Exhibit 10.7
EMPLOYMENT
AGREEMENT
This Agreement is made and entered
into on January 22, 2009, by and among Bank of Manhattan, N.A.
(the “Bank” ) and Rick Sowers (
“Executive” ) for the purposes set forth
hereinafter (“ Agreement ”).
W I T N E S S E T
H
WHEREAS, the Bank is a national
banking association subject to the supervision and regulation of
the Office of the Comptroller of the Currency (“ OCC
”);
WHEREAS, Executive has been named
Executive Vice President and Chief Operating Officer of the Bank;
and
WHEREAS, it is the intention of the
parties to enter into an employment agreement for the purposes of
assuring the continued services of Executive as Executive Vice
President and Chief Operating Officer of the Bank.
NOW, THEREFORE, in consideration of
the mutual covenants and agreements contained herein, the Bank and
Executive agree as follows:
A.
TERM OF
EMPLOYMENT
The term of this Agreement (
“Term” ) shall commence January 22, 2009,
the date the Bank opened for business (the “Effective
Date” ), and January 22, 2012. Where used
herein, “Term” shall refer to the entire period of
employment of Executive by the Bank hereunder, whether for the
period provided above, or whether terminated earlier as hereinafter
provided. This does not replace or impair the Stock Option
Agreements between Manhattan Bancorp (“MB”), the parent
company of the Bank and Executive dated June 30, 2008, and
November 20, 2008 (the “ Stock Option Agreements
”), which shall remain in full force and effect.
B.
DUTIES OF
EXECUTIVE
1.
Duties
. Executive shall perform the duties of
Executive Vice President and Chief Operating Officer of the Bank,
reporting directly to the President and Chief Executive Officer of
the Bank, and subject, at all times, to the powers vested by law in
the Board (the “ Board ”) of the Bank and their
respective shareholders. During the Term, Executive
shall perform the services herein contemplated to be performed by
Executive faithfully, diligently and to the best of
Executive’s ability, consistent with the highest and best
standards of the banking industry and in compliance with all
applicable laws and the Bank’s Articles of Association or
Incorporation, Bylaws and internal written policies.
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2.
Conflicts of
Interest . Except as permitted by the prior written
consent of the Board of Bank, Executive shall devote
Executive’s entire productive time, ability and attention to
the business of the Bank 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 the Bank’s interests. Notwithstanding the
foregoing, Executive may make investments of a passive nature in
any business or venture, provided that such business or venture is
not in competition, directly or indirectly, in any manner with the
Bank.
C.
COMPENSATION
1.
Salary
. For Executive’s services hereunder,
the Bank shall pay or cause to be paid as annual base salary (the
“ Base Salary ”) to Executive not less than One
Hundred Eighty-Five Thousand Dollars ($185,000) for the first year
of the Term, with annual increases in the discretion of the Board
or the Bank’s Compensation Committees. Base Salary
shall be payable in equal installments in conformity with the
Bank’s normal payroll period.
2.
Bonuses
. Any bonuses shall be as determined by the Board
of the Bank in their sole discretion. This agreement does not
nullify any previous understanding related to the 2009 bonus
guaranteed under Executive’s offer letter.
D.
EXECUTIVE
BENEFITS
1.
Vacation
. Executive shall be entitled to vacation
during each year of the Term consistent with the Bank’s
approved vacation schedule and policy, which shall provide
Executive with not less than four (4) weeks vacation for each
year of the Term. Executive is encouraged to use all accrued
vacation benefits and will be expected to take vacation in the year
it is earned. Accrual of any unused vacation shall be
determined in accordance with the Bank’s Personnel Policy as
in effect from time to time and shall be subject to any limitations
set forth therein.
2.
Group Medical and Other
Insurance Benefits . The Bank shall provide for Executive, at
the Bank’s expense, group medical and other insurance
benefits in accordance with the Bank’s Personnel Policy as in
effect from time to time. All coverage under this paragraph
shall be in existence or shall take effect as of the Effective Date
hereof. The Bank’s liability to Executive for any
breach of this paragraph shall be limited to the amount of premiums
required hereunder to be payable by the Bank to obtain or maintain,
as applicable, the coverage contemplated herein.
3.
Stock Option
. MB has granted Executive under the Stock Option
Agreements an option to purchase 52,000 of shares of MB’s
authorized but unissued Common Stock. Such option has a term
of ten (10) years and shall vest in three installments of
33.33% per year over a period of three (3) years, with the
first such installment to vest one year from the date of grant, and
with subsequent installments vesting two and three years
thereafter. To the maximum extent permitted by law, the
option will qualify as an “incentive stock option”
within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended. Such stock
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option has been granted to
Executive, pursuant to MB’s Stock Option Plan (the “
Plan ”) and the Stock Option Agreement.
4.
Auto Allowance
. During the Term, Executive shall be
entitled to receive One Thousand Dollars ($1,000) per month as a
car allowance.
E.
REIMBURSEMENT FOR BUSINESS
EXPENSES
Executive shall be entitled to
reimbursement by the Bank for any ordinary and necessary business
expenses incurred by Executive in the performance of
Executive’s duties in accordance with the Bank’s
reimbursement policies in effect from time to time, provided that
each such expenditure is of a nature qualifying it as a proper
deduction on the federal and state income tax returns of the Bank
as a business expense and not as deductible compensation to
Executive; and Executive furnishes to the Bank 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 expenditures as deductible business
expenses of the Bank and not as deductible compensation to
Executive.
F.
TERMINATION
1.
Termination for
Cause .
