EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is effective as of December 1, 2003
("Effective Date") and amends and restates that certain Employment Agreement
made as of January 1, 2003 ("Old Agreement") between Temecula Valley Bank, N.A.,
a national banking association ("Bank") and Xxxxx Xxxxxxx ("Executive").
R E C I T A L
WHEREAS, at the direction of the Bank's Board of Directors ("Board of
Directors"), the Old Agreement is hereby revised and restated as provided
herein.
WHEREAS, Bank desires that Executive continue be employed as Executive Vice
President/SBA Department Manager of Bank and Executive desires to be so
employed, subject to the terms and conditions herein stated.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the parties agree
as follows:
1. TERM OF EMPLOYMENT
1.1. Term. Bank hereby agrees to employ Executive, and Executive hereby
accepts employment with Bank, for the period (the "Term") commencing December 1,
2003 and terminating on such date and upon such terms as provided in Section 4
hereof.
2. DUTIES OF EXECUTIVE
2.1. Duties. Executive shall perform the duties of Executive Vice
President/SBA Department Manager of Bank, as specified in Exhibit "A" hereto,
and duties assigned by Bank's Chief Executive Officer and Board of Directors
subject to the powers by law vested in the Board of Directors of Bank and in
Bank's shareholders. During the Term, Executive shall perform the services
herein contemplated to be performed by Executive with due care faithfully,
diligently, to the best of Executive's ability and in compliance with all
applicable laws and Bank's Articles of Association and Bylaws.
2.2. Exclusivity. Executive shall devote substantially all of
Executive's productive time, ability and attention to the business of Bank
during the Term. Executive shall not directly or indirectly render any services
of a business, commercial or professional nature to any other person, firm or
corporation for compensation without prior consent evidenced by a resolution
duly adopted by the Board of Directors, or the Executive Committee thereof.
otwithstanding the foregoing, Executive may (i) make investments of a passive
nature in any business or venture; and (ii) serve in any capacity in civic,
charitable or social organizations, provided, however, that such investments or
services shall not be in competition, directly or indirectly, in any manner with
Bank.
1
3. COMPENSATION AND BENEFITS
3.1. Salary and Bonus. For Executive's services hereunder, Bank shall
pay, or cause to be paid, as annual gross base salary, to Executive in the
amount of One Hundred Eighty Thousand Dollars ($180,000) during the Term
("Annual Salary"), beginning with the Effective Date, payable in substantially
equal installments in accordance with Bank's normal payroll periods as in effect
from time to time. In addition, Executive shall be paid a bonus (the "Bonus")
equal to thirty (30) basis points of the total original principal amount of
funded (to the extent disbursed) 7a and 504 SBA loans ("SBA Loans") as well as
construction, conventional and business & industry loans related to and made in
conjunction with SBA Loans, if such loans were generated by and processed
through Bank's SBA Department, as reasonably determined by Bank. The Bonus shall
be paid based upon monthly disbursements (or any partial calendar month
hereunder) within thirty (30) days of the end of the applicable calendar month.
3.2. Vacation. Executive shall be entitled to four (4) weeks of vacation
leave each year of the Term accruing in accordance with Bank policy, of which
two (2) consecutive weeks must be taken in each calendar year ("Mandatory
Vacation"). Any vacation not used in excess of the Mandatory Vacation shall not
accumulate but at the end of each year of the Term, Executive shall be entitled
to vacation pay in lieu of vacation.
3.3. Equipment. Bank shall provide for Executive's use an automobile,
the selection of which shall be within the discretion of the Board of Directors.
Bank shall pay all the expenses (including, but not limited to, maintenance,
fuel, insurance, registration) related to such automobile during the Term. Bank
shall also provide Executive with a cellular phone for Executive's reasonable
use in the performance of his duties hereunder. Bank shall pay all reasonable
expenses in connection with the business use of such cellular phone.
3.4. Group Medical and Other Benefits. Bank shall provide for Executive,
at Bank's expense, participation in the medical and other benefit plans offered
to other similarly titled employees of Bank. Executive shall be eligible to
participate in Bank's 401(k) Plan. Executive will also be eligible to
participate in Bank's Senior Management Retirement Program on terms agreeable to
Bank and Executive.
3.5. Sick Leave. Executive shall be entitled to sick leave in accordance
with Bank's personnel policy. Accrued sick leave may not be carried over from
prior periods and Executive shall not be entitled to be paid in lieu thereof.
