EMPLOYMENT AGREEMENT
THIS AGREEMENT is dated as of March 16, 2009,
between Belvedere SoCal ("SoCal"), Professional Business Bank (the
"Bank") and Mary Lynn Lenz ("Executive") for the purposes set forth
in this agreement (the "Agreement").
WHEREAS, SoCal is a California corporation and
bank holding company registered under the Bank Holding Company Act
of 1956, as amended, subject to the supervision and regulation of
the Board of Governors of the Federal Reserve System (" FRB
");
WHEREAS, SoCal is the parent holding company of
the Bank, which is a California chartered banking corporation and
wholly-owned subsidiary of SoCal, subject to the supervision and
regulation of the California Department of Financial Institutions
(" DFI ") and Federal Deposit Insurance Corporation ("
FDIC ");
WHEREAS, it is the intention of the parties to
enter into an employment agreement for the purposes of securing
Executive's services as the President and Chief Executive Officer
of SoCal and of the Bank (together, the " Company
").
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein, the Company and
Executive agree as follows:
1.
TERM. Subject to the provisions for earlier termination
hereinafter provided, Executive's employment hereunder shall be for
a term (the " Term ") commencing on March 2009 (the
"Effective Date") and ending on the third anniversary of the
Effective Date.
2.
POSITION, DUTIES AND RESPONSIBILITIES . During the Term, the
Company will employ Executive, and Executive agrees to be employed
by the Company, as its President and Chief Executive Officer. In
such employment capacity, Executive will have such duties and
responsibilities as are normally associated with such position and
will report to the Board of Directors of the Company (the "
Board "). In addition, during the Term, subject to
stockholder approval, Executive will he appointed as a member of
the Board; provided, however, that the Company shall not be
so obligated to nominate or appoint Executive as a member of the
Board if any of the events constituting Cause (as defined below)
have occurred. During the Term, Executive shall devote her entire
business time, attention and energies to the business and affairs
of the Company, to the performance of Executive's duties under this
Agreement and to the promotion of the Company's interests.
Notwithstanding the foregoing, subject to Section 13 below, nothing
in this Agreement shall be construed to limit Executive's ability
to provide services to or participate in non-profit, charitable or
civic organizations or to manage personal investments, including
personal investment vehicles, to the extent that such activities do
not materially interfere with Executive's performance of her duties
hereunder. Executive acknowledges that Executive's services as
President and Chief Executive Officer of the Company shall
constitute Executive's principal business activity. Executive will
be provided with an office at the Company's principal offices, but
may also work from any location Executive chooses as long as
Executive has access to equipment and other resources necessary to
perform Executive's duties. Notwithstanding the foregoing, the
Company may from time to time require Executive to travel
temporarily to other locations on the Company's business. At the
Company's reasonable request, Executive will serve the Company
and/or its subsidiaries and affiliates in other capacities, in
addition to the foregoing, which are reasonably assigned and
commensurate with Executive's level, authority, and
status.
3.
BASE COMPENSATION . During the Term, the Company will pay
Executive a base salary of $300,000 per year, less payroll
deductions and all required withholdings, payable in accordance
with the Company's normal payroll practices and prorated for any
partial pay period of employment. Executive's base salary shall be
subject to (i) annual review and, (ii) in the sole discretion of
the Board, increase (but not decrease) pursuant to the Company's
policies as in effect from time to time (the " Base
Compensation ").
4.
ANNUAL BONUS . In addition to the base salary set forth
above, during the Term. Executive will be eligible to participate
in the Company's incentive bonus plan applicable to senior
executives of the Company. The amount of Executive's annual bonus
will be based on the attainment of performance criteria established
and evaluated by the Board after consultation with Executive.
