on behalf of Executive an amount selected
by
Executive, but in any event not less than One Thousand Six Hundred
Dollars
($1,600.00) and not more than Three Thousand Two Dollars ($3,200.00)
per
month, until all amounts credited to the Deferral Account have
been paid
to or for the account of Executive. Notwithstanding the foregoing,
once
Executive attains age 66, the amounts payable by the Bank to Executive
shall be determined under Section 3 .4(c)(ii) above and not this
Section 3
.4(c)(iii). If Executive dies after the Bank has commenced paying
his
amounts under this Section 3.4(c)(iii), the Bank shall pay to Executive’s
Designated Heirs (as defined below) in accordance with the provisions
of
Section 3 .4(c)(iv), below, the balance in the Deferred Account
on the
date of Executive’s death.
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(iv)
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Payment
on Executive’s Death. If Executive dies prior to the Bank’s payment to
Executive of all amounts credited to the Deferral Account, the
entire
balance of the Deferral Account on the date of Executive’s death shall be
paid by the Bank to Executive’s Designated Heirs (as defined below) within
thirty (30) days after the later of(A) the date of the delivery
to the
Bank of written notice of Executive’s death or (B) the date on which the
Bank receives a court order or written instructions from legal
counsel for
Executive or Executive’s estate reasonably acceptable to the Bank
authorizing and confirming the payment of the account balance to
the
Designated Heirs. Set forth in Exhibit A hereto is a schedule of
Executive’s heirs (the “Designated Heirs”) for purposes of this Agreement.
Executive may change the Designated Heirs at any time and from
time to
time; provided that the Bank shall not be bound by any change to
the
Designated Heirs unless and until the Bank has received written
notice of
the change.
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(v)
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Termination
of Payment Obligation. The Bank shall have no obligation to pay
Executive any amounts under this Section 3.4(c) on or after the
date on
which the Bank has paid to Executive the entire amount credited
to the
Deferral Account.
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(vi)
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Performance
of Services. All amounts credited to the Deferral Account under this
Section 3.4 are deemed credited with respect to services performed
or to
be performed by Executive under this Agreement after the Effective
Date.
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(d)
Vesting on Change in Control. On the occurrence of a Change in Control,
as defined in Section 4.7(a), below, Executive’s interest in fifty percent (the
“Vested Percentage”) of the total amount credited to the Deferral Account as of
the date of the Change In Control shall become fully vested. The Bank shall
pay
the Vested Percentage to Executive in accordance with the provisions of Sections
3.4(c)(ii), 3.4(c)(d)(iii), and 3.4(c)(iv) above, and the Bank shall be
obligated to pay such amount to Executive in accordance with such Sections
even
though Executive’s employment under this Agreement may have terminated prior to
the date on which he attains age 65. Subject to the provisions of Section
3
.4(c)(i), above, the Bank shall pay to Executive the balance of the amounts
credited to the Deferral Account in accordance with the provisions of Sections
3.4(c)(ii), 3.4(c)(iii) and 3.4(c)(iv) above.
The
vesting under this Section shall occur regardless of whether or not Executive’s
employment under this Agreement is terminated pursuant to Section 4.7,
below.
(e)
Tax Election. To the extent that this Agreement or the provisions of this
Section 3.4 constitute a nonqualified deferred compensation plan within the
meaning of Section 409A of the Code, Executive hereby makes an irrevocable
election as to the payment of any deferred compensation in accordance with
the
provisions of this Section 3.4.
(f)
Status of Deferred Account. Executive agrees that the Bank shall
establish and maintain the Deferral Account only as a balance sheet liability
account and that the Bank shall have no obligation to deposit or maintain
any
cash or other assets in a separate or segregated account for the benefit
of
Executive.
3.5.
401K Plan. Subject to Executive’s compliance with the eligibility and
other terms and conditions of the Plan, Executive will be eligible to
participate In the Bank’s 40 1(k) Plan.
3.6.
Bank Executive Benefits. Subject to Executive’s satisfaction of any
eligibility requirements, Executive shall be eligible to participate in the
Bank’s employee benefit plans, for both Executive and family (including medical,
dental, vision, prescription plan, life insurance, and short-term disability
benefits) generally provided by the Bank to its senior executives. 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(s) contemplated herein.
Nothing in this Section 3.6 or any other provision of this Agreement shall
prohibit the Bank from, or limit the right of the Bank to, changing or modifying
the terms of any of the foregoing employee benefit plans or terminating any
of
such plans.
3.7.