The Bank may terminate this
Agreement at any time by action of its Board for cause (“
Cause ”). For purposes of this Agreement
termination for “Cause” shall mean termination because
of Executive’s personal dishonesty, incompetence, willful
misconduct, any breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of
any law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order or material
breach of any provision of this Agreement. For purposes of
this Agreement, no act, or the failure to act, on Executive’s
part shall be considered “willful” unless done, or
omitted to be done, not in good faith and without reasonable belief
that the action or omission was in the best interests of the
Bank. Termination under this Paragraph shall not prejudice
any remedy that the Bank 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 Bank in good faith, this
Agreement shall terminate without any further liability or
obligation by the Bank to Executive. For purposes of this
Agreement only, physical or mental disability shall be defined as
Executive having been unable to fully perform under this Agreement
for a continuous period of ninety (90) days or a cumulative period
of one-hundred eighty (180) days in any calendar year, or, if
applicable, such other periods as may be defined in the
Bank’s Personnel Policy or in applicable disability insurance
policies as in effect from time to time. 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 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 Los Angeles County
Medical Association. The certification of such physician or
psychiatrist as to the question in dispute shall be final
and
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binding upon the parties
hereto. The Bank shall bear the costs of such physician or
psychiatrist selected to determine such matter.
3.
Supervisory
Matters . If Executive is suspended and/or
temporarily prohibited from participating in the conduct of the
Bank’s affairs by notice served under
Section 8(e)(3) or 8(g)(1) of the Federal Deposit
Insurance Act (12 U.S.C. Section 1818(e)(3) and (g)(1)),
the Bank’s obligations under this Agreement shall be
suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the
Bank may in its discretion: (i) pay Executive all or
part of the compensation withheld while its obligations under this
Agreement were suspended; and (ii) reinstate (in whole or in
part) any of its obligations which were suspended. If
Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank’s affairs by an
order issued under Section 8(e)(3) or i(g)(1) of the
Federal Deposit Insurance Act (12 U.S.C.
Section 1818(e)(3) or (g)(1)), all obligations of the
Bank under this Agreement shall terminate as of the effective date
of the order, but vested rights of the parties shall not be
affected. If the Bank is in default (as defined in
Section 3(x)(1) of the Federal Deposit Insurance Act (12
U.S.C. Section 1813(x)(1)), all obligations under this
Agreement shall terminate as of the date of default, but vested
rights of the parties shall not be affected. All obligations
under this Agreement shall be terminated, except to the extent that
it is determined that continuation of the Agreement is necessary
for the continued operation of the Bank; (i) by the Federal
Deposit Insurance Corporation at the time that the Federal Deposit
Insurance Corporation enters into an agreement to provide
assistance to or on behalf of the Bank under the authority
contained in Section 11 of the Federal Deposit Insurance Act
(12 U.S.C. Section 1821); or (ii) by the Federal Deposit
Insurance Corporation or the United States Comptroller of the
Currency or his or her designee, at the time that the Federal
Deposit Insurance Corporation or the United States Comptroller of
the Currency or his or her designee approves a supervisory merger
to resolve problems related to the operation of the Bank or when
the Bank is in an unsafe or unsound condition. All rights of
the parties that have already vested, however, shall not be
affected by such action.
4.
Termination Without
Cause .
Notwithstanding anything to
the contrary contained herein, it is agreed by the parties hereto
that the Bank may at any time without Cause and for any reason
immediately terminate this Agreement and Executive’s
employment by the Bank by action of their respective Boards.
Upon such termination by the Bank all benefits provided by the Bank
hereunder to Executive shall thereupon cease, except as provided in
this Subparagraph F.4 or Subparagraph F.5, and Executive shall be
deemed to have voluntarily resigned as a director, officer and
employee of the Bank and any corporation, partnership, venture,
limited liability company or other entity controlled by,
controlling or under common control with the Bank or MB, and shall
deliver such written resignation as Bank may request.
Notwithstanding the foregoing, it is agreed that in the event of
such termination without Cause by the Bank upon the delivery to the
Bank by Executive of a waiver and release in substantially the form
of Attachment “A” to this Agreement, and
Executive’s compliance with the terms thereof, Executive
shall be entitled to, upon the effective date of termination,
payment of a lump sum equivalent to twelve (12) months’ base
salary as such base salary is in effect on the date of termination
of employment, plus continuation of Executive’s medical
benefits for a period of twelve (12) months following such
termination, with Bank continuing to pay Executive’s share of
premiums and associated costs as if Executive continued to be
employed with the Bank;
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provided , however, that the Bank’s obligation to
provide such coverage shall be terminated if Executive is eligible
to receive comparable substitute coverage from another employer at
any time during such twelve-month period. Executive agrees to
advise the Bank immediately if such comparable substitute coverage
is available from another employer. Notwithstanding any
provision to the contrary in this Subparagraph F.4, no severance
benefits shall be payable to Executive hereunder if
Executive’s employment is terminated for any of the reasons
delineated in Subparagraphs F.1, F.2 or F.3 hereof or while grounds
for termination under such Subparagraphs exist, and no severance
benefits shall be payable to Executive under this Subparagraph F.4
if payments are required to be made to Executive under Subparagraph
F.5 hereof.
5.
Termination Following Change
in Control .
(a)
In the event a Change in Control of
the Bank or MB occurs (as defined below) and Executive’s
employment as Executive Vice President and Chief Operating Officer
of the Bank is terminated without Cause by the Bank, then Executive
shall be entitled, upon such termination of employment and upon
delivery to the Bank of an executed waiver and release in
substantially the form of Attachment “A” to this
Agreement, to payment of a lump sum equivalent to one
(1) times the highest annual cash compensation amount paid to
E