3.6. Stock Options. Executive shall be entitled to receive an option to
purchase fifteen thousand (15,000) shares of common stock of Temecula Valley
Bancorp Inc. ("Company") should a new stock option plan be approved by the
shareholders of the Company.
2
3.7. Salary Deferment Program. Bank will use its best efforts to afford
to Executive, as soon as practicable, a salary deferment plan the terms of which
are acceptable to both parties.
4. TERMINATION
4.1. Termination With Cause. Except as otherwise provided herein, this
Agreement may be terminated by Bank, at Bank's option with notice to Executive,
upon the occurrence of any of the following events:
(a) A material breach by Executive of any of the express terms or
provisions of this Agreement;
(b) Executive is charged with illegal activity or pleads guilty to
or nolo contendere to, illegal activity;
(c) Executive has committed any illegal or dishonest act which
would cause termination of coverage under Bank's Bankers Blanket Bond as to
Executive or termination of coverage as to Bank as a whole;
(d) Executive fails to perform or neglects Executive's duties or
commits an act of malfeasance or misfeasance in connection therewith;
(e) Executive becomes permanently disabled, as determined in good
faith by the Board of Directors;
(f) The Comptroller of the Currency, or any other regulatory
agency having jurisdiction, requests Executive's dismissal or removal, issues a
notice of suspension or removal, finally removes, or suspends Executive from
office;
(g) The Comptroller of the Currency or other supervisory or
regulatory authority having jurisdiction takes possession of the property and
business of Bank; or
(h) The death of the Executive.
4.2. Termination Without Cause. During the Term, subject to provisions
specifically intended to survive termination, this Agreement may be terminated
by either party without cause upon written notice to the other.
3
4.3. Compensation Upon Termination. If Executive's employment is
terminated by Bank pursuant to Section 4.1 above, or by Executive pursuant to
Section 4.2, Executive shall then only be entitled to receive his Annual Salary
(as in effect immediately prior to termination) earned through the effective
date of such termination. If Executive's employment is terminated by Bank
pursuant to Section 4.2, subject to any limitations on payments under applicable
federal or state law, Executive shall be entitled to the same amount as if the
termination had been pursuant to Section 4.1, plus: (i) any earned but unpaid
Bonus; and (ii) an immediate payment of severance equal to Executive's Annual
Salary (as in effect immediately prior to termination) for one year, paid over
one year in substantially equal installments, in accordance with the Bank's
normal payroll periods as in effect from time to time.
4.4. Vesting of Options Upon Change of Control. Executive's option
agreements covering stock options to be issued to him shall provide that in the
event of a Change in Control (as defined below), all options shall vest
immediately prior to any Change in Control. "Change of Control" means: (a) more
than fifty percent (50%) of the Company's voting stock is transferred to a
person or entity that is not an Affiliate of the Company prior to the
transaction ("Affiliate," as that term is defined in 12 U.S.C. Section 371c); or
(b) a merger or consolidation transaction pursuant to which the Company's
shareholders prior to the merger or consolidation own less than fifty percent
(50%) of the voting power with respect to the election of directors of the
resulting entity after the merger or consolidation.
4.5. Other Employment. In the event of termination of Executive under
Section 4.2 and payment by Bank of the severance compensation, Executive agrees
not to seek or accept employment in the Banking industry for performance of
services within a twenty five (25) mile radius of every location Bank maintains
an office for a period of one (1) year from the effective date of termination.
If Executive chooses to accept such employment, he shall not be entitled to the
severance payments and to the extent paid, shall be repaid immediately to Bank.
5. GENERAL PROVISIONS.
5.1. Ownership of Books and Records; Confidentiality.
(a) All records or copies thereof of the accounts of customers,
and any other records and books relating in any manner whatsoever to Bank
customers, and all other files, books and records and other materials owned by
the Bank and the Company or used by it in connection with the conduct of its
business, whether prepared by Executive or otherwise coming into his possession,
shall be the exclusive property of the Company and the Bank regardless of who
actually prepared the original material, book or record. All such books and
records and other materials, together with all copies thereof, shall be
immediately returned to the Bank by Executive on any termination of his
employment; and
4
(b) During the Term, Executive will have access to and become
acquainted with what Executive and Bank acknowledge are trade secrets, to wit,
knowledge or data concerning the Bank and the Company, including their
operations and business, and the identity of customers, including knowledge of
their financial condition, their financial needs, as well as their methods of
doing business. Executive shall not disclose any of the aforesaid trade secrets,
directly or indirectly, or use them in any way, either during the Term or
thereafter, except as required in the course of Executive's employment with
Bank.