Vacation. Executive shall be entitled to vacation time of not 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.
Executive shall be entitled to accumulate up to six (6) weeks of accrued
vacation, after which additional vacation will not accrue. The Bank shall
not be
obligated to pay or reimburse Executive at the end of any calendar year any
amount for any unused vacation time. The Bank shall pay or reimburse Executive
at the end of the Term or any Renewal Term after which there is no further
Renewal Term, for any unused vacation time.
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3.8.
Reimbursement for Expenses. The Bank shall reimburse Executive 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
4.1.
Termination At Will. Notwithstanding anything to the contrary herein, the
Bank may terminate this Agreement at any time and for any reason, with or
without cause, in accordance with the provisions of this Section 4. Except
as
otherwise specifically provided in this Agreement, such termination shall
be
effective either immediately upon receipt of notice of termination by Executive
from the Bank or at such later date as the Bank may specify in the notice
of
termination. Notwithstanding anything in this Agreement to the contrary,
the
Bank shall have no obligation to continue Executive’s employment under this
Agreement for any period or any particular period.
4.2.
Termination by the Bank Without Cause or on Non-Renewal. If during the
Term or Renewal Term, the Bank terminates this Agreement without cause or
does
not renew the Term or any Renewal Term, the following provisions shall
apply.
(a)
Notice Period. The Bank shall provide Executive at least three (3) months
written notice of (i) the Bank’s termination of Executive’s employment under
this Agreement without cause or, (ii) the Bank’s decision not to renew the
Agreement (“Notice Period”).
(b)
Compensation.
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(i)
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During
Notice Period. During the Notice Period, Executive shall continue to
receive the then applicable salary and benefits specified in this
Agreement and shall continue to perform the Duties and Specific
Duties of
employment as defined under the
Agreement.
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(ii)
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Deferred
Compensation. The Bank shall pay to Executive the balance in the
Deferral Account in accordance with the provisions of Section 3.4(d),
above.
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(c)
Benefits.
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(i)
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After
the effective date of the termination of this Agreement, all Executive
benefits available under Section 3.6 above (the “Benefits”), shall be
continued by Bank, contingent upon and subject to Executive’s COBRA
election described under Section 4.2(c)(ii) below, with the 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 earliest
of
(A) the expiration of the longer of either one (1) year following
the
effective date of the termination of Executive’s employment under this
Agreement or any continuation or coverage period specified by applicable
law, or (B) the date Executive becomes covered under any other
group
health plan not maintained by the Bank or any of its subsidiaries,
or (C)
Executive provides notice to Bank or the COBRA provider to discontinue
the
Benefits. Executive shall use his commercially reasonable efforts
to
promptly notify the Bank of the occurrence of an event described
in clause
(B) or (C) of the preceding
sentence.
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(ii)
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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.
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4.3.
Termination by the Bank for Cause. The Bank may terminate this Agreement
at any time for “cause” (as defined below) by giving to Executive ten (10) days
prior written notice of termination.
(a)
Definition of Cause. For purposes of this Section 4.3, the term “cause”
means and includes only:
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(i)
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conviction
of or confession by Executive to theft, fraud, or embezzlement
against the
Bank;
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(ii)
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Executive’s
refusal or failure, after specific written notice and demand by
the Bank,
to diligently perform services for the Bank as required by Article
2
hereof;
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(iii)
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Executive’s
breach or violation of any material written policy or regulation
of the
Bank, including, but not limited to, any written policy or regulation
dealing with sexual harassment, discrimination based on age, sex,
race,
religion or other protected category, illicit drugs, and environmental
protection matters;
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(iv)
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Executive’s
willful breach or violation of any material law, rule or regulation
(other
than traffic violations or similar offenses) or final order of
a court of
competent jurisdiction applicable to the Bank or
Executive;
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(v)
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Executive’s
taking of any material action which requires the prior approval
of the
Board of Directors without such approval;
and
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(vi)
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Executive’s
breach of or failure to perform any of his fiduciary duties to
the Bank or
any of shareholders involving personal
profit.
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(b)
Notice of Termination. If the Bank proposes to terminate this Agreement
under clause (a)(i) above, this Agreement shall terminate automatically at
the
end of such 10-day period and the Bank shall have no further obligation to
give
Executive any further notice of termination. If the Bank proposes to terminate
this Agreement under any of clause (a)(ii), (a)(iii), (a)(v) or (a)(vi),
above,
this Agreement shall terminate automatically at the end of such 10-day period
and the Bank shall have no further obligation to give Executive any further
notice of termination unless Executive has cured, to the reasonable satisfaction
of the Bank, during such 10-day period the alleged cause of termination and
the
Bank provides Executive written notice of its acceptance of such cure.