Subject to the terms of such performance criteria, Executive's
target annual bonus shall be no less than forty percent (40%) of
Base Compensation per year, pro-rated for any partial year of
service in which an annual bonus is earned and any bonus that
becomes payable shall be paid no later than the last day of the
applicable two and one-half (2-V2) month "short- term deferral
period" with respect to such bonus, within the meaning of Treasury
Regulation Section 1.409A-I (b)(4) (it being understood that the
actual annual bonus for any year may be more or less than 40% of
Base Compensation depending on the attainment of applicable
performance objectives). Each annual bonus shall be paid in cash
or, at the election of Executive made at least thirty (30) days
prior to the payment date (or such other date as may be determined
by the Board), in whole or in part in a number of fully vested
shares of SoCal common stock equal to the dollar amount of the
bonus payable divided by the Fair Market Value (as defined in the
SoCal 2007 Equity Incentive Plan (the " Plan ")) of a share
of SoCal common stock on the date preceding the date on which the
bonus is paid. In the event that Executive elects to receive an
annual bonus in shares, SoCal shall issue such shares to Executive
under the Plan and such shares shall be subject to the terms and
conditions of the Plan (including, without limitation, the limits
set forth in Section 3 and Section 6(c) of the Plan) and an award
agreement in a form prescribed by the Company. If the Company is
subject to the executive compensation limitations under the United
States Treasury Department's Troubled Asset Relief Program ("TARP")
at the time Executive receives a bonus under this section. any and
all such bonuses and/or portions thereof shall be subject to
forfeiture and/or repayment by the Executive to the Company if the
payment of such bonus was based on materially inaccurate financial
statements or any other materially inaccurate performance metric
criteria.
(a)
Initial Option. On the date of the first Board
Compensation Committee meeting following the Effective Date ( the
"Initial Grant Date"), the Company shall grant to Executive
nonqualified stock options to purchase a number of shares of SoCal
common stock equal to 3.0% of the total number of shares of SoCal
common stock outstanding as of the Initial Grant Date (the
" Initial Options "). 50% of the total number of the
initial Options shall be granted as Time Vested Options, in
accordance with and subject to the terms of the Time Vested Options
Stock. Option Agreement attached hereto as Exhibit A (the
"initial Time Vested Options"), and 50% of the total number
of the Initial Options shall be granted as Performance Vested
Options, in accordance with and subject to the terms of the
Performance Vested Options Stock Option Agreement attached hereto
as Exhibit B. In the event that (i) any portion of the
Initial Time-Vested Options remains outstanding and unvested at the
expiration of the Term, (ii) the Company does not offer to continue
Executive's employment with the Company on terms substantially
comparable in the aggregate as those provided under this Agreement
for a period of time ending no earlier than the fifth anniversary
of the Vesting Commencement Date of the Initial Time Vested
Options, and (iii) Executive's employment terminates upon
expiration of the Term by reason of the Company not offering to so
continue Executive's employment, then any outstanding unvested
portion of the Initial Time-Vested Options shall vest in full
immediately prior to such termination of employment.
(b)
Subsequent Acquisition Make-Whole Option. in
addition, provided that Executive is then employed by the Company,
in the event that (i) the Company consummates an acquisition
transaction in which the holders of SoCal common stock immediately
prior to such transaction continue, immediately after such
transaction, to control more than 50% of the total outstanding
shares of SoCal common stock (or equity securities of the surviving
entity if the Company is not the surviving entity (any such equity
securities, "New Equity")), and (ii) the total number of
shares of SoCal common stock (or New Equity) outstanding
immediately after the consummation of such acquisition transaction
exceeds the total number of shares of SoCal common stock
outstanding immediately prior to the consummation of such
transaction, as determined in the sole and absolute discretion of
the Company (any such excess, the "Transaction Share
Increase"), then the Company (or the surviving entity) shall,
on the thirtieth calendar day (or, if not a trading day, the next
succeeding trading day) following the consummation of such
acquisition, grant to Executive a nonqualified option to purchase a
number of shares of SoCal common stock (or New Equity) equal to
3.0% of the Transaction Share Increase (the "Subsequent
Acquisition Make-Whole Option" and. together with the
Initial Option, the "Options").
(c)
Option Terms. Each Option shall be granted at an
exercise price per share set by the Board Compensation Committee on
the date of grant, which exercise price shall, in no event, be less
than the Fair Market Value on such date of grant. The terms and
conditions of the Options, including without limitation any
applicable vesting and forfeiture conditions, shall be set forth in
Stock Option Agreements in the forfeiture conditions attached
hereto as Exhibit A and Exhibit B, as applicable, to be
entered into by the Company and Executive (the "Option
Agreement"). The Options shall, subject to the provisions of
this Section 5, be governed in all respects by the terms of the
Plan and the applicable Option Agreement.
