EXHIBIT 10.1
EMPLOYMENT
AGREEMENT
This Employment Agreement is made
and entered into as of March 7, 2006 by and between Beverly
Hills Bancorp, Inc., a Delaware corporation (the “
Company ”), and Larry B. Faigin (“
Executive ”).
1. Engagement and
Responsibilities
1.1 Upon the terms and subject to
the conditions set forth in this Agreement, the Company hereby
engages and employs Executive as an officer of the Company, with
the title “Chief Executive Officer.” Executive hereby
accepts such engagement and employment.
1.2 Executive’s duties and
responsibilities shall be those incident to the positions set forth
in Section 1.1 as set forth in the Bylaws of the Company and
those which are normally and customarily vested in such offices of
a corporation. In addition, Executive’s duties shall include
those duties and services for the Company and its affiliates as the
Board shall in its discretion, from time to time reasonably direct
which are not inconsistent with Executive’s positions
described in Section 1.1.
1.3 Executive agrees to devote all
of Executive’s business time, energy and efforts to the
business of the Company and will use Executive’s best efforts
and abilities faithfully and diligently to promote the
Company’s business interests. For so long as Executive is
employed by the Company, or for so long as Executive is receiving
severance under Section 5.2 of this Agreement, Executive shall
not, directly or indirectly, either as an employee, employer,
consultant, agent, investor, principal, partner, stockholder
(except as the holder of less than 1% of the issued and outstanding
stock of a publicly held corporation), corporate officer or
director, or in any other individual or representative capacity,
engage or participate in any business that is in competition in any
manner whatsoever with the business of the Company Group, as such
businesses are now or hereafter conducted. Subject to the foregoing
prohibition and provided such services or investments do not
violate any applicable law, regulation or order, or interfere in
any way with the faithful and diligent performance by Executive of
the services to the Company otherwise required or contemplated by
this Agreement, the Company expressly acknowledges that Executive
may:
1.3.1 make and manage personal
business investments of Executive’s choice without consulting
the Board; and
1.3.2 serve in any capacity with any
non-profit civic, educational or charitable organization without
consulting with the Board.
1.4 Covenants of
Executive
1.4.1 Best Efforts; Exclusive
Duty . Executive shall use his best efforts and skills in the
business and interests of the Company, do his utmost to enhance and
develop the
interests and welfare of the
Company, and devote substantially all of his professional time and
attention to the Company’s business.
1.4.2 Rules and Regulations .
Executive shall obey all rules, regulations and special
instructions of the Company and all other rules, regulations,
guides, handbooks, procedures, policies and special instructions
applicable to the Company’s business in connection with his
duties hereunder and shall endeavor to improve his ability and
knowledge of the Company’s business in an effort to increase
the value of his services for the mutual benefit of the Company and
Executive.
1.4.3 Compliance . Executive
shall use his best efforts and skills to cause the Company to
comply with all of its contractual obligations and commitments and
applicable laws, rules and regulations.
2. Definitions
2.1 “ Bank ”
shall mean First Bank of Beverly Hills, a California state
chartered bank that, as of the date of this Agreement, is a wholly
owned subsidiary of the Company.
2.2 “ Board ”
shall mean the Board of Directors of the Company.
2.3 “ Change of Control
” with respect to the Company shall be deemed to have if
occurred upon the occurrence of any one or more of the
following:
2.3.1 any “person” (as
such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended), is or becomes the
“beneficial owner” (as defined in Rule 3d-3 under said
Act), directly or indirectly, of securities of the Company
representing 50% or more of the total voting power represented by
the Company’s then outstanding voting securities;
or
2.3.2 the Company merges or
consolidates with any other corporation other than a merger or
consolidation that results in the voting securities of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or the parent corporation of the
surviving entity) more than 50% of the total voting power
represented by the voting securities of the Company, the surviving
entity or the parent of the surviving entity, as applicable,
outstanding immediately after such merger or consolidation;
or
2.3.3 the complete liquidation of
the Company; or
2.3.4 the occurrence of a
transaction pursuant to which the Company no longer owns 50% or
more of the outstanding voting securities of the Bank.
2.4 “ Company Group
” as of any date shall mean the Company and each Person that
the Company directly or indirectly Controls as of such
date.
2.5 “ Control ”
shall mean, with respect to any Person, (i) the beneficial
ownership of more than 50% of the outstanding voting securities of
such Person, or (ii) the power, directly or
- 2 -
indirectly, by proxy, voting trust or otherwise,
to elect a majority of the outstanding directors, trustees or other
managing persons of such Person.