Notwithstanding anything in this Agreement to the contrary, if the Bank proposes
to terminate this Agreement for cause under this Section 4.3, so long as
the
Bank provides Executive a reasonable opportunity to cure any alleged cause,
if
the Bank is required to do so, the Bank may terminate this Agreement as of
the
date of the initial notice of termination and pay Executive an additional
ten
(10) days of severance compensation.
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(c)
Compensation.
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(i)
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Earned
Compensation. Executive shall have the right to receive compensation
which has already vested or been earned as of the date of termination
of
this Agreement under this Section
4.3.
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(ii)
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Deferred
Compensation. The Bank shall pay Executive the balance in the Deferral
Account in accordance with the provisions of Section 3.4(c),
above.
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(d)
Benefits.
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(i)
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Earned
Benefits. Executive shall have the right to receive benefits which
have
already vested or been earned as of the date of termination of
this
Agreement under this Section 4.3, unless expressly prohibited by
the terms
of any plan, program or agreement governing such compensation or
benefits.
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(ii)
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Additional
Benefits. Executive shall be entitled to receive only the right to
participate in the Bank’s medical plan in accordance with the provisions
of COBRA; provided that Executive shall be responsible for paying
all
applicable insurance premiums and the Bank shall have no obligation
to pay
any such premiums.
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4.4.
Termination by Executive on Other Event.
(a)
Right to Terminate. Executive may terminate this Agreement at any time
upon
the occurrence of an Other Event (as defined below) by giving to the Bank
sixty
(60) days prior written notice of termination. Executive must deliver his
notice
of termination under this Section 4.4(a) within sixty (60) days after the
occurrence of any Other Event specified below. Executive shall specify in
reasonable detail in such notice of termination the basis for the claim that
the
Bank has breached or failed to perform any of its material obligations or
covenants. This notice of termination must set forth in reasonable detail
the
facts and circumstances that support Executive’s claim of right to terminate
this Agreement under this Section 4.4.
(b)
Definition. For purposes of this Agreement the term “Other Event” shall
mean and include: (i) the Bank’s breach or failure to perform any of its
material obligations or covenants under this Agreement, and either the Bank’s
failure to cure such breach or failure of performance within the 15- day
period
specified in Section 4.4(c), below, or the continuation of such breach or
failure of performance after such 15-day period without Executive’s written
consent; and (ii) Good Reason (as defined in Section 4.7(d),
below).
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(c)
Right to Cure. The Bank shall have an opportunity to cure said breach or
failure of performance within fifteen (15) days of Bank’s receipt of written
notice specifying the material breach and the opportunity for Bank to resolve
said breach.
(d)
Compensation.
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(i)
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Earned
Compensation. Executive shall have the right to receive compensation
which has already vested or been earned as of the date of termination
of
this Agreement under this Section
4.3.
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(ii)
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Deferred
Compensation. The Bank shall pay Executive the balance in the Deferral
Account in accordance with the provisions of Section 3.4(d),
above.
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(e)
Benefits.
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(i)
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Earned
Benefits. Executive shall have the right to receive benefits which
have already vested or been earned as of the date of termination
of this
Agreement under this Section 4.3, unless expressly prohibited by
the terms
of any plan, program or agreement governing such compensation or
benefits.
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(ii)
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Additional
Benefits. Executive shall be entitled to receive the Benefits specified
in
Section 4.2(c), above, in accordance with and subject to the terms
of such
Section.
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4.5.
Termination on Death of Executive. This Agreement shall terminate
automatically upon Executive’s death.
(a)
Compensation. The Bank shall pay to Executive, his beneficiary or beneficiaries
or Executive’s estate, as the case may be:
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(i)
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the
compensation which has been earned through the date of termination
of this
Agreement under this Section 4.5;
and
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(ii)
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the
balance in the Deferral Account in accordance with the provisions
of
Section 3.4(d)(iv) above.
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(b)
Benefits. Executive shall have the right to receive benefits which have
already vested or been earned as of the date of termination of this Agreement
under this Section 4.6, unless expressly prohibited by the terms of any plan,
program or agreement governing such compensation or benefits.
4.6.
Termination on Mental or Physical Disability of Executive.