(d)
Additional Equity Participation. Executive shall also
be eligible to participate in and receive additional grants of
equity-based awards commensurate with her position and level in any
stock option plan and restricted stock plan or other equity-based
or equity related compensation plan, programs or agreements of the
Company made available generally to its senior executives or
directors; provided that the amount, timing, and other terms of any
future grant shall be determined by the Board (or the Compensation
Committee thereof) in its sole discretion.
6.
BENEFITS AND VACATION . During the Term, (i) Executive and
her dependents shall be eligible on the first of the month
following the Effective Date to participate in Company's medical
and dental insurance programs at the Company's expense, (ii)
Executive shall be eligible to participate in all incentive,
savings and retirement plans, practices, policies and programs
maintained or sponsored by the Company from time to time which are
applicable to other senior executives of the Company, including
without limitation, a Company 401(k) plan, subject to the terms and
conditions thereof, and (iii) Executive shall be eligible for
standard benefits, such as paid time off and holidays, to the
extent applicable generally to other senior executives of the
Company, provided that, during the Term, Executive shall be
entitled to no less than twenty-two (22) vacation days per year
(i.e., four weeks plus two days of vacation), pro-rated for
any partial year of service, in all cases, subject to the terms and
conditions of the applicable Company plans or policies. In
addition, without limiting the generality of the foregoing, the
Company shall make available to Executive a long-term disability
insurance policy which it provides for other senior executives of
the Company on the same terms and conditions as are made available
to such other senior executives.
7.
EXPENSES . During the Term, Executive shall be entitled to
receive prompt reimbursement of all reasonable business expenses
incurred by Executive in accordance with the Bank's expense
reimbursement policy applicable to its senior executives, as in
effect from time to time. The amount of any such expenses
reimbursed in one year shall not affect the amount eligible for
reimbursement in any subsequent year and Executive's right to
reimbursement of any such expenses shall not be subject to
liquidation or exchange for any other benefit. In addition, the
Company will pay Executive $1,000 per month, less payroll
deductions and all required withholdings, pro-rated for any partial
month of service, to compensate for the purchase or lease,
operation and maintenance, of an automobile. Further, Executive
will be reimbursed for reasonable legal fees and expenses, up to a
maximum of $10,000, in connection with the review, drafting and
negotiation of this Agreement and any related documents by an
attorney of Executive's choosing, within 14 days after
substantiation of such expenses in accordance with applicable
Company policy, provided that Executive provides such
substantiation within 60 days after the month in which the expenses
are incurred.
8. RELOCATION ASSISTANCE . The Company
shall pay or reimburse to Executive costs and expenses associated
with Executive's relocation to California in connection with her
acceptance of employment and performance of services under this
Agreement in an amount not to exceed $20,000. To the extent
reimbursed, such costs and expenses shall be paid to Executive as
soon as administratively possible, but in no event more than 30
days after, substantiation of such expenses in accordance with
applicable Company policy, provided that Executive provides such
substantiation within 60 days after the month in which the expenses
are incurred. In addition, the Company shall pay or reimburse to
Executive the costs of temporary housing for a period of not more
than 6 months following the Effective Date in an amount not to
exceed $3.500 per month, which expenses shall be substantiated by
Executive in accordance with applicable Company policy within 60
days after the month in which the expenses are incurred and shall
be paid or reimbursed to Executive no later than 30 days after such
substantiation.
9.
TERMINATION OF EMPLOYMENT .
(a)
Termination Without Cause; Resignation for Good Reason. The
Company may terminate Executive's employment without Cause (as
defined below) at any time during the Term upon thirty (30) days'
written notice provided to Executive in accordance with Section 12
below. Executive may terminate her employment for Good Reason in
accordance with Section 9(i) below. At the Company's sole
discretion, Company may require that Executive cease performing
services hereunder during any notice period following notice of a
termination without Cause or for Good Reason. Notwithstanding
anything contained herein, in no event shall the expiration of the
Term or the Company's election not to renew the Term constitute a
termination of Executive's employment by the Company without
Cause.