5.2. Assignment and Modification. This Agreement, and the rights and
duties hereunder, may not be assigned by Executive.
5.3. Notices. All notices required or permitted hereunder shall be in
writing and shall be delivered in person, sent by courier, by facsimile or
certified or registered mail, return receipt requested, postage prepaid as
follows:
To Bank: Temecula Valley Bank, N.A.
00000 Xxxxxxxxx Xxxxx, Xxxxx X000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx,
President / Chief Executive Officer
Facsimile: (000) 000-0000
To Executive: Xxxxx Xxxxxxx
___________________________________________
Facsimile: ________________________________
With a copy to: Xxxxxxxxx X. Xxxxx, Esq.
XxXxxxxxx, Xxxxx & Xxxxxx
0000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
or to such other party or address as either of the parties may designate in a
written notice served upon the other party in the manner provided herein. All
notices required or permitted hereunder shall be deemed duly given and received
on the date received if delivered in person, by courier or by facsimile, or on
the third day next succeeding the date of mailing if sent by certified or
registered mail, postage prepaid.
5.4. Successors. This Agreement shall be binding upon, and shall inure
to the benefit of, the successors and assigns of the parties.
5.5. Entire Agreement. Except as provided herein, this Agreement
constitutes the entire agreement between the parties, and all prior
negotiations, representations, or agreements between the parties, whether oral
or written, are merged into this Agreement. This Agreement may only be modified
by an agreement in writing executed by both of the parties hereto.
5
5.6. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of California.
5.7. Executed Counterparts. This Agreement may be executed in one or
more counterparts, all of which together shall constitute a single agreement and
each of which shall be an original for all purposes.
5.8. Section Headings. The various section headings are inserted for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement or any section hereof.
5.9. Calendar Days/Close of Business. Unless the context so requires,
all periods terminating on a given day, period of days or date shall terminate
at the close of business on that day or date and references to "days" shall
refer to calendar days.
5.10. Attorneys' Fees. In the event that any party shall bring an action
or arbitration in connection with the performance, breach or interpretation
hereof, then the prevailing party in such action as determined by the court or
other body having jurisdiction shall be entitled to recover from the losing
party in such action, as determined by the court or other body having
jurisdiction, all reasonable costs and expenses of litigation or arbitration,
including reasonable attorneys' fees, court costs, costs of investigation and
other costs reasonably related to such proceeding, in such amounts as may be
determined in the discretion of the court or other body having jurisdiction.
5.11. Rules of Construction. The parties hereby agree that the normal
rule of construction, which requires the court to resolve any ambiguities
against the drafting party, shall not apply in interpreting this Agreement. Each
party to this Agreement has had sufficient opportunity to review it with
counsel. This Agreement shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly accomplish the purposes and
intentions of all parties hereto. Each provision of this Agreement shall be
interpreted in a manner to be effective and valid under applicable law, but if
any provision shall be prohibited or ruled invalid under applicable law, the
validity, legality and enforceability of the remaining provisions shall not,
except as otherwise required by law, be affected or impaired as a result of such
prohibition or ruling.
6
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
Bank: TEMECULA VALLEY BANK, N.A.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxxx
President and Chief Executive Officer
Executive: /s/ Xxxxx Xxxxxxx
-----------------
Xxxxx Xxxxxxx
7
Exhibit "A"
Duties of
Executive Vice President
------------------------
POSITION TITLE: Executive Vice President/SBA Department
REPORTS DIRECTLY TO: President/Chief Executive Officer
FUNCTION: Senior Management of the SBA Department
DUTIES:
1. Oversee overall growth of the Bank's SBA Department; Responsible for
establishing, in consultation with the Bank's President and other key
personnel, and achieving target growth of the Bank.
2. Supervise and effectively manage SBA personnel.
3. Aid in achieving CRA compliance.
4. Ensure the policies and procedures of the SBA Department are adhered to
and maintained up to industry standards; take initiative to implement
any policy or procedure changes required by law or good sound
practices.
A-1