(a)
Right to Terminate. 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 thirty (30) consecutive days, or a cumulative period
of
one hundred twenty (120) days in any one (1) calendar year, the Bank acting
in
good faith, may terminate this Agreement as of the termination date specified
in
a written notice of termination delivered to Executive, except that there
is no
minimum Notice Period requirement.
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(b)
Definition of Disability. 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)
Compensation.
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(i)
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Earned
Compensation. Executive shall have the right to receive compensation
which has already vested or been earned as of the date of termination
of
this Agreement under this Section
4.6.
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(ii)
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Deferred
Compensation. The Bank shall pay Executive the balance in the Deferral
Account in accordance with the provisions of Section 3 .4(d)(iii)
above.
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(d)
Benefits.
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(i)
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Earned
Benefits. Executive shall have the right to receive benefits which
have already vested or been earned as of the date of termination
of this
Agreement under this Section 4.6, unless expressly prohibited by
the terms
of any plan, program or agreement governing such compensation or
benefits.
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(ii)
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Additional
Benefits. Executive shall be entitled to receive the Benefits
specified in Section 4.2(c), above, in accordance with and subject
to the
terms of such Section.
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(e)
Dispute re Disability. If there should be a dispute between the Bank 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 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.
Termination on Change in Control.
(a)
Right
to Terminate. If within twelve (12) months following (a) a merger, consolidation
or reorganization of the Bank or Parent with or into another corporation
or
business entity immediately after which the shareholders of Parent or the
Bank
immediately before the merger, consolidation or reorganization own, directly
or
indirectly, 50% or less of the outstanding voting securities of the surviving
or
resulting corporation or entity, or (b) upon a sale or other disposition
of all
or substantially all of the assets of Parent or the Bank other than to a
wholly
owned subsidiary of Parent or the Bank, or (c) the acquisition of more than
fifty percent (50%) of the combined outstanding voting securities of Parent
or
the Banlc by any person or group of affiliated persons (other than as a result
of the organization of a holding company for Parent or the Bank) (collectively
a
“Change in Control”), (i) the Bank terminates this Agreement, with or without
cause, or does not renew the Term or any Renewal Term of this Agreement,
or (ii)
Executive terminates this Agreement under Section 4.4 above, the following
provisions shall apply.
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(b)
Compensation.
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(i)
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Earned
Compensation. Executive shall have the right to receive compensation
which has already vested or been earned as of the date of termination
of
this Agreement under this Section
4.6.
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(ii)
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Severance
Compensation. If, within one (1) year after the occurrence of the
Change in Control, Executive terminates his employment under this
Agreement for Good Reason (as defined below) or the Bank terminates
Executive’s employment under this Agreement other than for cause (as
defined in Section 4.3(a) above), the Bank shall pay to or on behalf
of
Executive one (1) year’s base salary and the costs of Executive’s Benefits
(as defined above) for a period of one( 1) year after such the
date of
termination. The foregoing salary and benefits shall be paid in
monthly
installments over such one-year period in accordance with the Bank’s
normal practices. This provision shall apply only if Executive
terminates
his employment for Good Reason or if the Bank terminates Executive’s
employment, and shall not apply if Executive terminates his employment
on
any other basis under Section 4.4,
above.
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(iii)
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Deferred
Compensation. The Bank shall pay Executive the balance in the Deferral
Account in accordance with the provisions of Section 3.4(e)
above.
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(c)
Benefits.
(i)
Earned Benefits. Executive shall have the right to receive benefits which
have already vested or been earned as of the date of termination of this
Agreement under this Section 4.7, unless expressly prohibited by the terms
of
any plan, program or agreement governing such compensation or
benefits.
(ii)
Additional Benefits. Executive shall be entitled to receive the Benefits
specified in Section 4.2(c), above, in accordance with and subject to the
terms
of such Section.
(d)
For
Good Reason. For purposes of this Section 4.7, the term “Good Reason” shall mean
and include only the occurrence of any of the following events:
(i)
A
material change occurs in the functions, duties, responsibilities, reporting
relationship, location of work, and/or title of Executive which is not agreed
to
by Executive, provided that none of (A) a change in Executive’s title following
the merger or consolidation of the Bank with or into any other corporation
or
entity or (B) a temporary change any of the matters described in this clause
(i)
for a period of no more than sixty (60) consecutive days as a result of
Executive’s incapacity or disability shall by itself constitute an event
described in this clause (i); or
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(ii)
The
Bank requires Executive to perform any function or duty, the performance
of
which would violate any material statute or public policy the violation of
which
could expose Executive to personal liability or which would have a material
adverse effect on Executive’s business reputation.