If Executive has a "separation from service"
(within the meaning of Section 409A(a)(2)(A)(i) of the Internal
Revenue Code of 1986, as amended (the "Code"), and Treasury
Regulation. Section 1.409A-1(h)) ("Separation from Service") by
reason of a termination by the Company without Cause or by
Executive for Good Reason, the Company shall promptly or, in the
case of obligations described in clause (iv) below, as such
obligations become due, pay or provide to Executive. (i)
Executive's earned but unpaid Base Compensation accrued through the
date of such Separation from Service (the "Termination Date"), (ii)
accrued but unpaid vacation time through the Termination Date,
(iii) reimbursement of any business expenses incurred by Executive
prior to the Termination. Date that are reimbursable under Section
7 above, (iv) any vested benefits and other amounts due to
Executive under any plan, program or policy of the Company, and (v)
any payment in lieu of notice of termination under this Section
9(a) (together, the "Accrued Obligations"). In addition, subject to
Section 9(f) below and Executive's execution and non-revocation of
a binding release in accordance with Section 9(g) below, upon
Executive's Separation from Service due to a termination of
Executive's employment by the Company without Cause, the Company
shall pay or provide to Executive (the "Severance"):
(x) a lump-sum cash payment equal to the sum of
(A) one year of Executive's Base Compensation at the rate in effect
as of the Termination Date, plus (B) a pro rata portion of
Executive's target annual bonus calculated by multiplying the
Executive's target bonus level for the bonus year in which the
termination occurs times a fraction, the numerator of which is the
number of days elapsed in the bonus year as of the Termination
Date, and the denominator of which is 365; provided,
however, that if a termination described in this Section 9(a)
occurs within twenty-four months after the consummation of an
Acquisition (defined as (i) any consolidation or merger of the
Company with or into any other corporation or other entity or
person in which the stockholders of the Company prior to such
consolidation or merger own, directly or indirectly, less than
fifty percent (50%) of the continuing or surviving entity's voting
power immediately after such consolidation or merger, excluding any
consolidation or merger effected exclusively to change the domicile
of the Company; or (ii) a sale or other disposition of all or
substantially all of the stock or assets of the Company), then the
payment pursuant to this Section 9(a)(x)(B) shall instead equal a
pro rata portion of Executive's maximum annual bonus for the
calendar year in which the Termination Date occurs, determined by
multiplying the applicable target or maximum annual bonus by a
fraction, the numerator of which equals the number of days elapsed
in the calendar year of termination through the Termination Date
and the denominator of which equals 365, and
(y) at the Company's expense, continuation of
group healthcare coverage for Executive and her legal dependents
until the earlier of twelve months from the Termination Date or
such time as Executive becomes eligible to receive medical benefits
under another group health plan, provided that Executive properly
elects continuation healthcare coverage under Section 4980B of the
Code and the regulations thereunder; following such continuation
period, any further continuation of such coverage under applicable
law shall be at Executive's sole expense, provided, that if any
plan pursuant to which such benefits are provided is not, or ceases
prior to the expiration of the period of continuation coverage to
be, exempt from the application of Section 409A of the Code under
Treasury Regulation Section 1.409A-1(a)(5), then an amount equal to
each remaining premium payment shall thereafter be paid to
Executive as currently taxable compensation in substantially equal
monthly installments over the continuation coverage period (or the
remaining portion thereof). The Company shall also provide
Executive with executive outplacement services from a provider of
her choice in an amount not to exceed $10,000, which outplacement
services shall be provided or reimbursed to Executive promptly
following the effectiveness of Executive's release, but in no event
later than the end of the second year following Executive's
Separation from Service.
Subject to Sections 9(t) and 9(g) below, the
Severance amounts described in Section 9(a)(x) above shall be paid
to Executive no later than 60 calendar days following the
Termination Date, with the exact payment date to be determined by
the Company in its sole discretion, which payment schedule is
intended to satisfy the short-term deferral exemption under
Treasury Regulation Section 1.409A-1(b)(4).
(b)
Resignation. Executive may terminate her employment without
Good Reason at any time upon thirty (30) days' written notice
provided to Company in accordance with Section 12 below,
provided, that the Company may, in its sole discretion,
require that Executive cease performing services during such notice
period.
(c)
Death; Disability. If Executive dies during the Term or her
employment is terminated due to her total and permanent Disability,
Executive or her estate, as applicable, shall be entitled to
receive the Accrued Obligations promptly or, in the case of
benef