2.6 “ For Cause ”
shall mean, in the context of a basis for termination of
Executive’s employment with the Company, that:
2.6.1 Executive breaches any
obligation, duty or agreement under this Agreement, which breach is
not cured or corrected within 15 days of written notice
thereof from the Company (except for breaches of Sections 1.3,
6 and 7 of this Agreement, which cannot be cured and for which the
Company need not give any opportunity to cure); or
2.6.2 Executive commits any act of
personal dishonesty, fraud, breach of fiduciary duty or trust;
or
2.6.3 Executive is convicted of, or
pleads guilty or nolo contendere with respect to, theft, fraud, a
crime involving moral turpitude, or a felony under federal or
applicable state law; or
2.6.4 Executive commits any act of
personal conduct that, in the reasonable opinion of the Board,
gives rise to a material risk of liability under federal or
applicable state law for discrimination or sexual or other forms of
harassment or other similar liabilities to subordinate employees;
or
2.6.5 Executive commits continued
and repeated substantive violations of specific written directions
of the Board, which directions are consistent with this Agreement
and Executive’s position as the Chief Executive Officer or
continued and repeated substantive failure to perform duties
assigned by or pursuant to this Agreement; provided that no
discharge shall be deemed for Cause under this
subsection 2.6.5 unless Executive first receives written
notice from the Company advising him of the specific acts or
omissions alleged to constitute violations of written directions or
a material failure to perform his duties, and such violations or
material failure continue after he shall have had a reasonable
opportunity to correct the acts or omissions so complained of;
or
2.6.6 Executive commits any act, or
fails to commit any act, that, in the reasonable opinion of the
Board, gives rise to a material risk of material liability under
federal or state banking or lending laws (the type of liability
that could result in a cease and desist order, civil monetary
penalty, consent decree, memorandum of agreement or similar
regulatory action); provided that the Board may not
terminate Executive for Cause under this Section 2.6.6 unless
the Board: (a) gives Executive notice of its intent to
terminate Executive under this Section and provides Executive an
opportunity to appear before the Board to explain his conduct, and
(b) if such action (or failure to act) is capable of being
cured or corrected by Executive (and was not a fraudulent act by
Executive) in a manner that could mitigate material risk of
liability, the Board gives Executive the opportunity to cure or
correct such action or failure to act for 60 days, and Executive
promptly commences to cure and correct such conduct; or
2.6.7 Executive willfully commits or
willfully causes any member of the Company Group to commit any
material violation of law, rule or regulation affecting
the
- 3 -
Company Group or regulatory order or
consent to which any member of the Company Group is
subject.
2.7 “ Good Reason
” shall mean the occurrence of one or more of the following:
(a) without the consent of Executive, the Board assigns any
duties to Executive substantially inconsistent with, or reflecting
an adverse change in, Executive’s position, duties,
responsibilities or status as the chief executive officer of the
Company, provided that Executive must advise the Board
within five days of assignment of such duties that he believes such
duties would give him the right to terminate his employment for
Good Reason and the Board does not withdraw such assignment; or
(b) without the consent of Executive, the Company relocates
Executive’s principal place of employment to a location that
is not in either Los Angeles County or Ventura County, California;
or (c) the Company employs a person as an officer of the
Company senior to Executive; or (d) a Change of Control
occurs; or (e) the Board fails to nominate Executive for
re-election as a director of the Company unless: (i) Executive
advises the Board he does not want to serve as director; or
(ii) a regulator of the Company or the Bank has requested or
demanded that Executive not serve as a director of the Company or
Bank.
2.8 “ Person ”
shall mean an individual or a partnership, corporation, trust,
association, limited liability company, governmental authority or
other entity.
3. Compensation and
Benefits
3.1 Base Salary . The Company
shall pay to Executive a base salary while Executive is employed by
the Company. The base salary shall be at an annual rate of $275,000
for 2006, $285,000 for 2007, $295,000 for 2008 and the amount
agreed to between the Board and Executive for 2009 and thereafter,
but if no such agreement is reached in any year thereafter, the
base salary shall be the same as the prior year. The Company shall
pay base salary to Executive in installments in the same manner and
at the same times the Company Group pays base salaries to other
executive officers of the Company Group, but in no event less
frequently than equal monthly installments.
3.2 Incentive Compensation .
The Company and Executive shall in good faith attempt to agree upon
incentive compensation plan for Executive for each calendar year
during the term of Executive’s employment. In addition, the
Board may, in its sole discretion, award performance bonuses to
Executive from time to time.
3.3 Expense Reimbursement .
Executive shall be entitled to reimbursement from the Company for
the reasonable costs and expenses that Executive incurs in
connection with the performance of Executive’s duties and
obligations under this Agreement in a manner consistent with the
Company’s practices and policies therefor.
3.4 Executive Benefit Plans .
Executive shall be entitled to participate in any pension, savings
and group term life, medical, dental, disability and other group
benefit plans which the Company Group makes available to its
employees generally. At such time as Executive is eligible for
Medicare, the Company Group shall be permitted to exclude Executive
from its medical insurance plans provided that it reimburses
Executive for Medicare coverages A and B.
- 4 -
3.5 Vacation . Executive
shall be entitled to paid vacation that accrues at the rate of 2.5
days per calendar month, provided that no vacation shall accrue at
any time when Executive has 15 days of accrued and unused
vacation.
3.6 Disability . In the event
of any disability or illness of Executive, if Executive shall
receive payments as a result of such disability or illness under
any disability plan maintained by the Company, the Company shall be
entitled to deduct the amount of such payments received from base
salary payable to Executive during the period of such illness
and/or disability.
3.7 Withholding . The Company
may deduct from any compensation payable to Executive (including
payments made pursuant to Sections 3 and 5 of this Agreement in
connection with or following termination of employment) amounts
sufficient to cover Executive’s share of applicable federal,
state and/or local income tax withholding, old-age and
survivors’ and other social security payments, state
disability and other insurance premiums and payments.
4. Termination of
Employment
Executive’s employment
pursuant to this Agreement commenced as of January 1, 2006 and
shall terminate on the earliest to occur of the
following:
4.1 upon the de