5.
ARTICLE 5- CONFIDENTIALITY AND
NON-SOLICITATION
5.1.
Confidentiality and Trade Secrets. Executive acknowledges that, in the
course of his 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. 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 prior written
consent of either the President/CEO of the Bank or the Chairman of the Board
of
Directors, during the one (1) year period following the termination date,
Executive shall not directly or indirectly solicit for employment or for
independent contractor work from any executive of the Bank, and shall not
encourage any such executive to leave the employment of Bank.
5.3.
Non-Solicitation of Customers. During the one (1) year period following
the termination date, Executive shall not directly: (a) solicit business
from
any customers of the Bank; (b) encourage any customers to stop using the
facilities or services of the Bank; or (c) encourage any customers to use
the
facilities or services of any competitor of the Bank.
5.4.
Bank to Benefit from Provisions. To the extent any provisions of this
Article 5 relate in any way to Confidential Information and trade secrets
of the
Bank, then the obligations of Executive set forth herein shall also extend
to
the Bank and inure to its benefit.
6.
ARTICLE 6- BANK’S OWNERSHIP IN EXECUTIVE’S
WORK
6.1.
Bank’s Ownership. Executive agrees that all inventions, discoveries,
improvements, trade secrets, formulas, techniques, processes, and know-how,
whether or not patentable, and whether or not reduced to practice, that are
conceived or developed during 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.
Notwithstanding anything in this Section 6.1 to the contrary, any inventions,
discoveries, improvements, trade secrets, formulas, techniques, processes
and
know-how conceived or developed by Executive solely while providing Volunteer
Services (as defined in Section 2.5, above) shall not be considered Bank
Work.
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6.2.
Return of Bank’s Property and Materials. Upon termination of his
employment with the Bank, Executive shall deliver to the Bank all Bank property
and materials that are in Executive’s possession or control, including Bank’s
Work, within five (5) calendar days.
6.3.
Bank to Benefit from Provisions. To the extent any provisions of this
Article 6 relate in any way to information, property, rights, projects,
ventures, or inventions of the Bank, then the obligations of Executive set
forth
in this Article 6 shall also extend to the Bank and inure to its
benefit.
7.
ARTICLE 7- ARBITRATION
7.1.
Obligation to Arbitrate. 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 party 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. Nothing in the Article 7 shall prohibit
or
limit the right of the Bank to commence suit or other judicial proceedings
seeking injunction or other equitable relief in the event of Executive’s breach
or threatened breach of any of his obligations under any of Sections 5 or
6 of
this Agreement or Sections 5 or 6 of the Original Agreement.
7.2.
Arbitrator. 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 (ZAAA”) 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.
Fee Deposit. 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 parry’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.
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7.4.
Hearing Schedule. 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 Santa Xxxxxxx 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.
Award. 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.
8.
ARTICLE 8- MISCELLANEOUS
8.1.
Parent as a Party. Parent is a party to this Agreement solely for
purposes of effecting the grant of the Options contemplated in Section 3,
above.
Parent shall have no liability or obligation to Executive with respect to
the
Bank’s performance or non-performance of any of its obligations under this
Agreement.
8.2.
Injunctive Relief. Executive hereby acknowledges and agrees that it would
be difficult to fully compensate the Bank for damages for a breach or threatened
breach of any of the provisions of Sections 5 or 6 hereof or Sections 5 or
6 of
the Original Agreement. Accordingly, Executive specifically agrees that the
Bank
shall be entitled to temporary and permanent injunctive relief to enforce
the
provisions of Sections 5 or 6 hereof or Sections 5 or 6 of the Original
Agreement, and that such relief may be granted without the necessity of proving
actual damages. The foregoing provision with respect to injunctive relief
shall
not, however, prohibit the Bank from pursuing any other rights or remedies
available to the Bank for such breach or threatened breach, including, but
not
limited to, the recovery of damages from Executive or any third
parties.
8.3.
Authorized Representative of the Bank. Although Executive is an officer
of the Bank, any and all actions and decisions to be taken or made by the
Bank
under this Agreement or with respect to the employment relationship described
in
this Agreement, and any and all consents, approvals and agreements permitted
or
required to be given or made on the part of the Bank under this Agreement,
shall
be made and accomplished by the Bank only through the actions taken, in writing,
of its Chief Financial Officer or such other person or persons as the Board
of
Directors may from time to time designate.
8.4.
Tax Advice. Executive represents and warrants to the Bank that he has
sought and received independent professional advice concerning the treatment
of
the transactions contemplated by this Agreement under the Code, the rules
and
regulations promulgated thereunder by the Internal Revenue Service (the “j$’),
and the income tax laws of any other applicable taxing jurisdictions, and
that
he is not relying upon any representation, warranty or other statement made
by
the Bank, its counsel or anyone acting on behalf of the Bank with respect
to
such treatment or the structuring of the compensation payable under this
Agreement as assuring any particular income tax treatment. Executive understands
and agrees that neither the Bank, its counsel nor anyone acting on behalf
of the
Bank has made or is making any representation, warranty or other statement
with
respect to such income tax treatment.
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8.5.
Notice. Any notice or other communication required or permitted under
this Agreement shall be in writing and shall be deemed received (i) when
personally delivered, or, (ii) if mailed, one (1) 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, email or other form of electronic transmission, one (1) business
day after the notice is transmitted to the facsimile number, email address
or
other address specified on the signature page of this Agreement, and the
transmitting party either receives confirmation of transmission or does not
receive notice of non- delivery.
8.6.
Entire Agreement. This Agreement, including any documents 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.
8.7.
Amendment. This Agreement may be amended only in writing duly executed by
all of the parties hereto. Notwithstanding anything in this Agreement to
the
contrary, any amendment to Section 3.4 of this Agreement shall be made in
compliance with the requirements of Section 409A of the Coder and the Treasury
Regulations thereunder.
8.8.
Survival of Certain Provisions. Notwithstanding anything to the contrary
contained herein, in the event of any termination of this Agreement, the
rights
and obligations of the parties under Sections 3.4, 4.2(b), 4.2(c), 4.3(c),
4.3(d), 4.4(d), 4.4(e), 4.5(a), 4.5(b), 4.6(c), 4.6(d), 4.6(e), 4.7(b) and
4.7(c) and Articles 5, 6, 7 and 8 hereof shall survive such termination and
shall continue in full for and effect until fully performed.
8.9.
Waivers. All rights and remedies of the parties hereto are separate and
cumulative, and no one of them, whether exercised or not, shall be deemed
to
limit or exclude any other rights or remedies which the parties hereto may
have.
Neither party hereto shall be deemed to waive any rights or remedies under
this
Agreement unless such waiver be in writing and signed by such party. No delay
or
omission on the part of either party hereto in exercising any right or remedy
shall operate as a waiver of such right or remedy or any other right or remedy.
A waiver of any right or remedy on any one occasion shall not be construed
as a
bar to or waiver of any such right or remedy on any future
occasion.
8.10.
Successors and Assigns. The Bank shall require any successor 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
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.
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8.11.
Governing Law. This Agreement is entered into in the State of California,
and California law shall in all respects govern the validity, construction,
and
interpretation of this Agreement.
8.12.
Attorney’s Fees. In any arbitration, suit or other action between the
parties seeking enforcement of any of the terms and provisions of this
Agreement, the prevailing party in such arbitration, suit or other action
shall
be awarded, in addition to damages, injunctive or other relief, its reasonable
costs and expenses, not limited to taxable costs, and a reasonable attorney’s
fees. 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
9.1.
Receipt of Agreement. Each of the parties hereto acknowledges that 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 Employment and
Confidentiality Agreement to be executed as of the Effective Date set forth
above.
ACCEPTED
AND AGREED:
EXECUTIVE
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By:
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Name:
Xxxxxxx X. Xxxxxxxxxxx
Address
for Notice:
0000
Xxxxxx Xxxx, #000
Xxxxxx,
XX 00000
Telephone: (000)
000-0000
COMMUNITY
WEST BANK
A
National Banking Association
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By:
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Xxxxx
Xxxxx, President & CEO
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Address
for Notice:
000
Xxxx
Xxxxxx
Xxxxxx,
Xxxxxxxxxx 00000
Attention:
Xxxxxx X. Xxxxxxxx, Chairman of the Board
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
COMMUNITY
WEST BANCSHARES,
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By:
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Xxxxx
Xxxxx, President & CEO
Address
for Notice:
000
Xxxx
Xxxxxx
Xxxxxx,
Xxxxxxxxxx 00000
Attention:
Xxxxx Xxxxx, President & CEO
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
DESIGNATED
HEIRS
Set
forth
below is a list of the names and addresses of Executive’s heirs to whom the Bank
shall pay the balance of the Deferred Account in the event of Executive’s
death.
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NAME
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ADDRESS
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PERCENTAGE
INTEREST
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